asean and saarc regional trade- pk joshi
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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: p.joshi@cgiar.org; 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
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.
000
tonn
es
US
$/kg
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
$/kg
100.
000
tonn
es
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)
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 p.joshi@cgiar.org
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