BLOG SURF: Lunar New Year
BLOG SURF: Lunar New Year
Published: 05:02 am Feb 01, 2017
This is not about how to start the Lunar New Year right with proper weight management. Well, not exactly, as this is about thin trade and why thin is not good especially during excessive upswings and downswings of prices for Asia’s main food staple rice. The average export output ratio, a measure of tradability or the extent of exchange of output between and among countries, is the thinnest for rice relative to two other important food staples, maize and wheat. From 1961 to 2009, the average export-to-output ratio of rice was only 5% while wheat was, 19%, and maize, 14%. Is 5% too thin for comfort? Yes, especially when you factor in price volatility. Prices move up and down, depending on changes in weather, increase in demand, etc. That prices are not constant serves as the incentive for suppliers and distributors to produce more or less of a food staple. Too high prices or too low prices are dangerous either way.