Dr. Randy Barker Consultant and Acting Head, Social Sciences Division International Rice Research Institute (IRRI)

Transcription

1 Dr. Randy Barker Consultant and Acting Head, Social Sciences Division International Rice Research Institute (IRRI) Thursday Seminar presented at IRRI, 24 April 2008

2 The 1960s and 70s. Why are world rice prices rising? A look at the future.

3 Cold war politics Concerns about Asian food security Shortfall in grain production in the 1960s-70s Release of IR8 in 1966 (click for background story) IRRI celebrates10th anniversary in May 1972

4 Prophecy No. 1 Much if not most of the rice production increase that has occurred in the last 6 years should be credited to favorable weather along with a 1% annual increase in crop area. J. Norman Efferson Dean, Louisana State University

5 1972= Philippines 150 Thailand 120 India

6 Rice price at 1980 US$ Price (US$/t) Urea price at 1980 US$ Source of raw data: World Bank Year

7 Monday, 2 July 1973 Rice is life itself in Southeast Asia, and this year, there is not enough to go around. Last year s bad weather has turned the region s usual bare sufficiency into severe shortage. The result: smuggling, hoarding, soaring prices and hungry people.

8 Philippine Daily Express FAO warns of food shortage The director general of the United Nations Food and Agriculture Organization (FAO) said Monday the world is eating more grain than it is growing and he warned there is a danger of a world-wide food shortage.. The director general of the FAO said Monday the world is eating more grain than it is growing and he warned there is a danger of a world-wide food shortage. Philippine Daily Express, June 13, 1973

9 Rice, corn hoarders get new warning President Marcos ordered the military yesterday to arrest unscrupulous rice and corn hoarders, price manipulators, and profiteers, and the sealing of their bodegas. Philippine Daily Express, 2 June 1973

10

11 Production of unmilled rice (million MT) World Production Real price Real price of milled rice (2008) US$/ton) Year Source: Production: USDA, 14April2008 Rice Price: 2008 is average of Jan-March Relate to Thai rice 5%-broken deflated by G-5 MUV Index deflator (adjusted based on February 27, 2008 data update) Source:

12 Prophecy No. 2 If the high food prices in the 1960s-70s accelerated investments in food production, which resulted to food surplus and low commodity prices in the 1980s, then the deceleration of investments since the late 1970s is a pre-condition for food shortage in the future. Hayami et al.

13

14 Supply - demand imbalance Price of other commodities Behavior of importers and exporters, traders, consumers, farmers -- speculation

15 Supply-Demand Imbalance in the World % growth rate Production Consumption Difference Sources of basic data: FAO, WRS

16 US$/t (fob) Jan-90 Nov-90 Sep-91 Jul-92 May-93 Source of raw data: The Pinksheet, World Bank Mar-94 Jan-95 Nov-95 Sep-96 Jul-97 May-98 Mar-99 Jan-00 Nov-00 Sep-01 Jul-02 May-03 Mar-04 Jan-05 Nov-05 Sep-06 Sep-07

17 Rice stock (million tons) 140 Major countries China India Source of raw data: PSD Online ( USDA, 2008

18 Lack of investment in R&D and rural infrastructure, plateauing of yields Rise in energy prices cost-price squeeze Pressure on resources land, labor, water, diversification, agricultural transformation Climate short term, global warming

19 10 8 Growth (%/yr) Asia Latin America SS Africa Developed D. Byerlee et al., Dobermann, 2008

20 Legend: Vertical bar represents area Horizontal line represents yield Yield (t/ha) China Asia India ASIA: Rice area (million h / / / / / / / / / Source of basic data: USDA,

21 Country Asia China India Indonesia Bangladesh Vietnam Thailand Myanmar Philippines Brazil Japan Source of raw data: USDA 2008, PSD online Production (000 tons) , , ,584 54,656 43,083 34,812 27,753 18,586 15,541 11,654 10,977 Yield growth rate (%/year)

22 Global growth in population, consumption Regional growth in consumption compared to production Africa and the Middle East Price of other food crops wheat, maize commodities in general

23 7, ,000 5, MT 4,000 3,000 2,000 1,000 - South Asia Southeast Asia East Asia Sub-Saharan Africa Middle East Latin America Europe Other America Source of basic data: USDA: TY Imports, Last accessed 14 April 2008

24 Growth in consumption outpaces growth in production in Africa and the Middle East Consumption Production Source of basic data: USDA, c

25 Supply - demand imbalance Price of other commodities Behavior of importers and exporters, traders, consumers, farmers -- speculation

26 Sharp increase in commodity Prices Rice Soya Wheat Corn 31% 74% 87% 130% Source: Bloomberg, except rice: FAO/Jackson Son & Co.

27 US$/t 700 Monthly world price of commodities, Sep 2005 to Mar Rice, Thailand, 5% Wheat, US, HRW 100 Maize 0 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Source of raw data: The Pinksheet, World Bank

28 500 Index ( =100) Urea Petroleum, spot Ave. crude price Thai, 5% Month Source: Pinksheet, The World Bank, various issues

29 Supply - demand imbalance Price of other commodities Behavior of importers and exporters, traders, consumers, farmers -- speculation

30 Behavior of importers and exporters, traders, consumers, farmers IMPORTERS domestic price stabilization Ex: Philippines EXPORTERS restriction in exports Ex: India and Vietnam

31 Regular Milled Thai 5% Philippines Urea Paddy Farm Wholesale Retail Broken P/50kg P/kg P/kg P/kg US$/kg Jan Mar-08 1, % increase 17% 24% 24% 21% 104% Source: BAS, IMF

32 Was the rise inevitable? What are the prospects for increasing productivity? What will be the response to higher prices? By the farmers, the private sector, the government, IRRI? Will the prices remain high and if so for how long?

33 Prophecy No. 3 Will rice prices remain high in the next 5 to 10 years? Most, if not ALL, forecasts say YES But the science of forecasting is not much better than fortune-telling -There may be several years of bumper crops - World Band forecasts have always been wrong -There may be new technology for energy production and rice production.only God knows Nipon Poapongsakorn 19 February 2008

34 In the short run, world rice prices will remain high due to speculation & food security concerns In the intermediate to long run, rice prices will be determined by -- technological advances in rice production & investments in infrastructure leading to an increase in rice productivity. technological advances in energy

35

36 IRRI s 9-point action plan for grain crisis Many reasons have been cited for the ongoing food grain crisis: -consumption overtaking production, -lower annual yield growth, -lack of land resources to raise acreage, -reduced public investment in agricultural research and development, -increase in population, adverse weather, pests, diseases etc.. Source : IRRI (International Rice Research Institute) Background Paper: The rice crisis: What needs to be done? Los Baños (Philippines,

37 What are the solutions? According to International Rice Research Institute, Manila, in the near term, urgent actions from national governments and international agencies are needed on two fronts: -rapidly exploiting existing technological opportunities for increasing rice yields -and policy reforms to improve poor people s food entitlements. Rice production can be revitalized, but there are no silver bullets.

38 IRRI s 9-point action plan for grain crisis 1. Bring about an agronomic revolution in Asian rice production to reduce existing yield gaps 2. Accelerate the delivery of new postharvest technologies to reduce losses 3. Accelerate the introduction and adoption of higher yielding rice varieties 4. Strengthen and upgrade the rice breeding and research pipelines 5. Accelerate research on the world s thousands of rice varieties so scientists can tap the vast reservoir of untapped knowledge they contain

39 6. Develop a new generation of rice scientists and researchers for the public and private sectors 7. Increase public investment in agricultural infrastructure 8. Reform policy to improve the efficiency of marketing systems for both inputs and outputs 9. Strengthen food safety nets for the poor