Market Responses to Climate Stress: Rice in Java in the 1930s

Abstract

Do markets in less-developed countries abate consequences of climate stress? Using changes in regional rice prices across the 19 regions in Java, Indonesia, during 1935-40, this paper will assess how rice markets responded to variations in rainfall, which is an important factor in rice production. It finds that rice markets were highly integrated across Java. The El Niño-induced episodes of lower than usual rainfall in 1935 and 1940 did not have a negative effect on levels and variations in regional rice prices, nor did they have adverse consequences for the supply of rice. Adaptive responses of firms specialising in the trade of rice are argued to have mitigated regional deficiencies in food production caused by climate stress.