Farmers, Rice, and Markets

American rice farmers are a little ticked off that Iraq’s Grain Board has decided to stop buying American rice. Seems the Iraqis owe it to “us.”

“That’s just not right,” [Texas rice farmer Ray] Stoesser fumed. “If we’ve got some rice to sell, they ought to pay a premium for it just because this is the country that freed them.”

Apparently being subsidized by only one government isn’t sufficient to make a living.

About J@m3z Aitch

J@m3z Aitch is a two-bit college professor who'd rather be canoeing.
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2 Responses to Farmers, Rice, and Markets

  1. Troublesome Frog says:

    If I remember correctly, Iraqi state-sponsord businesses were subsidized by the Iraqi government by keeping exchange rates “stable” even after the dinar collapsed under the weight of sanctions. That is, if a state company needed to import cotton to make clothing, the government acted as a middle-man. It would pay the market rate to the foreign cotton supplier and charge the company a rate that would have been accurate at the old exchange rate, taking a loss in the process.

    This creates two interesting problems. First, when your smarter factory managers figure this out, they realize that simply reselling the raw goods at market prices is vastly more profitable than actually trying to add any value to them. Second, when the US took over and started trying to figure out which businesses could be salvaged, a lot of factory managers (presumably the ones not clever enough to notice the arbitrage opportunity) were stunned to find that their “profitable” factory was actually a huge money loser.

  2. James Hanley says:

    Interesting. I had not heard that.

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