Asian Rice Exports and the European Demand: An Application of the Modified Panel Gravity Model

The purpose of this paper is to investigate the determinants of Asian rice exports to the European market that comprise of 27 member countries. The EU-27 emerged as the net importer of rice as well as the biggest importer of agricultural products. Privileged rice exporting countries including India, Pakistan, Thailand, and Vietnam mainly stem from preferential treatment given by the European Union. Using a 19-year panel data over 2001-2019 for four top rice exporting countries augmented gravity model is tested with additional variables including rice yield, exchange rate, the population of importing region, distance, and rice price indices in importing and exporting regions. Results of the study suggest that rice yield, exchange rate, the population of importing region, distance, and rice price in importing region are statistically meaningful in determining the level of exports of rice to the EU-27 region. Analysis in this paper contends that policymakers in top rice-producing countries should focus on competitive exchange rate regimes as well as set price below what is prevailing in the EU-27 region.