Government Decisions Fueled 2008 Food Crisis, FAO’s Ghanem Says - Bloomberg

I remember this when rice prices in Hong Kong rose quickly and there were shortages and hoarding. Governments do not always implement economic decisions to benefit the greater good sometimes they do it for other political reasons. One of the problems associated with government interventions in markets, is that it misallocates resources and creates winner and losers different than the market participants originally anticipated. When Thailand, the top exporter of rice in the world, banned exports, it created large economic dislocations not only within the region but also within Thailand itself. There were shortages in the region of rice due to the shock of reducing supplies so prices naturally increased. Inside of Thailand, I imagine the reverse happened. Large supplies of rice had to be held and consumed internally. Thailand produces 31 million metric tons annually but only consumes 10 million metric tons. So, imagine the collapse in prices that took place affecting the farmers and the rice traders that typically export that now had no place to go with the product.

This kind of non-economic intervention happens all the time by feckless governments. The US government intervenes in markets constantly with benefits accruing to some and costs accruing to others.

Government Decisions Fueled 2008 Food Crisis, FAO’s Ghanem Says - Bloomberg