The rice value chain in Chile
The purpose of this study is to characterize and analyze the markets of rice in Chile, distinguishing the participating agents and differentiated products, understanding market operation with the use of available information and applied econometric analysis.
Domestic production of paddy rice, the wholesale market for processed rice and also the retail markets at the consumer level are analyzed, based on market data from various public sources in Chile (INE, Cotrisa, ODEPA), and individual data provided on the production and yields obtained from harvests of small farmers, main suppliers of large local manufacturers of rice products. Similarly, the records of imports of rice products made by national companies was analyzed, information provided by the National Customs Service. Meetings and interviews were held with representatives of the industry, retail and farmers, and articles and reports from different researchers and specialists were reviewed.
Regarding competition analysis from demand side, the focus is on the markets at the consumer level, with an analysis of the prices of the main rice products based on information from the retail distribution link. The analysis provide evidence to identify the relevant market for the different rice products from the consumer perspective.
On the supply market for paddy rice at the national level, which constitutes the raw material acquired by the processing industry, assessment of the consistency between the value of imports and the referential indicator of Alternative Import Cost (CAI) of processed rice is performed. This indicator has been used as a reference for the cost of raw inputs in purchases of national paddy rice acquisition markets since its creation in 2009 to improve market transparency, and the analysis aims to evaluate its validity as predictor of effective value of imports.
Several hypothesis are tested as if companies behave in a competitive context or engage in purchasing power exertion, and different scenarios are studied based on local production and yield performance information, which allows to rationalize market data according to competitive assumptions.
These analyzes are carried out with the help of methods that allow testing hypotheses about the long-term relationships between the price series and estimating the equilibrium adjustment speed in those cases in which their behavior can be described by a model that represents its long-term behavior.
Full citation: Espinoza H., Álvaro, & Farías P., Claudio. Market Analysis Department Santiago, Chile: Bureau of Agricultural Studies and Policy (ODEPA).