Only five countries (coded as Countries A, B, C, D and E) and two commodities (rice and wheat) were covered by the study. A quick scan of notifications and submissions to the WTO indicates that only a few countries actually implement public stockholding programs which involve price support mechanisms and are therefore covered by AMS rules.
Table 1 gives a profile of the countries and commodities covered by the study. Notably, the public stockholding programs of Countries A, C and D for rice covered a relatively small proportion (ranging from one to five percent) of total domestic production. In turn, Country B’s rice program and wheat procurement in Countries B, C and E absorbed from one-fifth to one-third of local production.
Administered prices were generally high compared to the fixed reference prices.
Country A registered the highest ratio with its derived administered price equating to almost 26 times its reference price in 2011.12 Only Country C had reference prices which were lower than administered prices. In turn, administered prices were generally lower than equivalent prices of imports, except for Countries A and D for rice. A similar result came
out when administered prices were compared to producer prices.
Figure C graphically shows the wide divergence between Country A’s reference price for rice and its administered prices in 2010-12.
Prices of imports and domestic prices received by rice producers were also significantly higher than reference prices.
Country B-Wheat, 2010-11 26% 3.11 0.84 0.92
Country C-Wheat, 2008 37% 0.88 0.45 0.90
Country E-Wheat, 2010-11 25% 7.55 0.59 0.79
Table 1. Profile of Countries and Commodities Covered by the Study
Figure C. Reference, Import, Producer and Administered Prices for Rice in Country A, 2000 to 2012
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
M il li o n $ $ $ p e r T o n
Compared to Country A, Country B’s administered prices were only about five times its reference prices for rice in 2009 to 2012. Import and producer prices were
generally stable until 2005 as shown in Figure D. Thereafter, they exhibited an upward trend and began to exceed administered prices significantly.
Country C was the only country whose administered prices substantially fell below the fixed reference price. Figure E shows that producer
prices likewise were lower than reference prices for rice from 2000 to 2012. Import prices rose above reference prices starting only in 2008
Figure F shows that Country D followed the general trend with its administered prices averaging around six times the reference prices starting in 2008. Domestic prices for
producers were lower than administered prices, as were import prices except in 2008 and the years immediately following the 2008 food crisis
Figure D. Reference, Import, Producer and Administered Prices for Rice in Country B, 2000 to 2012
Figure E. Reference, Import, Producer and Administered Prices for Rice in Country C, 2000 to 2012
-10 20 30 40 50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Thousand$$$/Ton
YEAR
Reference Import Producer Administered
-1 000 2 000 3 000 4 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$$$/Ton
YEAR
Reference Import
Producer Administered
Figure F. Reference, Import, Producer and Administered Prices for Rice in the Country D, 2000 to 2012
Figure G. Reference, Import, Producer and Administered Prices for Wheat in Country B, 2000 to 2012
Figure H. Reference, Import, Producer and Administered Prices for Wheat in Country C, 2000 to 2012
In the case of wheat in Country B, administered prices were three times the rates for reference prices in 2009 to 2012. Import and producer
prices were generally lower than administered prices prior to 2009. Since then, they ranged from 10 to 20 percent over administered prices.
Country C’s administered price for wheat fell below its reference prices, as in the case of rice. In 2006 to 2008, procurement prices were about equal to domestic prices. Import prices
tended to be higher and spiked upwards to double the administered price during the 2008 international food crisis.
-5 000 10 000 15 000 20 000 25 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Thousand$$$/Ton
YEAR Reference Import Producer Administered
-5 10 15 20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Thousand$$$/Ton
YEAR
Reference Import Producer Administered
-1 000 2 000 3 000 4 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$$$/Ton
YEAR Reference Import Producer Administered
Figure I. Reference, Import, Producer and Administered Prices for Wheat in Country E, 2000 to 2012
Table 2. Scenarios Using Various Reference Price Settings Finally, Figure I shows that Country E
experienced significant increases in import and producer prices relative to its reference prices
starting in 2008. In turn, administered prices were almost eight times higher than reference prices in 2009-2011.
4.1 Simulations Using Variations in Reference Prices
The first set of simulations tested the behavior of AMS in relation to de minimis caps using
different versions of “external reference prices”. The variable settings under various scenarios are outlined in Table 2.13
Parameter Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6 Reference
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Thousand$$$/Ton
Figure J: Base Scenario Results
Scenario 1 represents the base setting and strictly follows the provisions of Annex 3. The only major adjustment was to convert the reference price, if necessary, to its equivalent for the raw form of the product using applicable extraction factors. Under this base scenario, all countries except Country C exhibited AMS which were well in excess of their product-specific de minimis caps. Figure J shows that Country A, whose administered price for rice was more than 26 times its reference price, came out with an AMS percentage which was more than ten times over the allowable de minimis limit. Excluding Country C, Country B had the lowest AMS percentage of 43 percent which nevertheless was still four times its de minimis allowance.
These results confirm apprehensions that many of the countries with price support programs will breach their caps and be vulnerable to disputes if the formula for computing AMS is applied literally and strictly. Country C, even though it had a lower de minimis cap of 8.5 percent, was the only country that complied with the rule. In fact, it consistently ended up with negative AMS because its administered prices for both rice and wheat were lower than the corresponding reference prices.
An analysis of producer prices for rice and wheat for all countries excluding Country C indicates that rice prices effectively doubled in 2000 in comparison to prices in 1991, which is the year nearest to the 1986-88 base period for which data is available in FAOSTAT. By 2011, prices had grown to an average of six times their comparable levels in 1991. Since administered prices often follow the trend in market prices for producers, the increasing gap between administered and reference prices is not surprising. Country C did not follow this pattern because its prices in 2000 were lower than 1998 base period rates by about 20 percent. Thereafter, rice prices increased only slightly to 113 percent while wheat prices grew to 169 percent of base rates by 2011.
Countries B and E gained significantly if the fixed reference prices were adjusted using producer price indices under Scenario 2. Figure K shows that their AMSs in fact became negative since their references prices rose above administered prices after the adjustment. Country C’s AMS for rice increased but remained well within its de minimis limits. On the other hand, Countries A and D continued to significantly exceed their caps even though their AMS percentages went down due to the adjustment.
Country A-Rice