Sunday, November 6, 2011

The Rice Shortage

A few years back--about 2008--there was rice rationing in the US and a great fear of rice shortages around the world. This lead to a certain amount of panic, particularly in Asia where citizens have traditionally consumed 70-80% of their calories in rice. The story of what actually happened is a combination of non-transparent markets, panic, reasonable actions on the part of governments, corrupt actions on the part of governments and their officials, reasonable actions on the part of consumers, screwy international trade activity, and just a general mess.
NPR ran a great story on the "crisis" and thankfully it's available in a podcast of the show Planet Money.

There's also a short interview with economist Peter Timmer on their website. But what is interesting are the lessons learned from the crisis. If you listen to the whole story, you hear that the lesson that the WTO and  Western economists take away from the "crisis" is exactly the opposite of the lesson learned by the governments involved. The interesting thing is, both sides appear to be right; open markets and transparency are good, but food security is a necessity. The problem is, neither side can see that maybe both lessons need to be learned.

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