How price stabilization would work in Belize

This concept paper examines the feasibility of price stabilization in Belize for three staples - rice, red kidney beans, and corn. An application of price stabilization techniques under various scenarios is made for each of the three commodities using a realistic target band with floor and ceiling prices based on projected supply/demand relationships and historical and border (international) prices, respectively. Benefits to producers and consumers and costs to the Belize Marketing Board (BMB), the price stabilizing agency, are calculated, along with overall benefit/cost ratios that indicate how economically feasible the price stabilization programs would be. Results show that benefits would exceed costs for rice under both scenarios discussed in the paper, and would also exceed costs for red kidney beans given the scenario of an oversupply of the beans and the BMB"s need to maintain producer prices near the floor price. Under the scenario of a sharp drop in red kidney bean production, however, the benefits to producers and consumers would not be greater than the costs to the BMB. Benefits would also outweigh costs for corn under the two price stabilization scenarios described in the paper, but the program could be very costly if the BMB ends up with unmarketable stocks of corn, which lacks an export market from Belize. (Author abstract, modified)