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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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| 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 |
| Summary: | 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. |
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