rice trade between asean- saarc - p k joshi and devesh roy june 2013
TRANSCRIPT
SESSION 4.2
ASEAN and SAARC:
towards regional trade exchange
Pramod K. Joshi and Devesh Roy International Food Policy Research Institute (IFPRI)
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 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
350Rice_stock (right)
Price_rice (left)
100.0
00 t
onnes
US
$/k
g
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
550Wheat_stock (right)
Price_wheat (left)
US
$/k
g
100.0
00 t
onnes
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 6.8 8.3 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, 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; 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
Important import commodities by ASEAN and
export commodities by SAARC countries
Importer
• Indonesia
– Wheat; soybean cake; cotton lint; soybean; raw sugar
• Malaysia
– Palm oil; rubber; cocoa bean; rubber natural dry; sugar
• Philippines
– Rice; wheat; food pre nes; soybean cake; 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; fresh vegetables; sesame seeds
• India
– Cotton lint; rice; buffalo meat; soybean cake; tobacco; tea; sugar
• Nepal
– Lentil; tea; cardamom; beverages (non alc); nuts; ginger
• Pakistan
– Rice; cotton lint; 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 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
• Need to develop common agriculture policy to prepare for post 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 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
