Liberalization of Foodgrain Markets Implications for Food Security and Price Stability

This paper explores through counterfactual simulations the effects of deregulating and liberalizing the foodgrain sector on the costs of price stabilization, production incentives and consumption levels. The outcomes under free trade with trade taxes are compared with those of a regime in which trade is canalized. Equilibrium output, stocks and prices of the three major foodgrains viz. rice, wheat and coarse cereals are determined simultaneously in a multi market set up.