Rice trade between ASEAN- SAARC - P K Joshi and Devesh Roy June 2013


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Rice trade between ASEAN- SAARC - P K Joshi and Devesh Roy June 2013

  1. 1. SESSION 4.2ASEAN and SAARC:towards regional trade exchangePramod K. Joshi and Devesh RoyInternational Food Policy Research Institute (IFPRI)
  2. 2. Outline• About SAARC– Food trade, food reserve and food security issues• Contrast between SAARC and ASEAN– Approaches in ensuring food security cooperation• Existing areas of cooperation between ASEANand SAARC• Potential areas for cooperation between ASEANand SAARC countries– Food trade and food reserve• Way forward
  3. 3. IAbout SAARCFood reserve and trade
  4. 4. 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 andcultural 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
  5. 5. 1. SAARC Food Bank• Reserve food grain to be maintained by member countriesof 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 MemberCountries during food shortages and emergencies– Provide regional support to national food security efforts– Foster inter-country partnerships to solve regional food shortagesthrough collective action• Withdrawal procedure and replacement
  6. 6. 2. SAARC Seed Bank• Agreement signed in 2011 for establishing SAARC SeedBank in Sri Lanka• Objectives:– Provide regional support to national seed security efforts, addressregional 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 geneticresources and share best practices, technologies and techniquesamong countries to produce quality seeds.• Each member country is expected to contribute 1 percentof their total seed requirement
  7. 7. An Illustration from Indian food reserve andfood security efforts
  8. 8. Indian government strategy for ensuring foodsecurity (national and household)• Food Security Mission• Subsidy in fertilizer and irrigation• MSP and assured procurementProduction• Food reserve and stocks (>80 million ton)• 500 thousand fair price shopsAvailability• Mahatma Gandhi National Rural EmploymentGuarantee Program• Direct Cash TransferAccess• Subsidized food to people BPL• Food Security Bill (Right to Food)Affordability
  9. 9. Trade, Agricultural Policies and Structural Changes in India’s Agrifood SystemIndian food stock and prices (MSP) of rice and wheat
  10. 10. Trade, Agricultural Policies and Structural Changes in India’s Agrifood SystemIndian rice stocks and domestic rice prices0. 2002 2004 2006 2008 2010 2012050100150200250300350Rice_stock (right)Price_rice (left)100.000tonnesUS$/kg
  11. 11. Trade, Agricultural Policies and Structural Changes in India’s Agrifood SystemIndian wheat stocks and domestic prices0. 2002 2004 2006 2008 2010 2012050100150200250300350400450500550Wheat_stock (right)Price_wheat (left)US$/kg100.000tonnes
  12. 12. Trade, Agricultural Policies and Structural Changes in India’s Agrifood SystemPressure 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 domesticprices also went up! Assured procurement of rice and wheat Not adequate off-take of rice and wheat for PublicDistribution Program
  13. 13. 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 specialpreference to the Least Developed Countries– Benefit the people by bringing transparency and integrity amongnations• Tariff– Developing countries (India, Pakistan and Sri Lanka) bring dutiesdown to 20% by 2007 and to ‘zero’ by 2012– Least developed countries (Nepal, Bangladesh, Afghanistan andMaldives) have additional three years (2015) to reduce tariffs to ‘zero’
  14. 14. SAFTA contt….• Sensitive list– Commodities/items are not included for tariffconcessions• 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 externaltrade; intra-ASEAN trade is 25% of all external trade– India (65%) and Bangladesh (27%) are majorcontributors (92%) in intra-regional trade
  15. 15. IICompare and contrast SAARC and ASEAN
  16. 16. Per capita supply of food grain and proteinFood grain availability(kg/capita/year)1401451501551601651701751990 2009167161151173SAARC ASEANProtein availability(g/capita/day)05101520253035401990 20094029.238.733.4SAARC ASEAN
  17. 17. Rice production is Asian regionsRegion Production (m t) Share (%)1970 2011 1970 2011East Asia 137.4 219.9 43.4 30.4Southeast Asia 63.5 206.8 20.0 28.6South Asia 87.7 221.6 27.7 30.6Asia 290.1 653.2 91.7 90.4World 316.3 722.8 100.0 100.0
  18. 18. Agriculture trade by SAARC and ASEANcountries (Constant US b$)SAARC countries05101520253035Export Import5.6 6.88.310.732 331990 2000 2010ASEAN countries020406080100120Export Import17.3 10.825.1 19.3104611990 2000 2010
  19. 19. SAARC and ASEAN in world agriculture tradeExport (% of world) Import (% of world)Year 1990 2010 1990 2010SAARC countries 1.73 2.97 1.94 3.02ASEAN countries 5.53 9.64 3.07 5.49India 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)•
  20. 20. Import of rice by Asian regions (m t)Region 1990 2011East Asia 0.53 1.98Southeast 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 9.02Europe 2.25 3.41Oceania 0.25 0.56World 12.27 31.19 (4% of production
  21. 21. 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
  22. 22. Export of rice by Asian regions (m t)Region 1990 2010East Asia 0.47 0.67Southeast 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 1.05Americas 3.04 5.77Europe 1.12 2.06Oceania 0.43 0.06World 12.46 32.77
  23. 23. Major exporting countries• East Asian countries– China• Southeast Asian countries– Thailand, Vietnam• South Asian counties– Pakistan and India
  24. 24. Important export commodities from ASEAN andimport commodities from SAARC countriesExporter• Indonesia– Palm oil; rubber; palm kernel oil;cocoa beans; coffee green• Malaysia– Palm oil; rubber; oilhydrogenated; cocoa butter; palmkernel 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; pepperImporter• Bhutan– Rice; soybean oil; barley beer;skimmed milk; raw sugar• Bangladesh– Wheat; cotton; palm oil; raw sugar;soybean oil• India– Palm oil; soybean oil; dry beans;rubber; cashew nuts• Nepal– Soybean oil; palm oil; arecanuts;rice; soybean cake• Pakistan– Palm oil; cotton lint; rapeseeds;refined sugar; tea• Sri Lanka– Sugar; wheat; milk; lentil; palm oil
  25. 25. Important import commodities by ASEAN andexport commodities by SAARC countriesImporter• Indonesia– Wheat; soybean cake; cotton lint;soybean; raw sugar• Malaysia– Palm oil; rubber; cocoa bean; rubbernatural dry; sugar• Philippines– Rice; wheat; food pre nes; soybeancake; skimmed milk; refined sugar• Thailand– Soybean cake; soybean; cotton lint;wheat; food prep nes• Viet Nam– Rice; pasrty; chicken meat; cigarettes;beverages (dist alc)Exporter• Bhutan– Oranges; cardamom; potatoes; apples;fruit juices nes; mushrooms• Bangladesh– Jute; tobacco; nuts; cotton lint; freshvegetables; sesame seeds• India– Cotton lint; rice; buffalo meat; soybeancake; tobacco; tea; sugar• Nepal– Lentil; tea; cardamom; beverages (nonalc); nuts; ginger• Pakistan– Rice; cotton lint; tangerines; oilhydrogenated; cattle meat; potatoes• Sri Lanka– Tea; rubber; wheat flour; cinnamon;coconut; food wastes; food prep nes;pepper
  26. 26. Export of rice by India to SAARC and ASEANcountries (000’ tons)-50005001000150020002500SAARC ASEAN
  27. 27. Import of rice by ASEAN countries within theregion (000’ tons)-5000500100015002000250030003500Indonesia Malaysia Philippines Singapore
  28. 28. IIIExisting areas of cooperation betweenSAARC and ASEAN
  29. 29. Existing partnership• Indo-ASEAN Trade– Trade increased from US$ 30.7 b in 2006-07 to US$ 39.08 b in2007-08; 45.34 b in 2008-09 and approached to US$ 70 b in2012– India 7th largest trading partner with ASEAN and 6th largestinvestor (FDI) in ASEAN• India-ASEAN Green Fund– Promote agriculture sector and R&D– US$ 5 million for pilot projects to promote adaptation andmitigation technologies on climate change• ASEAN-India Scientist & Technology Fund– Promote science and technology in a partnership mode
  30. 30. IVPotential areas of cooperation betweenSAARC and ASEAN
  31. 31. Important areas for cooperationResearch &EducationAgriculturalTradeKnowledgePlatform
  32. 32. ASEAN-SAARC Trade• Opportunities for trade between ASEAN andSAARC countries– Palm oil; rubber, rice from ASEAN to SAARC– Rice, wheat, milk, cotton lint, soybean from SAARCto 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
  33. 33. VWay forward
  34. 34. Way forward• Need to develop common agriculture policy to prepare forpost AEC 2015• Learning 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 promotingexport• Identify commodities and assess their competitiveness forpromoting inter-regional trade in agricultural commodities– Analyze constraints in promoting trade between ASEAN and SAARCcountries• Develop networks to share knowledge and best practices– Sensitize policy makers to promote inter-regional cooperation
  35. 35. For information, contact:Pramod K. Joshi or Devesh Royp.joshi@cgiar.org; d.roy@cgiar.org