The Relational Ship between Rice Market Liberalization and Food Security in Iran

In an effort to alleviate rice shortages, the Iranian government is attempting to encourage the private sector to become more involved in the rice market and trade of Iran. To this end, the multi rate foreign exchange system, which was adopted for several years mainly to support consumers, is being substituted by a single rate, with which the consumer price of rice is expected to decline, and the producer price to increase towards the world price. In this study, the links between change in rice price on the one hand, and poverty and food insecurity (measured by calorie intake) on the other, are calculated by applying Foster-Greer-Thorbecke (1984) measures to data from a sample of 540 Iranian households. Because of the increase in the real income of consumers following lower prices for a staple food, the poverty rate is calculated to fall from 0.24 to 0.16. The measures of poverty gap and poverty severity are also expected to fall, by 0.07 and 0.26 respectively. However, food insecurity, in terms of daily calorie intake, was found expected to be more severe after market liberalization, particularly among the poorest in Iranian society.