Keeping Rice Price Stable in the Region

These reports conclude that despite fierce competition from leading exporters (especially India), Thailand is forecast to be the lead exporter. Vietnam is expected to cede its second position, as one of the lead rice exporters, to India.

 

According to statistics, Vietnam harvested 7.6 million hectares and produced 26.50 million tonnes of rice in 2011, with an average of 3.49 tonnes per hectare, up 0.94 percent annually. Vietnam (together with India and Pakistan) is boosting their export and stabilizing the export price to a level lower than the international average.

Lourdes Adriano, an expert and Head of the Department of Agriculture, Food Security and Rural Development under the Regional Sustainable Development Department of ADB, offered his opinion, "As of now, the rice market still retains its stability and forecast production number shows that in general the price will remain stable. This is a good signal after prolonged concerns about the corn, wheat and soybeans in the international market. In order to be more resilient and to ensure that the rice price is not too high that the poor in the region can not afford, central planners need to think and act in a regional scale."

 

The surge in rice price in 2007-2008 was partly due to export quota and continued purchase from importers. Recent published reports during the ASEAN Rice Forum, held by ASEAN Food Reservation and Security Commission, ASEAN Secretariat and ADB shows that trade limitation in the region has pushed the international rice price up 149 percent.

 

These reports propose instead that rice importing countries should reduce its self-sufficiency target in exchange for commitments from exporters, in the process avoiding the unilateral exporting issue. Importers will feel less pressure on insuring themselves against trade interruption and exporters will be able to enter new markets.

 

According ADB, assuming that the weather and macroeconomic condition remain relatively stable, rice production in ASEAN countries is expected to increase by 1.37 percent each year; from 110.5 million tonnes in 2010-2011 to 128.3 million tonnes in 2021-2022. Harvest output will be up 1.22 percent each year while harvesting areas in the region will increase by 0.15 percent to about 47 million hectares in 2022.

 

Thailand is expected to be the lead rice exporter. However, the special report noted that Thailand's commitment that farmers will receive more than the market price for their rice has discouraged the country's exporters, leading to continued loss in its GDP from exporting rice since late 2011. As of May 28, 2012, Thailand's rice export turnover decreases by 43.1 percent, equivalent to 2.86 million tonnes.

 

ADB's report warned that if India has to restore its export embargo because it liquidated its rice reserve and also because of drought, global supply of rice will quickly be tightened.

 

This will hold true if Thailand maintains the high price floor, which acts as a disguised tax on exporters. The recent hike in international rice price, especially Vietnam's broken rice, is due to the fact that Thailand's traders purchase Vietnamese rice through Thailand-Cambodia border in order to satisfy their orders. Purchasing rice through this route is still relatively cheaper compared to purchasing highly-priced rice in Thailand.

 

Cambodia, Laos and Myanmar have the potential for rice production given their available land and water resources. However, ADB reckons that these countries need to invest in transportation and market infrastructure; facilitate R&D activities to produce more while utilizing natural resources in an efficient way and improve their production and grinding techniques.

 

ASEAN also exports their rice to African countries. In 2011, Thailand and Vietnam provided more than half of Africa's imported rice turnover. Together with India and Pakistan, these four exporters account for more than four-fifth of Africa's demand for rice.

 

In the next decade, ASEAN is forecast to increase their net export by 53 percent and net import by 14 percent. Countries in the region are also expected to increase their harvesting areas by 29 percent, turnover by 25 percent and sale by 22 percent.