Tuesday, February 18, 2014

US Rice Price Floor

The Wall Street Journal reports that the US government has put a price floor for Japonica Rice - used in sushi.  If the price of Japonica Rice is less than 115% of the average price of all types of rice, the US government will pay the difference.  Hence, rice producers have an incentive to increase production which normally will lower the market price, but now have a guarantee that increased production will not be economically harmful.

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