Commodity price stabilization and policy reform: an approach to the evaluation of the Brazilian price band proposals

This volume gives the results of a World Bank research project on agricultural price stabilization in Brazil. The project also examines the ways in which different analytical methodologies can gauge the effects of stabilization measures in single markets and in multi-markets. The project investigates whether the Newbery-Stiglitz analysis would come to the same conclusions when applied to a single country such as Brazil. It also evaluates whether the methodology can be used by countries with governments that intervene to a significant extent in their markets. Researchers examined five Brazilian markets to study the effects of price bands, which are designed to limit the magnitude of price fluctuations. These markets comprise edible beans, cotton, corn, rice, and wheat. Two main price band proposals are analyzed. The first proposal sets no limits and establishes a free trade environment. The second proposal sets some limits once a free trade environment has been established. Together, these proposals show how price bands may affect producers and consumers. -from Publisher