ABSTRACT
The volcanic eruption in rice prices (see Figure 14.1) in the global market, rising from $385/ton 1 (January 2008) to $962.6/ton (May 2008) and then declining to about $582/ton (December 2008), has aroused keen interest among policy analysts and policymakers regarding the reasons behind such a roller-coaster ride of rice prices. Was this just a one-time blip or was it a part of the so-called ‘global food crisis’ that many experts predicted will stay with us for years to come? 2 Was it due to a sharp drop in production at the global level or have there been any structural changes in the rice demand–supply equations over time in the world? Several scholars have been trying to understand this phenomenon and respond to the underlying factors that led to this type of a situation. Rice was not the only commodity to have experienced such a high volatility in prices, but it showed the highest peak (an increase of 150 per cent from January to May 2008) as compared to other commodities such as wheat and maize. 3
