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Policy Impact on Food Price in South Asian Countries

Corresponding Author : Nazmunnesa Bakth (sumisust2002@gmail.com)

Authors : Nazmunnesa Bakth (sumisust2002@gmail.com), Alexander McTier (alex.mctier@strath.ac.uk)

Keywords : Food Price, Government Intervention, Trade Restrictions, Random Effects

Abstract :

Food price fluctuations pose grave danger to developing countries with people having high responsiveness of food demand to income, with consistent supply bottlenecks in food industry hampering food security, with governments fearing political unrest, and with trade restrictions threatening quick solutions to food crisis. The risk of endangering already vulnerable people to lower food consumption, the will to smooth tenure of the ruling party and the lack of capability to handle any food crisis force governments of such countries to maintain activist position in food price stabilization. Both government interventions in food market and trade restrictions in food are advocated from different corners citing consumers’ benefit. While public controls can favor either consumers or producers, trade restrictions are meant for producers’ protection. Countries also put forward concern about national food security as justification for food trade barriers. In this perspective, this study focuses government policy impact on food price as food price stability is a major concern for consumer welfare, production margin, and political popularity. The study reveals that public policies can influence food prices only providing incentives to food production and only in a delayed manner. Thus, intense efforts for the betterment of production capacity should pay off better in the long run while targeted government support can help the poor in smoothing short term shocks.

Published on December 30th, 2021 in Vol 32, No 2, 2021 (Special Issue on Bangladesh Development Perspectives : Issues of Economic Justic, Social Sciences