ASEAN and SAARC Regional Trade- PK Joshi

ASEAN and SAARC Regional Trade:

Status and opportunities for ensuring food security

P K JoshiInternational Food Policy Research Institute

South Asia Regional OfficePusa, New Delhi India

E-mail: [email protected]; Web: www.ifpri.org

Outline• About SAARC

– Food Bank, Seed Bank, Regional trade

• 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 SAARCFood 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 shopsAvailability

• Mahatma Gandhi National Rural Employment Guarantee Program

• Direct Cash TransferAccess

• 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


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.

000

tonn

es

US

$/kg


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

$/kg

100.

000

tonn

es


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)

1990 2009140

145

150

155

160

165

170

175167

161

151

173

SAARC ASEAN

Protein availability (g/capita/day)

1990 20090

510152025303540

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

Export Import0

5

10

15

20

25

30

35

5.6 6.88.310.7

32 33

1990 2000 2010

ASEAN countries

Export Import0

20

40

60

80

100

120

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 1.98Southeast 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 2010East Asia 0.47 0.67Southeast 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 1.05Americas 3.04 5.77Europe 1.12 2.06Oceania 0.43 0.06World 12.46 32.77

Major 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• 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; 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• 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)

Exporter• 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

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

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0

500

1000

1500

2000

2500

SAARC ASEAN

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

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

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 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

V

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

Thank you

For information, contact:Pramod K. Joshi [email protected]

ASEAN and SAARC Regional Trade- PK Joshi

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