Jan Brockhaus

Modelling Indian Wheat and Rice Sector Policies

This paper serves to disentangle the complex system of Indian food policies related to wheat and rice procurement, storage, distribution and trade. Using nationally aggregated time series data, these policies are econometrically analysed. Based on the estimation results, their market implications are assessed. Eventually, different scenarios, including the implementation of the National Food Security Act, are simulated with respect to fiscal costs and public stocks.

Food Grain Policies in India and their Implications for Stocks and Fiscal Costs: A Dynamic Partial Equilibrium Analysis

This paper analyzes current and possible future reforms of the Indian food policies of the two most important staple grains, wheat and rice, within a two commodity dynamic partial equilibrium model with stochastic shocks. The model is empirically grounded and reproduces past values well. It uses a new reduced-form approach to capture private storage dynamics. We evaluate implementation of the National Food Security Act (NFSA) under several policy measures with the current regime as well as two scenarios with a regime change - implementation of cash transfers and deficiency payments. Implications for market fundamentals and fiscal costs were simulated in the medium term - until 2020/21. The NFSA puts a high pressure on fiscal costs and public stocks. Relying on imports with low MSPs results in a high stock-out risk and the lowest fiscal costs, however with high domestic price levels and volatility and high international prices. A policy strategy to manipulate procurement prices in order to maintain public stocks close to the norms leads to slightly higher fiscal costs with lower and more stable prices and ample stocks. A cash-based regime can bring considerable savings and curb fiscal costs, particularly if targeted to the poor, and would leave ample stocks due to higher private stocks. However, this scenario shows the highest market price levels and variability, which can have negative effects on some producers and consumers as well as political stability.

When Do Prices Matter Most? Rice, Wheat, and Corn Supply Response in China

This study analyses the indica rice, winter wheat, and corn production response to prices, rainfall, temperatures, and other parameters for the agriculturally most important provinces in China. System and difference GMM estimators are used as the number of groups is large compared to the time periods and the production response is a dynamic process. We find that all crops strongly respond to prices around planting time and shortly after while prices further away from the time of planting turn out insignificant. Furthermore, rainfall affects the production positively and high temperatures negatively for all crops. The results for other variables differ between the crops. Mixed outcomes are found for irrigation, fertilizer prices, area affected by droughts and interaction terms. Results suggest that irrigation is only partly able to compensate for impacts of weather variability. The presented method for analyzing the price response at different points in time may also be used for general model specification tests.