Food crisis a wakeup call for Asian agriculture


Bangkok : When world rice prices hit $1,000 per tonne in May, more than doubling over five months, Asian governments were forced to take a serious look at their neglected agriculture sectors.

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Before the Asian economic miracle of the 1980s and ’90s, there was the green revolution of the 1960s.

Asia’s green revolution combined the introduction of high-yield seeds for staple crops such as maize, wheat and rice with massive public expenditures on rural infrastructure. Productivity soared and famine became a thing of the past.

Taxes on agriculture, mainly on exports, helped finance a shift in development strategies in the 1980s towards industry and services, building modern economies on the shoulders of the poor farmers.

Today most agricultural taxes have been dropped. Thailand ended its agriculture export taxes in 1986 and other Southeast Asian countries eventually followed. China abolished all direct taxation on agriculture in 2006 and provided $5.6 billion to subsidise farmers in 2007, according to the World Bank.

Other governments, such as Thailand’s, have started subsidising their farmers through price support schemes, notably for the country’s rice industry, a highly competitive business that has won the kingdom the position as the world’s leading rice exporter since the mid-1960s.

While subsidies are one means of assisting Asian agriculture, economists argued that they are not necessarily the best.

“Price support schemes are often preferred by politicians,” noted the World Bank in its special report on Agriculture for Development, published in November.

“The benefits from public investments in agricultural productivity, on the other hand, such as agricultural research and development and rural infrastructure, are less immediate, less visible and thus less appealing to policymakers.

International development agencies such as the World Bank, however, are partly to blame for the recent drought in public investments for boosting Asia’s agricultural productivity.

From 1983 to 2000, official development assistance for agriculture fell by 57 percent in Asia, according to United Nations figures.

In those years, national development plans focused on cutting fiscal deficits, promoting export industries and services as well as pumping money into education and health.

“Agriculture was just left behind,” said Shamika Sirimanne, an economist at the UN Economic and Social Commission for the Asia-Pacific.

Then came the so-called “food crisis” of 2008.

“The good thing that’s come out of the food crisis is that governments are rethinking agriculture,” Sirimanne said.

The crisis has proven to be more than a blimp caused by an artificial shortage on the world market. In general, food prices will be on an upward trend as long as oil prices continue to skyrocket.

Food production requires fuel for tractors and transport, and petroleum is an important ingredient for chemical fertiliser and pesticides. As long as oil prices continue to rise, so will commodity prices.

To cap food prices, experts said governments should concentrate on improving Asia’s agricultural productivity, which could increase farmers’ incomes while still satisfying consumption.

In the Philippines, the world’s largest rice importer, the government this year allocated nearly $1 billion to boost rice and food production by subsidizing fertiliser, rehabilitating irrigation systems and post-harvest facilities, and introducing new high-yielding rice varieties.

“In virtually every country, there’s a recognition that they’ve got to increase investments in agriculture,” said Robert Zeigler, director general of the Philippines-based International Rice Research Institute, which helped launch the green revolution.

One good place for governments to start is in agricultural research and development.

Public spending on agricultural research and development averaged 0.4 percent of Asia’s agriculture gross domestic product in 2000, compared with 2.36 percent in high-income countries.

More investments in rural infrastructure would also help.

In South Asia, 35 percent of the rural population lives more than two kilometres from the nearest all-weather road.

India, with two-thirds of the region’s 600 million poor, arguably has the most to gain by improving its agricultural productivity.

Partly in response to widespread criticism of the government’s inability to prevent the suicides of an estimated 150,000 debt-ridden farmers since the early 1990s, the Indian government has launched multibillion-dollar projects to boost yields in 600 districts identified as having low crop productivity and to promote investments in agriculture.

Global warming is another good reason to invest now in agricultural productivity and research and development.

The UN estimated that at the current rate of warming, Central and South Asia’s crop yields could fall by 30 percent by 2050, stressing the need for research and development on new staple crop seeds that are resistant to drought, heat and floods as well as cheap enough for the poor to buy.