SESSION 4.

ASEAN and SAARC Regional Trade: Status and Opportunities for Ensuring Food Security

Pramod K. Joshi and Devesh Roy

International Food Policy Research Institute (IFPRI)

Outline
1. About SAARC
Food Bank, Seed Bank, Regional trade

2. Contrast between SAARC and ASEAN

Approaches in ensuring food security cooperation

3. Existing areas of cooperation between ASEAN and SAARC 4. Potential areas for cooperation between ASEAN and SAARC countries
Food trade and food reserve

5. Way forward

1. 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 members

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 tons (about 63%)

Objectives
Act as a regional food security reserve for the SAARC Member States 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% of their total seed requirement

An illustration from Indias food reserve and food security efforts

Indian government strategy for ensuring food security (national and household)
Production
Food Security Mission Subsidy in fertilizer and irrigation MSP and assured procurement Food reserve and stocks (>80 million tons) 500 thousand fair price shops
Mahatma Gandhi National Rural Employment Guarantee Program

Availability Access Affordability

Direct Cash Transfer Subsidized food to people BPL Food Security Bill (Right to Food)

Indian food stock and prices (MSP) of rice and wheat

Trade, Agricultural Policies and Structural Changes in Indias Agrifood System

Indian rice stocks and domestic rice prices

0.5 Rice_stock (right) Price_rice (left) 350

0.45

300

250 0.4

200

0.35 150

0.3 100

0.25

50

0.2 2000 2002 2004 2006 2008 2010 2012

Trade, Agricultural Policies and Structural Changes in Indias Agrifood System

100.000 tonnes

US$/kg

Indian wheat stocks and domestic prices

0.4 Wheat_stock (right) Price_wheat (left) 550 500

0.35

450

400

350 0.3 300

250 0.25 200

150 0.2

100

50

0.15 2000 2002 2004 2006 2008 2010 2012

Trade, Agricultural Policies and Structural Changes in Indias Agrifood System

100.000 tonnes

US$/kg

Pressure on stocks through prices

Export ban on rice and wheat

Wheat: February 2007 to September 2011 Rice: September 2007 to September 2011 Few states give bonus above MSPs

Pressure from farmers to increase MSP

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
Trade, Agricultural Policies and Structural Changes in Indias Agrifood System

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 contd
Sensitive list
Commodities/items are not included for tariff concessions

SAFTA internal trade increased

USD 69,000 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% 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

2. Compare and contrast SAARC and ASEAN

Per capita supply of food grain and protein

Food grain availability (kg/capita/year)
175 170 165 160 155 150 145 140 1990 SAARC 2009 ASEAN 151 167 161 173 40 35 30 25 20 15 10 5 0

Protein availability (g/capita/day)

40 38.7 33.4 29.2

1990 SAARC

2009 ASEAN

Rice production in Asian regions

Region
East Asia Southeast Asia

Production (mt)
1970 137.4 63.5 2011 219.9 206.8

Share (%)
1970 43.4 20.0 2011 30.4 28.6

South Asia
Asia

87.7
290.1

221.6
653.2

27.7
91.7

30.6
90.4

World

316.3

722.8

100.0 100.0

Agriculture trade by SAARC and ASEAN countries (Constant US Billion $)

SAARC countries
35 30 25 32 33

ASEAN countries
120 100 80 60
61 104

20
15 10 5 0 5.6 8.3 6.8

10.7

40 20 0
25.1 17.3 19.3 10.8

Export
1990 2000

Import
2010

Export
1990 2000

Import
2010

SAARC and ASEAN in world agriculture trade

Export (% of world)
Year SAARC countries ASEAN countries India in South Asia

Import (% of world)
1990 1.94 2010 3.02

1990 1.73

2010 2.97

5.53
55.0

9.64
62.0

3.07
16.0

5.49
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) Indias E/I ratio was 2.83 in 1990 and fallen to 1.92 in 2010 Trade surplus (+ USD 9.52 billion)

Imports of rice by Asian regions (mt)

Region East Asia Southeast Asia South Asia Asia Africa Europe 1990 0.53 1.27 (10%) 0.63 (5%) 4.85 (40%) 3.15 2.25 2011 1.98 4.47 (14%)
(2% of production)

0.98 (3%)
(<1% of production)

14.01 (45%) 9.02 3.41

Oceania
World

0.25
12.27

0.56
31.19 (4% of
production)

Major rice-importing countries

East Asian countries
China, Japan, Republic of Koreas

Southeast Asian countries

Philippines, Indonesia, Malaysia, Singapore

South Asian counties

Bangladesh (to some extent: Nepal, Bhutan & Sri Lanka)

Exports of rice by Asian regions (mt)

Region East Asia Southeast Asia South Asia Asia Africa Americas Europe Oceania World 1990 0.47 5.86 (47%) 1.25 (10%) 7.77 (62%) 0.10 3.04 1.12 0.43 12.46 2010 0.67 16.05 (49%)
(8% of production)

6.42 (20%)
(3% of production)

23.83 (72.7%) 1.05 5.77 2.06 0.06 32.77

Major rice-exporting countries

East Asian countries
China

Southeast Asian countries

Thailand and Vietnam

South Asian counties

Pakistan and India

Important export commodities from ASEAN and import commodities from SAARC countries
Exporter

Importer

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

Bhutan Rice; raw sugar; soybean oil; barley beer; skimmed milk Bangladesh Palm oil; raw sugar; wheat; cotton; soybean oil India Palm oil; soybean oil; dry beans; rubber; cashew nuts Nepal Palm oil; soybean oil; arecanuts; rice; soybean cake Pakistan Palm oil; refined sugar; cotton lint; rapeseeds; tea Sri Lanka Palm oil; sugar; wheat; milk; lentil

Important import commodities by ASEAN and export commodities by SAARC countries

Importer Exporter

Indonesia Soybean cake; cotton lint; rice; wheat; soybean; raw sugar Malaysia Palm oil; rubber; cocoa bean; rubber natural dry; sugar Philippines Rice; soybean cake; wheat; food pre nes; skimmed milk; refined sugar Thailand Soybean cake; soybean; cotton lint; wheat; food prep nes Viet Nam Pasrty; chicken meat; cigarettes; beverages (dist alc)

Bhutan Oranges; cardamom; potatoes; apples; fruit juices nes; mushrooms Bangladesh Cotton lint; jute; tobacco; nuts; fresh vegetables; sesame seeds India Soybean cake; cotton lint; rice; sugar; buffalo meat; tobacco; tea Nepal Lentil; tea; cardamom; beverages (non alc); nuts; ginger Pakistan Cotton lint; rice; tangerines; oil hydrogenated; cattle meat; potatoes Sri Lanka Tea; rubber; wheat flour; cinnamon; coconut; food wastes; food prep nes; pepper

Exports of rice by India to SAARC and ASEAN countries (000 tons)

2500 2000

1500 1000 500 0 -500

SAARC

ASEAN

Imports of rice by ASEAN countries within the region (000 tons)

3500 3000

2500
2000

1500
1000

500
0

-500

Indonesia

Malaysia

Philippines

Singapore

3. 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

4. Potential areas of cooperation between SAARC and ASEAN

Important areas for cooperation

Research & Education

Knowledge Platform

Agricultural Trade

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 and soybean cake 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

5. Way forward

Way forward
Rice+: include livestock and horticulture Develop common agriculture policy to prepare for post AEC 2015 Learn 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

For information, contact:

Pramod K. Joshi or Devesh Roy

p.joshi@cgiar.org d.roy@cgiar.org