Do Guaranteed Prices Increase Rice Production? Rice Supply Response to Price Support in Mexico

Mexico’s rice sector has long been characterized by declining cultivated area and heavy dependence on imports, raising concerns about food security and vulnerability to external shocks. In 2019, the federal government reintroduced price support through the Guaranteed Price Program for Basic Staples (PPGPB) to stabilize producer incomes and stimulate domestic rice production. This study provides the first empirical ex post evaluation of the PPGPB for rice during 2019–2021. Results show that paddy rice production increased by 29% in 2020 relative to the preceding decadal average. This increase was driven primarily by a 17.6% expansion in cultivated area, while yields increased by nearly 10%, indicating a predominantly extensive supply response. Econometric estimates suggest that the observed response exceeded both simulation-based predictions and the range of short-run elasticities commonly reported in the international literature. The results are consistent with the hypothesis that program effectiveness depended not only on price incentives, but also on expanded incentive coverage and program redesign introduced in 2020. While guaranteed price policies may contribute to short-run recovery in structurally weakened staple-crop sectors, they are unlikely to be sufficient to achieve the production objectives established under Plan México 2025–2030. The findings underscore the need for complementary structural investments.