Th4_The Changing Asian Rice Economy and its Implications for the Development of the Rice Subsector in West Africa

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3rd Africa Rice Congress …

3rd Africa Rice Congress
Theme 4: Rice policy for food security through smallholder and agribusiness development
Mini symposium 3: Socio-economic drivers of change in rice sector development
Author: Adjao et al.

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  • 1. The Changing Asian Rice Economy and its Implications for the Development of the Rice Subsector in West Africa Ramziath T. Adjao and John M. Staatz Michigan State University October 2013
  • 2. The Importance of Asia in the Global Rice Market Source: FAOSTAT
  • 3. A Thin, Segmented and Volatile World Rice Market USD/T 700 600 500 400 300 200 100 0 1986 1991 1996 2001 2006 Thai 5% broken, f.o.b. price adjusted for inflation (2005=100) Source: USDA & IMF data 2011
  • 4. The Growing Importance of Rice in West Africa 1000 T USD/ T 8000 800 7000 700 6000 600 5000 500 4000 400 3000 300 2000 200 1000 100 0 0 1985 1990 Thai 5% broken Source: FAOSTAT, USDA & IMF data 1995 2000 WA rice imports 2005 2010 WA rice production
  • 5. Structural Change and Emerging Trends in Asia • Structural change – Increased income – Urbanization • … leading to diversification of diets – Decreased per capita consumption of rice – Increased per capita consumption of fruits, vegetables and meat • … and diversification of production into higher value crops – Increasing competition between rice & other crops for water and land – Falling cereal prices relative to inputs costs – Diminishing returns to modern varieties – Declining TFP of rice
  • 6. Agricultural Trends in Asia Asia Exporters Myanmar Cambodia Traditional exporters India Thailand Vietnam Emerging economies Pakistan Importers Potential emerging low-cost exporters Low-income economies Philippines Indonesia Bangladesh China Traditional importers Low-income countries Japan Korea Emerging economies High-income countries -Rice is an “inferior good” -Rice is still a " normal good" -Rice is a “ normal good” -Rice is an “inferior good” -Improving quality of cereal exports -Improving productivity and quality of cereal exports -Increased rice imports -Increased imports of high quality rice -Increased diversification of agricultural production -Less diversification of agricultural production -Less diversification of agricultural production -Increased diversification of agricultural production
  • 7. Perspectives of the World Rice Markets Asia Current Consumption per capita (kg/year) West Africa Trend Current 80 37 Production (1000 T paddy) 650 055 13 079 Area (1000 ha) 145 543 6 365 Yield ( T/ha) 4.5 2.1 World price of rice ($/T) 576 576 Energy/input costs ($/T) 195 195 9 815 - 5 175 Net Trade (1000 T) Source: FAOSTAT, USDA & IMF data Trend
  • 8. Perspectives of the World Rice Markets Asia Current Consumption per capita (kg/year) West Africa Trend 80 Current 37 Production (1000 T paddy) 650 055 The changing structure Area (1000 ha) Yield ( T/ha) 13 079 of the rice economy in Asia suggests scope 6 365 for 145 543 greater rice production/selfsufficiency4.5 West Africa… 2.1 in World price of rice ($/T) 576 576 Energy/input costs ($/T) 195 195 9 815 - 5 175 Net Trade (1000 T) Trend
  • 9. Perspectives of the World Rice Markets Asia Current West Africa 80 Trend Trend ReductionCurrent of consumption and exports from emerging 37 Asian economies like China Production (1000 T paddy) 650 055 13 079 Area (1000 ha) 145 543 6 365 Yield ( T/ha) 4.5 2.1 World price of rice ($/T) 576 576 Energy/input costs ($/T) 195 195 9 815 - 5 175 Consumption per capita (kg/year) Net Trade (1000 T)
  • 10. Perspectives of the World Rice Markets Asia Current Consumption per capita (kg/year) 80 Production (1000 T paddy) 650 055 Area (1000 ha) 145 543 West Africa Trend Current 37 13 079 Increasing imports from low6 365 income countries like the Philippines, Indonesia and Bangladesh 2.1 Yield ( T/ha) 4.5 World price of rice ($/T) 576 576 Energy/input costs ($/T) 195 195 9 815 - 5 175 Net Trade (1000 T) Trend
  • 11. Perspectives of the World Rice Markets Asia Current Consumption per capita (kg/year) Production (1000 T paddy) Area (1000 ha) 80 West Africa Trend Current 37 650 055 Increased maritime13 079 rates freight 145 543 between Asia and WA 6 365 Yield ( T/ha) 4.5 2.1 World price of rice ($/T) 576 576 Energy/input costs ($/T) 195 195 9 815 - 5 175 Net Trade (1000 T) Trend
  • 12. Perspectives of the World Rice Markets Asia Current Consumption per capita (kg/year) Production (1000 T paddy) Area (1000 ha) West Africa Trend Current 80 37 650 055 13 079 … BUT there145 543 be important still will 6 365 competitive pressures from Asia. Yield ( T/ha) 4.5 2.1 World price of rice ($/T) 576 576 Energy/input costs ($/T) 195 195 9 815 - 5 175 Net Trade (1000 T) Trend
  • 13. Perspectives of the World Rice Markets Asia Current Consumption per capita (kg/year) 80 Production (1000 T paddy) 650 055 Area (1000 ha) 145 543 West Africa Trend Current 37 Expansion of output from 13 079 potential low-cost producers (Myanmar and 6 365 Cambodia) Yield ( T/ha) 4.5 2.1 World price of rice ($/T) 576 576 Energy/input costs ($/T) 195 195 9 815 - 5 175 Net Trade (1000 T) Trend
  • 14. Perspectives of the World Rice Markets Asia Current West Africa Trend Current Consumption per capita Decreased relative80 price of rice to input 37 (kg/year) cost likely to: Production (1000 T paddy) higher650 055 intensification 13 079 1) spur costs of 2) restrain regional trade (fuel costs) Area (1000 ha) 145 543 6 365 Yield ( T/ha) 4.5 2.1 World price of rice ($/T) 576 576 Fuel and energy costs ($/T) 195 195 9 815 - 5 175 Net Trade (1000 T) Trend
  • 15. Perspectives of the World Rice Markets Asia Current Consumption per capita (kg/year) 80 West Africa Trend Current 37 Production (1000 T paddy) Thus, Area (1000 ha) Yield ( T/ha) 13 WA650 055 just rely on 079 cannot expected future high world rice prices 145 543 6 365 BUT rather focus on improving 4.5 2.1 competitiveness World price of rice ($/T) 576 576 Energy/Input costs ($/T) 195 195 9 815 - 5 175 Net Trade (1000 T) Trend
  • 16. Implications for the Future Competitiveness of West Africa • Increasing farm-level productivity – Scope for productivity increase vary across ecologies (irrigated, lowland, and upland) – TFP vs yield – Improving lowlands would offer a favorable environment for expansion of rice production • Decreasing per-unit costs throughout the value chain – Off-farm transaction costs and transports costs in WA remain among the highest in the world – Need to increase consistent supply of paddy to medium & large scale millers by improving contractual linkages between farmers and millers • Improving product quality and market segmentation – Higher quality locally produced rice fetches a premium (up to 20%) over imported rice in some countries – Need to improve post-harvest operations by improving contractual linkages between smallholders and processors as well as wholesaling functions
  • 17. THANK YOU !!! MERCI !!!