Friday, August 31, 2012

ADB to ASEAN nations: Lower rice self-sufficiency targets to prevent global rice price hike

The Philippines and neighboring Southeast Asian nations should reduce their rice self-sufficiency targets to help avoid world rice price shocks.

According to a series of working papers from the Asian Development Bank (ADB), rice-importing countries like the Philippines -- ranked second in the world -- should lower the self-sufficiency targets in exchange for import guarantees such as exemption from export restrictions from rice-exporting nations.

"The self-sufficiency strategy raises the cost of rice security in the region," said the ADB paper titled "Enhancing ASEAN's Resiliency to Extreme Rice Price Volatility."

The paper also showed that regional trade restrictions pushed global rice prices up by 149 percent.

Lourdes Adriano, Practice Leader for Agriculture, Food Security and Rural Development in the Regional Sustainable Development Department of the ADB, said self-sufficiency is not a bad policy if the government does not misallocate funds intended for rice.

"Self-sufficiency is fine so long as the government does not misallocate funds from rice to other crop varieties. The Philippines is 85 percent self-sufficient, we're doing good in yields but don't push it to 100 percent if you can't do it in a short time," Adriano told reporters.

The Philippines is eyeing 100 percent self-sufficiency in rice by 2013, but Adriano said "it is not feasible."

She said if a country achieves self-sufficiency, there is an external cost that makes the global market thinner and prices are likely to be more volatile.

She cited as example the 2007-2008 rice price spike that was triggered by export restrictions and panic buying by importers.

The Philippines and Indonesia are projected to remain as the top rice net importers in the ASEAN region, both accounting for 11.6 percent of global rice import volume.

Despite projected gains in rice output, the paper said the Philippines is expected to remain a rice importer as the population continues to grow.

About 20 percent of domestic rice consumption in the country is sourced from imports, the paper said.-Black Pearl (August 30, 3012 3:00PM)

No comments: