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Follow-up to the Guidelines for National and International Action on Rice

2001-2003

Joint Meeting of the 30th Session of the IGG on Grains and the 41st

Session of the IGG on Rice

Rome 10-11 February 2004

CCP: GR-RI 04/CRS.4

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2

What are the Guidelines?

… a voluntary code of action to:

• Achieve a balance between production consumption and trade in rice

• Prevent distortions and restrictions on world

markets

• Foster the development of the rice sector in developing countries through multilateral cooperation

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Review of Rice policies2001-2003

IGG Documents

• CCP: GR-RI 04/3-Supp.1: Legal text of the Guidelines and Statistical annexes

• CCP: GR-RI 04/3: Synopsis of major policy developments and recommendations for special consideration by the IGG

Food Policy Review - 2002

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Context to policies

• Launching of a new Round of MTN

• International rice prices still low

FAO Rice Export Price Index

50

60

70

80

90

100

110

120

130

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

1998-2000=100

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Rice Production Policies

• General production policies – by region

• Market stabilization measures and producer price support

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General Production Policies

In Asia

• Self-sufficiency objectives

• Yield enhancement through hybrid seeds and biotechnology

• Diversification out of marginal lands

• Move from quantity to quality objectives

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General Production Policies

In Africa

• Promotion of in-valley, low land production • Diffusion of Nerica varieties and of short-cycle varieties• Rehabilitation of irrigation schemes and transfer of their management to farmers

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

94 95 96 97 98 99 00 01 02 03

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Production Yields

million tonnes, paddy tonnes/ha.

est.

Egypt: Rice Production and Yields

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General Production Policies

In Latin America and the Caribbean

• Policies based on consultations with the private sector

• Limited interference from governments

• Yield enhancement through research in new rainfed and irrigated varieties

• Solving land tenure problems

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General Production Policies

In the Chinese Prov. of Taiwan, Japan, the Rep. of Korea and Malaysia

• Restructuring and consolidation of farms to improve competitiveness

• Cuts to production, principally through

land diversion programmes

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General Production Policies

In the European Union

New policy regime as of 2004/05

• 50% cut in Intervention prices • 75 000 tonnes ceiling on intervention• Much higher “decoupled” payments per

hectare• 8% reduction in rice base areas

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General Production Policies

In the United States • The 2002 Farm Act reintroduces target prices for the calculation of counter-cyclical payments

• Direct payments down but loan benefits up.

0

200

400

600

800

1000

1200

1400

1600

91/9

2

92/9

3

93/9

4

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

Direct Payments Loan Benefits Total Transfers

million US$

Unites States : Transfer to rice under Direct Payments and Loan Benefits

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Market stabilization

Support prices….

• Widely used in Asia, but very little in LAC or Africa• In general stable, but some were raised• Price support remains very high in a number of countries

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Market stabilization

• Large government procurement purchases especially in India and Thailand

'000 tonnes

0

1000

2000

3000

4000

5000

6000

7000

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Thailand: Paddy pledged under the Paddy Mortgage scheme (Main crop)

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Market stabilization

• Large releases from stocks in China

China: Rice Production and Estimated Opening Stocks

80

100

120

140

160

1994 1995 1996 1997 1998 1999 2000 2001 2002 20030

20

40

60

80

100

120

Production Opening Stocks

million tonnes million tonnes

(milled eq.)

est.

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Alternatives Instruments for Market / Prices Stabilization

• Market insurance

• Futures (India, Thailand)

• Contract between producers and millers/traders (Vietnam, Russian Fed.)

• Crop absorption schemes (Colombia, Ecuador, Peru, etc.)

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Consumption and Marketing Policies

• Retail price controls diminished

• Subsidized rice sales better targeted to the needy

• Programmes to raise consumption (Japan, the Rep. of Korea, EU)

• Liberalization of domestic marketing (India, Myanmar, China)

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Rice Trade Policies

Major developments

• New WTO members (China, Chinese Prov. of Taiwan, Cambodia, Nepal) important for rice

• Reforms of State trading enterprises

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Export Measures

• Council for Rice Trade Cooperation • Governments active in finding new

markets • Tightening of export quality standards

and minimum export prices• Relaxation of export restrictions • Growing use of subsidies by some

developing countries

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Subsidies boost exports by India

India: Rice Exports and Opening Public Stocks

0

1

2

3

4

5

6

7

1995 1996 1997 1998 1999 2000 2001 2002 2003 20040

5

10

15

20

25

Exports Opening Public Stocks

million tonnes million tonnes

f.cast

(milled eq.)

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Import measures

• New WTO members opened tariff quota

• Relaxation of import monopolies

• Ample use of tariff and non-tariff barriers

• Recourse to safeguards, anti-dumping clauses and to phytosanitary measures

• Tighter controls to halt smuggling

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Food aid shipments

0

200

400

600

800

1,000

1,200

1,400

1,600

1990

1992

1994

1996

1998

2000

2002

'000 tonnes

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Rice Reserves

• Large stock draw-downs, especially in India and China, to reduce the burden on public finances

• China largely internalized the adjustments by reducing production

• India transmitted the burden of its adjustment on world markets, by subsidizing exports

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Issues for special consideration by the Group

• Areas of progress – para 47 • Areas of concern – para 48

• Secretariat recommendations – para 49

…should governments be urged to raise production?

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THANK YOU

Concepción CalpeBasic Foodstuffs Service

Commodities and Trade DivisionEconomic and Social Department

FAO (Room D-823)Viale delle Terme di Caracalla - 00100 Rome, ItalyTel. 39-06570554136 - Fax 39-0657054495E-mail: Concepcion.Calpe@fao.org