Rice continues to be the most important food staple in Asia, contributing 40%-80% of total calorie intake. Rice is also the major source of livelihood of small farmers and agricultural labor households in this region, where at least two-thirds of arable land is planted to rice. At least half of that rice area is rain-fed and vulnerable to drought and floods. Even in irrigated areas, higher cropping intensity has increased pest problems, contributing further to the production instability that characterizes the rice economy of monsoon Asia. Because of the economic and political importance of rice in Asia, no government has left its domestic rice sector freely influenced by market demand and supply forces. Invariably, the central food policy question confronting Asian governments is how to reconcile the conflicting objectives of providing low rice prices to consumers and remunerative incentives to farmers. Maintaining stable domestic rice prices to both consumers and producers is a separate and equally important concern. Moreover, given the political importance of rice and the instability of the world rice market, most Asian countries aim for rice selfsufficiency rather than rely on international trade to pursue their food security goals. Among rice exporters, on the other hand, raising government revenues from rice exports is another policy objective. To achieve the above objectives, a wide variety of policy instruments have been used to influence output and input prices directly or to increase productivity. Except for Thailand, most Asian governments control rice prices in the short run through a monopoly on international trade, as well as by engaging in domestic marketing operations.1 On the other hand, governments also invest in irrigation,
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