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NEARLY 16% of Indonesia’s 250m people survive on $1.90 a day or less, as do more than 6% of Cambodia’s 15m people. In both countries, rice is the staple crop, providing more than half the daily calories of the poor. That puts needy Cambodians at a distinct advantage: between January of last year and April of this, the average wholesale cost of a kilo of rice in Cambodia was roughly $0.40, while in Indonesia it was nearly $0.70.

There are a few reasons why rice is more expensive in Indonesia. For one, it is a net importer, whereas Cambodia grows more than it needs. Indonesia is also a far-flung archipelago with abysmal infrastructure, which raises transport costs. But David Dawe of the Food and Agriculture Organisation (FAO), a division of the United Nations, has found that transport costs account for only a small share of the gap in prices. Instead, the culprit is policy.

Like many Asian countries, Indonesia wants to be self-sufficient in rice. But as well as trying to help farmers become competitive through investments in agriculture and infrastructure, its government, like others in the region, manipulates the rice market through a...Continue reading

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