MANILA, PHILIPPINES - Asia's ability to keep food prices in check and ensure long-term regional food security will require the region's farm to market supply chains to become more efficient and cost effective, says a new Asian Development Bank (ADB) study.
"Asia faces a formidable challenge of feeding 5 billion people by 2030," said Bindu Lohani, ADB Vice President for Knowledge Management and Sustainable Development. "Rising populations and incomes, resource degradation, and climate change will keep putting upward pressure on food prices, requiring vast improvements to ensure adequate, affordable food supplies."
The Quiet Revolution in Staple Food Value Chains: Enter the Dragon, the Elephant and the Tiger, produced by ADB and the International food Policy Research Institute in response to the 2008 spike in food prices, analyzes domestic rice and potato supply chains in Bangladesh, India and People's Republic of China (PRC).
It finds that the rapid modernization of staple food chains in Asia has allowed farmers to increase control over what they produce, and to whom they sell. The transformation has been particularly dramatic in the PRC, with modern rice mills increasingly buying direct from farmers, cutting out middlemen. In India the spread of modern cool storage facilities is giving consumers year-round access to potatoes, and delivering substantial price advantages to farmers.
More isolated rural areas have seen an increase in jobs and incomes from new links with commercial urban centers, and better infrastructure, technologies and policies. At present the benefits are not always shared equally, however, with large and medium-sized farmers typically getting the lion's share of subsidies and marginal farmers largely missing out.
The study notes that the cost of energy, labor and farm inputs like fertilizer and seeds remain substantial, and can quickly translate into higher retail food prices. In Delhi and Dhaka, power accounts for about 75% of cold storage operational costs, leaving potato prices vulnerable to energy price shifts.
Value chain transformation is crucial for ensuring that food prices in Asia's cities - home to half the region's people - remain affordable, and the study calls for regional food security to be placed front and center in the 21st century policy agenda.
"The changes in food demand, driven by urbanization and increasing incomes of consumers, are creating important opportunities for agricultural development and rural poverty reduction in Asia," said Bart Minten, one of the authors of the study and Senior Research Fellow at IFPRI.
There is no "silver bullet" to address the challenges facing staples value changes, meaning a variety of policy and program measures will be required to stimulate the efficiency of staples markets. Given Asia's widely different zones, no "one size fits all" approach will work, requiring tailored solutions. Improving post-harvest productivity in areas such as processing, storage and distribution, and directing government subsidies and support to the neediest farmers and regions are central to more efficient supply chains, which ultimately affect prices, the study says.