The FT is reporting that the world is facing a rice crisis.
As they note, the price of rice is rising very fast.
That is partly because India has put a ban on the export of some types of rice most commonly bought in developing countries, and placed minimum prices and export tariffs on other types of rice, like basmati, most commonly bought by countries like the UK.
So, what should we do then?
Well, exactly what Spud says we shouldn’t which is have more speculation – yes, futures, options, commodity exchanges! – in rice.
Because some of us recall back when Spud was shrieking – along with the World Development Movement, now Global Justice – over how we really must tax speculation. For the WDM report (as I gleefully pointed out at the time) noted that rice had less speculation than wheat and corn. And also greater price movements from smaller changes in supply and or demand. Which is as standard econmoics would have it too – it’s right there in Adam Smith.
Speculation in futures etc dampens price movements.
So, to solve the problem Ritchie is complaining about we should do the opposite of what Ritchie normally suggests. And how normal is that?