A protectionist foodgrain price policy. The case of rice in Panama

Panama has pursued a protectionist price policy for rice, with domestic prices well above the world market level. The government marketing authority purchases sufficient rice to support the established price level and stores or exports the surplus. Although producers benefit, this policy imposes significant costs on consumers, government expenditures and economic efficiency. One policy recommendation is to bring domestic prices in line with the international level. Although free trade is one possibility, a market stabilization programme could be retained. At a minimum Panama's rice price should reflect domestic demand and not production costs. The unfavourable rice-fertilizer price ratio also deserves attention.