Environmental Economics & Policies; Markets and Market Access;
Economic Theory & Research; Access to Markets; Insurance & Risk
Mitigation Summary: Venezuela's agricultural sector is heavily
regulated and protected. As part of structural adjustment, the
government is considering major reform of its agricultural trade
policies. The strategy is to introduce competition into the
economy by removing government price controls and liberalizing
trade. In 1990, the Government proposed a price stabilization
scheme to ease the liberalization of quota-driven, price-managed
domestic markets for several "essential" commodities - including
maize, sorghum, rice, wheat, sugar, palm oil, soybeans and
soybean products. The authors analyzed historical data to
demonstrate the effects of several alternative stabilization
schemes on domestic prices and government revenues. They also
calculated average welfare benefits, including transfer and risk
benefits, based on assumptions about risk aversion among
producers. The effects of the