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Unintended consequences of food subsidies : the case of the Haiti rice subsidy (Inglês)

Haiti is an important rice consumer, and a big rice importer. Around 86 percent of the Haitian population consumes rice. The decision to implement an indirect subsidy was made based on the fact that import prices had in the past been transmitted fully and immediately to rice consumers. Thus, a subsidy to the price of rice at the level of the importers was expected to be passed on immediately into benefits (savings) to rice consumers. The Government also prohibited rice exports to the Dominican Republic in order to avoid re-export of subsidized rice. The subsidy scheme was implemented by forming a public-private sector Presidential Commission between the Central Bank of Haiti (BRH), the President's Office and rice importers. Although the rice price subsidy program did produce the intended savings to Haitian consumers during the 4-month period of the subsidy program (April-August 2008), this intervention caused medium term distortions in the domestic market of imported rice such that domestic prices of imported rice have risen beyond the price that consumers would have faced without a subsidy program. The actual prices consumers faced after the subsidy program was implemented were much more volatile than the estimated price without a subsidy program, pointing to also an increased consumer uncertainty about local market prices for rice. Using a targeted food voucher as a subsidy mechanism is not only more efficient, but can have higher impact on nutrition as it can be used for a wide variety.


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    Arias, Diego; Carneus, Maxime

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    Documento de Trabalho

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    América Latina e Caribe,

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    Unintended consequences of food subsidies : the case of the Haiti rice subsidy

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    law of one price;vote of no confidence;domestic price;rice price;price of rice;price to consumer;international food prices;elasticity of substitution;poor urban family;elasticity of demand;oil price spike;food price inflation;crime and violence;Food Price Index;food price subsidy;cost to consumer;purchase price;local market;Price Subsidies;import price;subsidy scheme;vertical line;social unrest;replacement cost;import cost;local distributors;target price;food voucher;government intervention;standard deviation;household income;food crisis;high correlation;environmental sustainability;social sustainability;primary vehicles;food product;spatial economics;direct transfer;global financial;market income;bureaucratic process;welfare benefit;food cost;supply chain;subsidy payment;regression coefficient;consumer saving;quoted price;simple regression;absolute change;price consumers;public resource;import tariff;national ones;local ones;volume sell;consumer purchase;price rise;consumption basket;price change;price uncertainty;price difference;program impact;voucher scheme;profit margin;rice farmer;premium price;price decision;unintended consequence;food import;food market;agriculture policy;urban agricultural policy;rice production;food subsidies;price source;broken rice;exogenous shock;weighted average;social tension;food source;transport efficiency;reference price;food production;external financing;targeted food;delivery mechanism;nutritional need;Price Fixing;overhead cost;commodity price;pay rate;index number;household survey;family living;budget support;indirect subsidy;local price;agreed price;market price;public expectation;Direct Subsidies;target consumer;low-income family;



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