Unintended Consequences of Food Subsidies : The Case of the Haiti Rice Subsidy

Haiti is an important rice consumer, and a big rice importer. Around 86 percent of the Haitian population consumes rice. The decision to implement an indirect subsidy was made based on the fact that import prices had in the past been transmitted fu...

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Main Authors:	Arias, Diego, Carneus, Maxime
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	AGRICULTURE AVERAGE PRICE CENTRAL BANK COLLUSION COMMODITIES COMMODITY COMMODITY PRICES CONSUMERS DELIVERY MECHANISM DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES ELASTICITY OF SUBSTITUTION ENVIRONMENTAL SUSTAINABILITY EXPENDITURES EXPORTS EXTERNAL FINANCING FINANCIAL CRISIS FOOD IMPORTS FOOD MARKETS FOOD POLICY FOOD PRICE FOOD PRICE INFLATION FOOD PRICE SUBSIDY FOOD PRICES FOOD PRODUCTION FOOD PRODUCTS FOOD SECURITY FOOD SUBSIDIES GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GOVERNMENT SUBSIDY GRAINS INCOME INCOMES INDEX NUMBERS INDIRECT SUBSIDY LIBERALIZATION MACROECONOMICS MAIZE MARKET PRICE MARKET PRICES MERCHANDISE PREMIUM PRICE PRICE BEHAVIOR PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRICE FIXING PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INDICES PRICE SUBSIDIES PRICE SUBSIDY PRICE UNCERTAINTY PROFIT MARGINS PUBLIC POLICIES PURCHASING PURCHASING POWER RICE SAVINGS SELLING PRICE SOYBEAN SPATIAL ECONOMICS STOCKS SUBSTITUTE SUBSTITUTION SUPPLY CHAIN SUSTAINABLE DEVELOPMENT TAXPAYERS TRADE LIBERALIZATION VOLATILITY WFP WHEAT WORLD FOOD PROGRAM
Online Access:	http://documents.worldbank.org/curated/en/2011/03/17394181/unintended-consequences-food-subsidies-case-haiti-rice-subsidy http://hdl.handle.net/10986/18019

id	okr-10986-18019
recordtype	oai_dc
spelling	okr-10986-180192021-04-23T14:03:35Z Unintended Consequences of Food Subsidies : The Case of the Haiti Rice Subsidy Arias, Diego Carneus, Maxime AGRICULTURE AVERAGE PRICE CENTRAL BANK COLLUSION COMMODITIES COMMODITY COMMODITY PRICES CONSUMERS DELIVERY MECHANISM DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES ELASTICITY OF SUBSTITUTION ENVIRONMENTAL SUSTAINABILITY EXPENDITURES EXPORTS EXTERNAL FINANCING FINANCIAL CRISIS FOOD IMPORTS FOOD MARKETS FOOD POLICY FOOD PRICE FOOD PRICE INFLATION FOOD PRICE SUBSIDY FOOD PRICES FOOD PRODUCTION FOOD PRODUCTS FOOD SECURITY FOOD SUBSIDIES GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GOVERNMENT SUBSIDY GRAINS INCOME INCOMES INDEX NUMBERS INDIRECT SUBSIDY LIBERALIZATION MACROECONOMICS MAIZE MARKET PRICE MARKET PRICES MERCHANDISE PREMIUM PRICE PRICE BEHAVIOR PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRICE FIXING PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INDICES PRICE SUBSIDIES PRICE SUBSIDY PRICE UNCERTAINTY PROFIT MARGINS PUBLIC POLICIES PURCHASING PURCHASING POWER RICE SAVINGS SELLING PRICE SOYBEAN SPATIAL ECONOMICS STOCKS SUBSTITUTE SUBSTITUTION SUPPLY CHAIN SUSTAINABLE DEVELOPMENT TAXPAYERS TRADE LIBERALIZATION VOLATILITY WFP WHEAT WORLD FOOD PROGRAM Haiti is an important rice consumer, and a big rice importer. Around 86 percent of the Haitian population consumes rice. The decision to implement an indirect subsidy was made based on the fact that import prices had in the past been transmitted fully and immediately to rice consumers. Thus, a subsidy to the price of rice at the level of the importers was expected to be passed on immediately into benefits (savings) to rice consumers. The Government also prohibited rice exports to the Dominican Republic in order to avoid re-export of subsidized rice. The subsidy scheme was implemented by forming a public-private sector Presidential Commission between the Central Bank of Haiti (BRH), the President's Office and rice importers. Although the rice price subsidy program did produce the intended savings to Haitian consumers during the 4-month period of the subsidy program (April-August 2008), this intervention caused medium term distortions in the domestic market of imported rice such that domestic prices of imported rice have risen beyond the price that consumers would have faced without a subsidy program. The actual prices consumers faced after the subsidy program was implemented were much more volatile than the estimated price without a subsidy program, pointing to also an increased consumer uncertainty about local market prices for rice. Using a targeted food voucher as a subsidy mechanism is not only more efficient, but can have higher impact on nutrition as it can be used for a wide variety. 2014-04-22T21:46:58Z 2014-04-22T21:46:58Z 2011-03-17 http://documents.worldbank.org/curated/en/2011/03/17394181/unintended-consequences-food-subsidies-case-haiti-rice-subsidy http://hdl.handle.net/10986/18019 English en_US LCSSD occasional paper series on food prices; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research Latin America & Caribbean
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	AGRICULTURE AVERAGE PRICE CENTRAL BANK COLLUSION COMMODITIES COMMODITY COMMODITY PRICES CONSUMERS DELIVERY MECHANISM DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES ELASTICITY OF SUBSTITUTION ENVIRONMENTAL SUSTAINABILITY EXPENDITURES EXPORTS EXTERNAL FINANCING FINANCIAL CRISIS FOOD IMPORTS FOOD MARKETS FOOD POLICY FOOD PRICE FOOD PRICE INFLATION FOOD PRICE SUBSIDY FOOD PRICES FOOD PRODUCTION FOOD PRODUCTS FOOD SECURITY FOOD SUBSIDIES GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GOVERNMENT SUBSIDY GRAINS INCOME INCOMES INDEX NUMBERS INDIRECT SUBSIDY LIBERALIZATION MACROECONOMICS MAIZE MARKET PRICE MARKET PRICES MERCHANDISE PREMIUM PRICE PRICE BEHAVIOR PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRICE FIXING PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INDICES PRICE SUBSIDIES PRICE SUBSIDY PRICE UNCERTAINTY PROFIT MARGINS PUBLIC POLICIES PURCHASING PURCHASING POWER RICE SAVINGS SELLING PRICE SOYBEAN SPATIAL ECONOMICS STOCKS SUBSTITUTE SUBSTITUTION SUPPLY CHAIN SUSTAINABLE DEVELOPMENT TAXPAYERS TRADE LIBERALIZATION VOLATILITY WFP WHEAT WORLD FOOD PROGRAM
spellingShingle	AGRICULTURE AVERAGE PRICE CENTRAL BANK COLLUSION COMMODITIES COMMODITY COMMODITY PRICES CONSUMERS DELIVERY MECHANISM DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES ELASTICITY OF SUBSTITUTION ENVIRONMENTAL SUSTAINABILITY EXPENDITURES EXPORTS EXTERNAL FINANCING FINANCIAL CRISIS FOOD IMPORTS FOOD MARKETS FOOD POLICY FOOD PRICE FOOD PRICE INFLATION FOOD PRICE SUBSIDY FOOD PRICES FOOD PRODUCTION FOOD PRODUCTS FOOD SECURITY FOOD SUBSIDIES GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GOVERNMENT SUBSIDY GRAINS INCOME INCOMES INDEX NUMBERS INDIRECT SUBSIDY LIBERALIZATION MACROECONOMICS MAIZE MARKET PRICE MARKET PRICES MERCHANDISE PREMIUM PRICE PRICE BEHAVIOR PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRICE FIXING PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INDICES PRICE SUBSIDIES PRICE SUBSIDY PRICE UNCERTAINTY PROFIT MARGINS PUBLIC POLICIES PURCHASING PURCHASING POWER RICE SAVINGS SELLING PRICE SOYBEAN SPATIAL ECONOMICS STOCKS SUBSTITUTE SUBSTITUTION SUPPLY CHAIN SUSTAINABLE DEVELOPMENT TAXPAYERS TRADE LIBERALIZATION VOLATILITY WFP WHEAT WORLD FOOD PROGRAM Arias, Diego Carneus, Maxime Unintended Consequences of Food Subsidies : The Case of the Haiti Rice Subsidy
geographic_facet	Latin America & Caribbean
relation	LCSSD occasional paper series on food prices;
description	Haiti is an important rice consumer, and a big rice importer. Around 86 percent of the Haitian population consumes rice. The decision to implement an indirect subsidy was made based on the fact that import prices had in the past been transmitted fully and immediately to rice consumers. Thus, a subsidy to the price of rice at the level of the importers was expected to be passed on immediately into benefits (savings) to rice consumers. The Government also prohibited rice exports to the Dominican Republic in order to avoid re-export of subsidized rice. The subsidy scheme was implemented by forming a public-private sector Presidential Commission between the Central Bank of Haiti (BRH), the President's Office and rice importers. Although the rice price subsidy program did produce the intended savings to Haitian consumers during the 4-month period of the subsidy program (April-August 2008), this intervention caused medium term distortions in the domestic market of imported rice such that domestic prices of imported rice have risen beyond the price that consumers would have faced without a subsidy program. The actual prices consumers faced after the subsidy program was implemented were much more volatile than the estimated price without a subsidy program, pointing to also an increased consumer uncertainty about local market prices for rice. Using a targeted food voucher as a subsidy mechanism is not only more efficient, but can have higher impact on nutrition as it can be used for a wide variety.
format	Publications & Research :: Working Paper
author	Arias, Diego Carneus, Maxime
author_facet	Arias, Diego Carneus, Maxime
author_sort	Arias, Diego
title	Unintended Consequences of Food Subsidies : The Case of the Haiti Rice Subsidy
title_short	Unintended Consequences of Food Subsidies : The Case of the Haiti Rice Subsidy
title_full	Unintended Consequences of Food Subsidies : The Case of the Haiti Rice Subsidy
title_fullStr	Unintended Consequences of Food Subsidies : The Case of the Haiti Rice Subsidy
title_full_unstemmed	Unintended Consequences of Food Subsidies : The Case of the Haiti Rice Subsidy
title_sort	unintended consequences of food subsidies : the case of the haiti rice subsidy
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2011/03/17394181/unintended-consequences-food-subsidies-case-haiti-rice-subsidy http://hdl.handle.net/10986/18019
_version_	1764435943555596288

Unintended Consequences of Food Subsidies : The Case of the Haiti Rice Subsidy

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