Food security depends on trade as much as it does on production. Rice is a staple food in Asia, and around 90% of the world's rice is produced and consumed in the Association of Southeast Asian Nations* (ASEAN) countries. Despite having almost half of the world's export rice supply, rice trade is still low within the ASEAN region. Lourdes S. Adriano, Advisor/Practice Leader for Agriculture, Food Security and Rural Development at ADB's Regional and Sustainable Development Department, talks to ADB.org about how coordinated policy actions among ASEAN countries, through the first ASEAN Rice Trade Forum, may help balance trade of the region's most important crop.
The two main challenges are the extreme rice price volatility due to policy shocks and the threats to supply caused by climate change and low productivity. To tackle these issues, ASEAN established the Integrated Food Security Program, which entails four key components: setting up a regional emergency rice reserve; fostering a healthy rice trade; promoting regional market information on food; and introducing productivity innovations in the markets.
"It is estimated that by 2026 more than half the population in Asia will be living in urban centers. This is a complex phenomenon that links key issues such as food, water, energy, nutrition, and poverty."
While a more robust rice trade could abate rice price volatility, rice security is viewed by the ASEAN governments as a sensitive national issue that cannot be left to the uncertainties of international trade. One thing ADB is looking at is for ASEAN to initiate stakeholder discussions on rice trade issues using evidence-based analysis. It is is hoped that such a dialogue could become the basis for coordinated policies on how to reduce rice price volatility. This is how the ASEAN Rice Trade Forum came about.
Food security is not just an issue of national concern, but one that also has regional and global dimensions. The global and regional rice market cannot afford to be influenced by unilateral actions of major rice exporting and importing countries. Rather, coordinated policy actions are needed to minimize global rice price surges. Food safety nets are very important at a national level especially in view of the need to protect the poor and vulnerable. For example, we are looking at the possibility of a regional rice reserve complemented by national stocks. In addition, all countries will need to look at enhancing productivity. We have to produce more rice with less water, make better use of our land, and also use less labor as rural population continue to migrate to the cities. It is estimated that by 2026 more than half the population in Asia will be living in urban centers. This is a complex phenomenon that links key issues such as food, water, energy, nutrition, and poverty.
The main objective of the forum is to find out what short- and medium-term policies can be coordinated to reduce the price volatility of rice.
One way is through coordinated policies between exporters and importers. ASEAN has the benefit of having both types of countries among its members. ASEAN also has good relations with South Asia, another area with major rice trade players. ASEAN countries and their South Asian counterparts should dialogue. Secondly, the regional rice reserve may need to be complemented with national stock reserve managed more efficiently and according to agreed rules. Thirdly, market information and intelligence are needed to guide coordinated policy actions. And lastly, ADB is looking at measures to develop rice futures in the region. The ASEAN agriculture ministers agreed to hold the forum as a pilot, and based on the results, ASEAN will decide whether it should be held on a regular basis to exchange ideas on coordinated rice trade policies that work and have the support of the major actors in the regional rice trade.
ADB is providing support for the implementation of the Integrated Food Security program, which is being undertaken through the Japan Fund for Poverty Reduction . So far, ADB helped with the development of rules and operating procedures for the emergency rice reserve. ADB is providing ASEAN with tools for analysis that then becomes the basis for constructive discussions among different stakeholders. On the investment side, in March 2008 President Kuroda committed US$2-billion a year for investments related to food security. These investments have been aimed at enhancing productivity, particularly through the use of smarter irrigation and water resource management techniques. Yet, enhancing rural roads and making market infrastructure more robust, as well as developing rural and renewable energy, are also important initiatives because they target factors that are vital to producing robust food supply chains.
ADB believes that if Asia wants to be a booming economy in 2050, it has to have a lasting solution to the issue of food security.
*ASEAN is made up of the following countries: Brunei Darussalam, Cambodia, Indonesia, Lao People's Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, Viet Nam