MANILA, PHILIPPINES – Asia’s economies coped fairly well with the food crisis of 2007–2012, but stagnating agricultural productivity and increasingly extreme weather are putting the region at great risk of sustained higher level food prices, says a report on food security in Asia.
Upward pressure on basic food grain food prices is easing and, though they are higher than before the crisis, there are indications that prices will stabilize in the coming years. But these are not grounds for complacency, warns the Asian Development Bank’s Independent Evaluation Department.
Its study, Food Security Challenges in Asia, takes stock of the vulnerabilities that caused the crisis and their implications. It identifies two major threats to food security: the long slowing in Asian wheat and rice productivity growth due to falling investment in agriculture, and the effects of climate change.
“Further high volatility in food prices is likely unless there is a significant response from governments, development institutions and the private sector to markedly increase agricultural productivity across Asia,” says Independent Evaluation’s director-general Vinod Thomas.
“But climate change may well prove to be the biggest threat to food security in the next 10 to 20 years; indeed, it’s already having measurable adverse impacts in Asia,” says Thomas.
After decades of declining real prices of basic food commodities, international prices of rice, wheat and corn accelerated sharply from 2006. Prices spiked twice: first, in 2008, led mainly by rice; then corn and wheat prices peaked again in mid-2012 before moderating. Rice prices moved higher up to late 2012, but have gradually declined by about 10% since early 2013.
"Over the last century, price spikes have occurred roughly every 30 years,” say the study’s task manager Andrew Brubaker and consultant Fred Roche. “What is changing are the much tighter links between food, energy and financial markets. Fuel and fertilizer costs are ‘driving’ food prices more than ever and speculative investment on commodity markets is an increasing source of potential price volatility."
The study stresses that for all major food crops there is potential with existing technology to raise productivity in land and water use where the yield gap remains large. Farmers in much of Asia are still rarely able to achieve more than 80% of potential yields due, among other things, to pests, droughts, and economic constraints, such as low prices for certain basic crops.
Yet, public spending on agricultural research has plateaued, and while international funding for agriculture has grown, a concern is whether it will reach an adequate level and be sustained.
“Asia faces a witch’s brew of supply and demand factors in food security,” says Brubaker. “On the supply side are overexploited natural resources, including growing water scarcity, and the increasingly tangible impacts of climate change. On the demand side, Asia is becoming more urban and prosperous, which bring more diversified food requirements.”
Sustained investment is needed in agriculture to adapt to the effects of climate change. “This is a pressing issue for today, not a distant threat, and needs to be addressed as part of a country’s overall climate strategy integrating adaptation and mitigation,” says Brubaker.
Evidence from research, ranging from studies conducted in large geographical areas to the household level, compellingly argues that climate change affects agriculture in a wide range of economies, crops and farming systems over and above the dramatic effects of floods and droughts.
“It is becoming increasingly evident that measures to adapt to climate change—first and foremost through adaptation of farming systems and rural communities—will be fundamental to long-run efforts to ensure food security at both the national and household levels,” says the study.
Volatile food prices not only threaten Asia’s dramatic progress in reducing poverty, but add impetus to concerns over rising inequality in the region at a time when achieving inclusive growth has become a cornerstone of national development plans in many emerging countries.
Despite rapid economic growth, Asia remains home to 67% of the world’s hungry, some 552 million people, and more than 900 million who subsist on less than $1.25 a day.
Says Thomas, “This raises the question of whether government food policies need rethinking in a less secure world facing the dilemma of high food prices hurting consumers in the short run, but low prices not providing an incentive for farmers to increase productivity.”
“At the end of the day, while recognizing the merits of open trade at the global level, the study recommends getting country policy choices right. These include incentives for raising productivity, safety nets for the poor, and predictable trade policies to ensure food security.”
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To download the study, visit: http://www.adb.org/documents/food-security-challenges-asia and click on the PDF.
About Independent Evaluation at the Asian Development Bank
Asian Development Bank's Independent Evaluation, reporting to the Board of Directors through the Development Effectiveness Committee, contributes to development effectiveness by providing feedback on ADB's policies, strategies, operations, and special concerns in Asia and the Pacific.