Asia should cut rice trade barriers and stabilise prices, the Asian Development Bank said Thursday, as concerns grow of a supply crunch similar to one that led to the 2008 global food crisis.
Asians, the world’s top rice consumers and producers, bore the brunt as prices of the cereal spiked in 2007-2008 due in part to export limits by producers and panic buying by big importers, the Manila-based bank said.
Their governments need to reduce export restrictions, which an ADB study found were to blame for a 149 per cent price surge four years ago, said Lourdes Adriano, an agriculture and food security expert at ADB.
“To enhance resiliency and ensure that rice prices do not jump beyond the reach of the region’s poor, policymakers must think and act regionally,” she said in a statement.
Experts blamed the last food crisis on slowing production growth at a time of rising demand, bad weather, and competition from biofuels, triggering hoarding and export restrictions.
The bank study was released after the UN’s Food and Agriculture Organisation early this month cut its global 2012 rice output forecast due to low monsoon rainfall in India, a major rice producer.
The FAO said global rice production is now expected to reach 724.5 million tonnes, 7.8 million tonnes lower than its original forecast.
While this year’s output is likely to exceed last year’s, the FAO urged countries to ensure enough stockpiles because high volatile prices are expected to remain.
Adriano said that while current rice prices were holding steady, the 10-nation Association of Southeast Asian Nations (ASEAN) needed to play a leading role in ensuring adequate supply to the world’s most populous region.
ASEAN, which produced 110.5 million tonnes of rice last year, could do this by setting up a rice price index, along with an exchange to trade the grain, she said.
This would help ease global price fluctuations while allowing farmers to cut out the middlemen and sell directly to the market at better prices, she added.
ASEAN includes the top exporters Thailand and Vietnam, with fellow members Laos, Cambodia and Myanmar seen by the study as having huge potential to expand their rice exports.
The group also includes Indonesia and the Philippines, the world’s top rice importers, along with Brunei, Malaysia, and Singapore.
Thailand and Vietnam could establish domestic commodities exchanges that would help farmers get better prices, the study said.
Rice futures and options could be traded in existing exchanges in Hong Kong, China or Singapore based on a regional price index of the most exported grades of rice, the ADB said.