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Food market transformation and improving food security in Asia (within and across countries)

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"Food market transformation and improving food security in Asia (within and across countries)”, presented by Kevin Chen, IFPRI/Beijing at the ReSAKSS-Asia Conference, Nov 14-16, 2011, in Kathmandu, Nepal.

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Food market transformation and improving food security in Asia (within and across countries)

  1. 1. Food Market Transformation and Food Security in Asia: Emerging Trade and Value Chain Linkages with Special Reference to Dragon and Elephant Kevin Chen International Food Policy Research Institute
  2. 2. Food Security - a dinner table with 4 inter-dependent legs a) Leg 1 is “availability” from raising farm production/productivity b) Leg 2 is “access” from raising household incomes to buy food c) Leg 3 is “access” to food by raising efficiency of market supply chains to deliver food to consumers d) Leg 4 is raising “utility” of food by raising food safety/quality/nutrition Source: Reardon and Chen 2011
  3. 3. Food Security - a dinner with two important courses a) Course 1 – Rice • About 50% of consumer calories • Only about 10% of consumer spending on food • Rice/Agriculture (1980- 2008): East Asia: 19%8%; South Asia: 20%  15%; Southeast Asia: 40%  32%  Per capita rice consumption growth negative or trending negative b) Course 2 - Food-beyond- rice such as vegetables, meat, and fish • About 50% of consumer calories • About 90% of their protein & vitamins • About 92% of agriculture in East Asia, 85% in South Asia, and 68% in Southeast Asia. • About 4 times more income/ha to farmers than rice Source: Reardon and Chen 2011
  4. 4. Rapid Transformation on Asian Agri-Food Sectors: Driving Forces • Rapid economic growth • Increasing urbanization • New Technologies • Accelerated integration into the world market
  5. 5. Urban Population in ASEAN 2009-2050 Urban population(thousand) Percentage urban country 2009 2050 2009 2050 Brunei 301 573 75.2 87.2 Cambodia 2,934 10,430 19.8 43.8 Indonesia 101182 190,007 44.0 65.9 Lao PDR. 2,024 7,310 32.0 68.0 Malaysia 19,696 34,846 71.3 87.9 Myanmar 16,495 39,841 33.0 62.9 Philippines 44,784 101,371 48.7 69.4 Singapore 4,737 5,221 100.0 100.0 Thailand 22,761 43, 984 33.6 60.0 Viet Nam 26 ,204 65 ,867 29.8 59.0 China 620,480 1,037,695 46.1 73.2 Japan 84,731 81,403 66.6 80.1 Republic of Korea 39,948 40,037 82.7 90.8 Brazil 166 ,44 204,464 86.1 93.6 Source: WUP 2009
  6. 6. Extremely Rapid Urbanization • 50% in urban areas by 2011, rising fast • South Korea did in 2 decades (1970-1990) what US did in 9 decades • 75% of the ASEAN food economy in urban areas that market is growing 5-7 times faster than OECD food markets  big opportunity for income growth (thus food security from market access) for farmers
  7. 7. Rising Importance of Post-farmgate Segments of Agrifood Supply Chain • Post-farmgate have developed to become 50-80% of the formation of the food price. Yet the debate focuses mainly on farm productivity. • In Asia, wholesale/logistics, processing and food retail have VERY quickly transformed in the past 10- 20 years – the fastest in the world, in history  increases in efficiency of wholesale/logistics, processing, and retail would have as much impact on food security
  8. 8. Food Processing and Distribution • Huge investment by domestic and foreign, following FDI liberalization in 1990s/2000s. – Example: Thailand’s CP creates largest shrimp farm/processing in world in Indonesia • “Supermarket revolution” in ASEAN & China, also starting India – For just top 47 chains in China, 13 billion USD in 2001, 92 billion USD in 2009 • Rapid concentration & multi-nationalization of food processing and retail – integration of the Asian food economy
  9. 9. FDI Inflows - Asia Source: UNCTAD • In 2010, FDI inflows to South, East and South-East Asia rose 24 percent, to $300 billion • In 2010, FDI to East Asia rose to $188 billion, due to growing inflows to Hong Kong (32%) and mainland China (11%)
  10. 10. FDI Outflows - Asia • FDI outflows from South, East and South East Asia rose by 20 percent to about $230 billion in 2010, driven by increased outflows from China, Hong Kong, Malaysia, etc. • Hong Kong and China are the two largest FDI outflows sources - increased by more than $10 billion each and reached historic highs of $76 billion and $68 billion, respectively. Source: UNCTAD
  11. 11. Regional Distribution of China’s ODI (%) Year 2003 2004 2005 2006 2007 2008 2009 Asia 53 54.57 35.68 43.46 62.60 77.89 71.48 Africa 3 5.77 3.19 2.95 5.94 9.82 2.55 EU 5 3.11 4.12 3.39 5.81 1.57 5.93 Latin America 36 32.06 52.74 48.03 18.50 6.58 12.96 North America 2 2.30 2.62 1.46 4.25 0.65 2.69 Pacific 1 2.19 1.65 0.72 2.91 3.49 4.39 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: MOFCOM 2011
  12. 12. Sectoral Distribution of China’s ODI (%) Sector Year 2003 2004 2005 2006 2007 2008 2009 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Agriculture 2.850 5.250 0.859 0.874 1.025 0.307 0.606 Mining 48.295 32.743 13.663 40.349 15.328 10.416 23.604 Manufacturing 21.860 13.742 18.599 4.284 8.023 3.159 3.964 Energy 0.769 1.428 0.062 0.561 0.571 2.349 0.828
  13. 13. FDI in China and India Data source: World Bank 0 1 2 3 4 5 6 7 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 % FDI inflow (% of GDP) China India -0.2 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 % FDI outflow (% of GDP) China India
  14. 14. Food Trade • Only about 5% of the food economy of ASEAN is traded, similar or less in South Asia and China • Trade is only 10-20% as important as the modernizing food market inside ASEAN urban areas • But the fastest growth (and the future) is INTRA- ASIAN trade and competition Big opportunity, but also competition i.e. 30% of vegetables and 70% of fruit in Indonesian supermarkets from Thailand and China
  15. 15. TRADE - China and Asia Agri-food exports in China, 2010 Agri-food imports in China, 2010 Asia 60% Africa 4% Europe 18% South America 3% North America 13% Australia 2% Asia 23% Africa 2% Europe 9% South America 27% North America 30% Australia 9% other 0% Source: monthly statistical report for China's agricultural trade •Asia is the main agri-food export ing region for China; the export value amounts to $29 billion in 2010 •Asia is also one of the main agri-food importing sources; the imports value is $16 billion in 2010.
  16. 16. TRADE - China and Asia China: Top ten agri-food importing countries in 2009 Rank Partner Value [1000 USD] 1 United States of America 18,490,823 2 Brazil 10,536,133 3 Thailand 4,280,160 4 Malaysia 4,058,506 5 Argentina 3,618,632 6 Australia 3,453,585 7 Indonesia 3,412,152 8 Canada 3,055,984 9 France 1,942,384 10 New Zealand 1,773,926 China: Top ten agri-food exporting countries in 2009 Rank Partner Value [1000 USD] 1 Japan 5,366,526 2 United States of America 2,949,603 3 Viet Nam 1,892,698 4 Republic of Korea 1,822,761 5 Malaysia 1,043,889 6 Germany 1,013,488 7 Indonesia 954,919 8 Russian Federation 826,445 9 Netherlands 780,702 10 Thailand 772,803 Source: FAO
  17. 17. TRADE - India & Asia 2 4 6 8 10 12 14 16 18 20 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 % India's Merchandise trade to developing economies in East Asia & Pacific (% of total merchandise exports/imports) export import Data source: World Bank
  18. 18. TRADE - India & Asia India: Top ten agri-food importing countries in 2009 Partner Value [1000 USD] 1 Indonesia 3,752,373 2 Brazil 1,208,171 3 Malaysia 907,158 4 Myanmar 864,335 5 United States of America 756,124 6 Canada 582,098 7 Argentina 573,649 8 China 491,071 9 Ukraine 425,897 10 Australia 395,366 India: Top ten agri-food exporting countries in 2009 Partner Value [1000 USD] 1 China 1,684,585 2 United Arab Emirates 1,401,087 3 Saudi Arabia 1,044,091 4 Viet Nam 1,002,577 5 United States of America 953,821 6 Bangladesh 862,814 7 Malaysia 644,004 8 Iran (Islamic Republic of) 578,978 9 Pakistan 473,014 10 Indonesia 402,229
  19. 19. China and India: Some Facts on Food Security Source: Gulati, Chen, and Shreedhar (2010) Indicator Year China India Economic Statistics Ag, value added as % of GDP 2008 11.3 17.4 Real GDP Growth (%) 2004-08 10.8 8.5 Real GDPA Growth (%) 2004-08 5.2 3.4 Merchandise Trade as a % of GDP 2008 59.2 40.6 For-Ex Reserves (USD billion, current) 2009 2,416 265 Agricultural & Resource Statistics % Share of Arable Land to world 2007 10 11.2 Average Holding Size (ha) 2002/03 0.5 1.06 Annual Freshwater Withdrawals for Ag. (% of total) 2007 67.7 86.5 % Share of Renewable Internal Freshwater Resources flow to world 2007 6.5 2.9 Fertilizer Consumption (kg/ha of arable land) 2007 331.1 142.3 Demographic & Social Population (billions) 2008 (2030) 1.3 (1.5) 1.1 (1.6) % Share of world population 2008 19.9 17.5 International Poverty rate (<1.25 USD/day, PPP) 2004/05 15.9 41.6 % Share of World's Poor (Int.) 2004/05 15.1 33.1 National Poverty Rate 2004/05 2.8 27.5 Rural Poverty Rate (National) 2004/05 2.5 28.3 % of Stunted Children under 5 years C: 2002, I: 2006 21.8 47.9
  20. 20. GDP Growth Rates in China and India -4 -2 0 2 4 6 8 10 12 14 16 % GDP growth rate (annual %) China India World
  21. 21. Rice Yields in China & India & Share of Hybrid rice in China’s rice area Source: Gulati, Chen, and Shreedhar 2010 & Li, Xin & Yuan (2009)
  22. 22. Proportion and Number of People Living below $1.25 a day in Emerging Economies 0 20 40 60 80 100 % China India Brazil 835 million 420 million 21 million 456 million 15 million 208 million Source: Fan (2010)
  23. 23. Issue and Challenge • The future of China, India, Asia and the World economy: Fierce Competition or shared growth? • Accelerated growth in China and India may create opportunities for some and threaten others and the outcomes may differ depending on the reform on the way • Opportunity for mutual learning
  24. 24. Who will Feed the D&E in the Future? • Will the D&E able to feed themselves in 2030 or 2050 in the face of rising population, rapid urbanization and limited land and water resources? In the face of Climate change? • Will Brazil be in a position to feed the D&E? Will Africa be?
  25. 25. The approach of Indian and China is as inexorable as ever – they are intertwining with the West quietly and quickly. The rest of the world cannot avoid the changes they will bring. The only thing to do is face them, and adjust. - Robyn Meredith in 2007

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