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ASEAN and SAARC Regional Trade- PK Joshi
 

ASEAN and SAARC Regional Trade- PK Joshi

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  • From 2006 onwards stocks and prices seem to become linked (explanation in slide 9)
  • Also for wheat, from 2006 onwards stocks and prices seem to become linked (explanation in slide 9)
  • On fourth bullet:India now has very high stocks. Lack of storage (with roofs) means that many stocks are of bad quality (rotting away). TDPS system not very efficient, throughput of stocks not fast; i.e. large stocks are not distributed quickly to poorOn fifth bullet:Domestic prices are rising because of pressure from world prices but also high due to other factors of course, such as rising costs of inputs.We tested cointegration between world prices and domestic prices for rice and wheat (Johanssen test and ADF test) and this shows that the two are not cointegrated.Next slides (slides 10 and 11) illustrate last point

ASEAN and SAARC Regional Trade- PK Joshi ASEAN and SAARC Regional Trade- PK Joshi Presentation Transcript

  • ASEAN and SAARC Regional Trade: Status and opportunities for ensuring food security P K Joshi International Food Policy Research Institute South Asia Regional Office Pusa, New Delhi India E-mail: p.joshi@cgiar.org; Web: www.ifpri.org
  • Outline • About SAARC – Food Bank, Seed Bank, Regional trade • Contrast between SAARC and ASEAN – Approaches in ensuring food security cooperation • Existing areas of cooperation between ASEAN and SAARC • Potential areas for cooperation between ASEAN and SAARC countries – Food trade and food reserve • Way forward
  • I About SAARC Food reserve and trade
  • Background of SAARC • SAARC is an organization of South Asian nations, established in 1985 – Members: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka; Afghanistan joined in 2007 – Dedicated to promote economic, technological, social and cultural development, emphasizing collective self-reliance – Observers: Australia, China, European Union, Iran, Japan, Mauritius, Myanmar, Republic of Korea, and USA – China and Myanmar expressed to be full member • Three important initiatives – SAARC Food Bank, SAARC Seed Bank, and SAFTA
  • 1. SAARC Food Bank • Reserve food grain to be maintained by member countries of either rice or wheat or a combination of both – Committed reserve: 486,000 metric tons – India sharing 306,400 metric ton (about 63%) • Objectives – Act as a regional food security reserve for the SAARC Member Countries during food shortages and emergencies – Provide regional support to national food security efforts – Foster inter-country partnerships to solve regional food shortages through collective action • Withdrawal procedure and replacement
  • 2. SAARC Seed Bank • Agreement signed in 2011 for establishing SAARC Seed Bank in Sri Lanka • Objectives: – Provide regional support to national seed security efforts, address regional seed shortages through collective actions – Increase Seed Replacement Rate (SRR) – Act as a Regional Seed Security reserve for the Member States – Make available quality seeds, exchange seeds and plant genetic resources and share best practices, technologies and techniques among countries to produce quality seeds. • Each member country is expected to contribute 1 percent of their total seed requirement
  • An Illustration from Indian food reserve and food security efforts
  • Indian government strategy for ensuring food security (national and household) • Food Security Mission • Subsidy in fertilizer and irrigation • MSP and assured procurement Production • Food reserve and stocks (>80 million ton) • 500 thousand fair price shops Availability • Mahatma Gandhi National Rural Employment Guarantee Program • Direct Cash Transfer Access • Subsidized food to people BPL • Food Security Bill (Right to Food) Affordability
  • Trade, Agricultural Policies and Structural Changes in India’s Agrifood System Indian food stock and prices (MSP) of rice and wheat
  • Trade, Agricultural Policies and Structural Changes in India’s Agrifood System Indian rice stocks and domestic rice prices 0.2 0.25 0.3 0.35 0.4 0.45 0.5 2000 2002 2004 2006 2008 2010 2012 0 50 100 150 200 250 300 350 Rice_stock (right) Price_rice (left) 100.000tonnes US$/kg
  • Trade, Agricultural Policies and Structural Changes in India’s Agrifood System Indian wheat stocks and domestic prices 0.15 0.2 0.25 0.3 0.35 0.4 2000 2002 2004 2006 2008 2010 2012 0 50 100 150 200 250 300 350 400 450 500 550 Wheat_stock (right) Price_wheat (left) US$/kg 100.000tonnes
  • Trade, Agricultural Policies and Structural Changes in India’s Agrifood System Pressure on stocks through prices  Export ban on rice and wheat  Wheat: February 2007 to September 2011  Rice: September 2007 to September 2011  Pressure from farmers to increase MSP  Few states give bonus above MSPs  When MSPs increase, stocks increase, but domestic prices also went up!  Assured procurement of rice and wheat  Not adequate off-take of rice and wheat for Public Distribution Program
  • 3. South Asia Free Trade Area (SAFTA) • Trade liberalization program commenced from 1 January 2006 • Objective of SAFTA – Promote competition in the free trade area – Promote trade by reducing tariff and barriers, and give special preference to the Least Developed Countries – Benefit the people by bringing transparency and integrity among nations • Tariff – Developing countries (India, Pakistan and Sri Lanka) bring duties down to 20% by 2007 and to ‘zero’ by 2012 – Least developed countries (Nepal, Bangladesh, Afghanistan and Maldives) have additional three years (2015) to reduce tariffs to ‘zero’
  • SAFTA contt…. • Sensitive list – Commodities/items are not included for tariff concessions • SAFTA internal trade increased – USD 69 thousand in 2006 to USD 342 million in 2012; with a peak of USD 663 million in 2010 • Total trade from 2006 to 2012 was USD 2 billion – Intra-SAARC trade is mere 2 per cent of total external trade; intra-ASEAN trade is 25% of all external trade – India (65%) and Bangladesh (27%) are major contributors (92%) in intra-regional trade
  • II Compare and contrast SAARC and ASEAN
  • Per capita supply of food grain and protein Food grain availability (kg/capita/year) 140 145 150 155 160 165 170 175 1990 2009 167 161 151 173 SAARC ASEAN Protein availability (g/capita/day) 0 5 10 15 20 25 30 35 40 1990 2009 40 29.2 38.7 33.4 SAARC ASEAN
  • Rice production is Asian regions Region Production (m t) Share (%) 1970 2011 1970 2011 East Asia 137.4 219.9 43.4 30.4 Southeast Asia 63.5 206.8 20.0 28.6 South Asia 87.7 221.6 27.7 30.6 Asia 290.1 653.2 91.7 90.4 World 316.3 722.8 100.0 100.0
  • Agriculture trade by SAARC and ASEAN countries (Constant US b$) SAARC countries 0 5 10 15 20 25 30 35 Export Import 5.6 6.88.3 10.7 32 33 1990 2000 2010 ASEAN countries 0 20 40 60 80 100 120 Export Import 17.3 10.8 25.1 19.3 104 61 1990 2000 2010
  • SAARC and ASEAN in world agriculture trade Export (% of world) Import (% of world) Year 1990 2010 1990 2010 SAARC countries 1.73 2.97 1.94 3.02 ASEAN countries 5.53 9.64 3.07 5.49 India in South Asia 55.0 62.0 16.0 31.0 • Export/import ratio in SAARC countries was < 1 (0.83 in 1990 and 0.96 in 2010) • Trade deficit region (- USD 1.33 billion) • Export/import ratio of ASEAN countries was >1 (1.60 in 1990 and 1.74 in 2010) • Trade surplus region (+ USD 43 billion) • India’s E/I ratio was 2.83 in 1990 and fallen to 1.92 in 2010 • Trade surplus (+ USD 9.52 billion) •
  • Import of rice by Asian regions (m t) Region 1990 2011 East Asia 0.53 1.98 Southeast Asia 1.27 (10%) 4.47 (14%) (2% of production) South Asia 0.63 (5%) 0.98 (3%) (<1% of production) Asia 4.85 (40%) 14.01 (45%) Africa 3.15 9.02 Europe 2.25 3.41 Oceania 0.25 0.56 World 12.27 31.19 (4% of production
  • Major importing countries • East Asian countries – China, Japan, Republic of Koreas • Southeast Asian countries – Philippines, Indonesia, Malaysia, Singapore • South Asian counties – Bangladesh (to some extent by Nepal, Bhutan & Sri Lanka)
  • Export of rice by Asian regions (m t) Region 1990 2010 East Asia 0.47 0.67 Southeast Asia 5.86 (47%) 16.05 (49%) (8% of production) South Asia 1.25 (10%) 6.42 (20%) (3% of production) Asia 7.77 (62%) 23.83 (72.7%) Africa 0.10 1.05 Americas 3.04 5.77 Europe 1.12 2.06 Oceania 0.43 0.06 World 12.46 32.77
  • Major exporting countries • East Asian countries – China • Southeast Asian countries – Thailand and Vietnam • South Asian counties – Pakistan and India
  • Important export commodities from ASEAN and import commodities from SAARC countries Exporter • Indonesia – Palm oil; rubber; palm kernel oil; cocoa beans; coffee green • Malaysia – Palm oil; rubber; oil hydrogenated; cocoa butter; palm kernel oil • Philippines – Coconut oil; bananas; milk, dried; pineapple, canned; cigarettes • Thailand – Rubber; rice; chicken meat, canned; refined sugar; cassava • Viet Nam – Rice; rubber; coffee, green; cashew nut; pepper Importer • Bhutan – Rice; raw sugar; soybean oil; barley beer; skimmed milk • Bangladesh – Palm oil; raw sugar; wheat; cotton; soybean oil • India – Palm oil; soybean oil; dry beans; rubber; cashew nuts • Nepal – Palm oil; soybean oil; arecanuts; rice; soybean cake • Pakistan – Palm oil; refined sugar; cotton lint; rapeseeds; tea • Sri Lanka – Palm oil; sugar; wheat; milk; lentil
  • Important import commodities by ASEAN and export commodities by SAARC countries Importer • Indonesia – Soybean cake; cotton lint; rice; wheat; soybean; raw sugar • Malaysia – Palm oil; rubber; cocoa bean; rubber natural dry; sugar • Philippines – Rice; soybean cake; wheat; food pre nes; skimmed milk; refined sugar • Thailand – Soybean cake; soybean; cotton lint; wheat; food prep nes • Viet Nam – Pasrty; chicken meat; cigarettes; beverages (dist alc) Exporter • Bhutan – Oranges; cardamom; potatoes; apples; fruit juices nes; mushrooms • Bangladesh – Cotton lint; jute; tobacco; nuts; fresh vegetables; sesame seeds • India – Soybean cake; cotton lint; rice; sugar; buffalo meat; tobacco; tea • Nepal – Lentil; tea; cardamom; beverages (non alc); nuts; ginger • Pakistan – Cotton lint; rice; tangerines; oil hydrogenated; cattle meat; potatoes • Sri Lanka – Tea; rubber; wheat flour; cinnamon; coconut; food wastes; food prep nes; pepper
  • Export of rice by India to SAARC and ASEAN countries (000’ tons) -500 0 500 1000 1500 2000 2500 SAARC ASEAN
  • Import of rice by ASEAN countries within the region (000’ tons) -500 0 500 1000 1500 2000 2500 3000 3500 Indonesia Malaysia Philippines Singapore
  • III Existing areas of cooperation between SAARC and ASEAN
  • Existing partnership • Indo-ASEAN Trade – Trade increased from US$ 30.7 b in 2006-07 to US$ 39.08 b in 2007-08; 45.34 b in 2008-09 and approached to US$ 70 b in 2012 – India 7th largest trading partner with ASEAN and 6th largest investor (FDI) in ASEAN • India-ASEAN Green Fund – Promote agriculture sector and R&D – US$ 5 million for pilot projects to promote adaptation and mitigation technologies on climate change • ASEAN-India Scientist & Technology Fund – Promote science and technology in a partnership mode
  • IV Potential areas of cooperation between SAARC and ASEAN
  • Important areas for cooperation Research & Education Agricultural Trade Knowledge Platform
  • ASEAN-SAARC Trade • Opportunities for trade between ASEAN and SAARC countries – Palm oil; rubber, rice from ASEAN to SAARC – Rice, wheat, milk, cotton lint, soybean and soybean cake from SAARC to ASEAN • Food safety issues – Biotechnology and biosafety standards in Asia • Intra-regional trade flow – AFTA effective but not SAFTA – Trade flow within SAARC region is poor
  • V Way forward
  • Way forward • Rice+: include livestock and horticulture • Develop common agriculture policy to prepare for post AEC 2015 • Learn lessons on best practices from both the regions – ASEAN from SAARC on building SAARC food bank and seed bank – ASEAN from India on building food reserve – SAARC from ASEAN on increasing productivity and promoting export • Identify commodities and assess their competitiveness for promoting inter-regional trade in agricultural commodities – Analyze constraints in promoting trade between ASEAN and SAARC countries • Develop networks to share knowledge and best practices – Sensitize policy makers to promote inter-regional cooperation
  • Thank you For information, contact: Pramod K. Joshi p.joshi@cgiar.org