Josling - Agricultural

1. Three interventions in the
rice market in Haiti
Timothy Josling, Professor Emeritus at Food Research Institute, Stanford
University
Haiti Priorise Conference, Haiti April 30 – May 2

2. The Haiti Rice ‘Problem’
• Haiti rice problem:
• Stagnant yields and production due to lack of access to inputs, poor farm
structure + management, environmental factors and more
• ‘Overwhelmed’ by cheap imports from USA due to (perceived) overly liberal
trade regime
• Haitian rice is a long grain variety produced in Haiti for over 200 years
• Haitian rice traditionally consumed as a special dish for Sundays and
special occasions
• Now, rice – mostly from the US – is one of the primary staple foods,
particularly for urban population

3. Consumption and Production of Rice in Haiti
0
100
200
300
400
500
600
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Quantity
(1000sMT)
Production
Consumption
2nd wave of
liberalization
Tariffs reduced
from 35% to 3%1st wave of
liberalization:
Import quantity
restriction eased

4. 1st analyzed solution
Raise tariff on imported rice to 20% for 10 years

5. Raise tariff on rice to 20%
• Imposition of a tariff on imports
• raises the price paid by the importer who passes this on down the marketing
chain eventually to consumer
• domestic prices should rise by the full extent of the tariff
• In Haitian context this represents a transfer from urban consumers to
rural producers (and government)
• Tweak to basic intervention: Government transfers revenue to
consumers as social protection, particularly for vulnerable households

6. Costs and Benefits
Costs
• Reduction in consumer
surplus by $143m less
$114m returned via
food subsidies = $29m
in first year
Benefits
• Producer surplus
increase of $25m in first
year
Discount Benefits
($m USD)
Costs
($m USD)
BCR Quality of Evidence
3% $182.5 $216.5 0.84 Medium
(supply response and
consumer demand
fairly well established)
5% $170.5 $202.5 0.84
12% $135.4 $161.2 0.84
Costs and Benefits of 10 year
program to raise tariffs to 20%

7. 2nd analyzed solution
Subsidy for fertilizer

8. Subsidize 50% of fertilizer costs
• Problem
• Constraints (particularly knowledge, access and funds) mean farmers do not
use the optimal amount of fertilizer
• Solution
• Fertilizer subsidy => the lower price of fertilizer should cause farmers to
increase its use and therefore yields
• Practically more challenging
• people can sell the fertilizer to Dominican Republic, and pocket the difference
• Sector expert paper suggests use of vouchers

9. Costs and Benefits
Costs
• Financial outlay on subsidies =
$27m
• More fertilizer used = $8.8m
Total cost = $36m in year 1
Benefits
• 53% increase in yields =
$113m
• Reduction in fertilizer costs =
$18.6m
Total benefit = $132m in year 1
Discount Benefits
($m USD)
Costs
($m USD)
BCR Quality of Evidence
3% $943.5 $251.6 3.8 Limited (Agronomic
evidence on yield
response not adequate
for more accurate
assessment)
5% $883.9 $235.9 3.7
12% $708.1 $189.8 3.7
Costs and Benefits of program to
subsidize fertilizer

10. 3rd analyzed solution
Crop insurance

11. Crop insurance
• A relatively simple yield insurance that compensates farmers for the
difference between the yield observed in their region and that agreed
as the average for that region
• 60% of farmers participating
• Protects farmers from extreme weather
• Encourages farmers to make more long term investments and take
more risk => higher yields

12. Costs and Benefits
Costs
• Start up costs = $350,000 over three
years
• Running costs = $50,000 per year
• Costs of payouts = $0 to $40m
depending on year
• Costs of premiums = ~$140,000 per
year
Benefits
• Increased yields = ~$13m p.a.
• Payouts received by farmer = $0 to
$40m depending on year
• Premiums received by government
= ~$140,000 per year
Discount Benefits
($m USD)
Costs
($m USD)
BCR Quality of Evidence
3% $189.8 $97.6 1.95 Limited (reaction of
farmers to more stable
returns not well
known)
5% $175.1 $90.3 1.94
12% $132.4 $68.6 1.93
Costs and Benefits of crop
insurance

13. Summary
• Raising tariff on rice would
hurt many urban consumers to
support fewer rural producers
• Fertilizer subsidy could be a
relatively beneficial
intervention, though great care
required in designing program
• Crop insurance would also be
valuable on the assumption
that farmers are risk-averse
and would adopt improved
farming practices in the
presence of a risk-pooling
scheme
Discount Benefits
($m USD)
Costs
($m USD)
BCR
Rice tariff $182.5 $216.5 0.84
Fertilizer
subsidy
$883.9 $235.9 3.7
Crop insurance $132.4 $68.6 1.93
Costs and Benefits of Three
Interventions in Rice Market (5%
discount rate)