Cambodia, Laos, and Burma can become more efficient rice producers by improving their transport and marketing networks and enhancing research, the Asian Development Bank said in a report Thursday aimed at boosting rice production and stabilizing prices of the region’s staple food.
The report was released as Laos became the latest signatory to a regional rice cooperative that would strengthen members’ bargaining power in the international market.
The three Southeast Asian countries have an abundance of natural resources, but require more effective means of leveraging them to increase their annual rice outputs, the Philippines-based ADB said.
They “have good production potential, given the availability of land and water resources, but require investments in transportation and market infrastructure, research and development for producing more with efficient use of natural resources, and improvements in production and milling quality,” the report said.
Cambodia, Laos, and Burma are all net rice exporters, but the ADB said that more could be done to increase their output.
According to the United Nations Food and Agriculture Organization (FAO), more than 85 percent of rice production in Cambodia is dependent on annual rains, and recurrent drought and floods in the nation have led to reduced yields.
The country also lacks a proper milling infrastructure, forcing farmers to simply export their harvest at cheap prices or have their rice milled in neighboring Thailand and then buying it back for domestic consumption at a much higher cost.
In addition, Cambodia lacks storage facilities and irrigation systems. Only 15 percent of rice fields use irrigation, while these irrigated fields account for 40 percent of the country’s rice production.
The ADB said that rice contributed 25 percent of Cambodia’s agricultural gross domestic product in 2006, but the country's rice yield by percentage is currently the lowest in comparison with other major rice-producing countries—even below that of impoverished neighbors Laos and Burma.
While Burma has recently made strides to improve its milling infrastructure, the country’s rice production is also highly susceptible to changing weather conditions.
In 2011, heavy rain caused much damage to rice production in the country, with production possibly having fallen by 1.7 million tons, the Myanmar Rice Producers’ Association said in March.
The country consumed about 15 million tons and exported 800,000 tons the previous year, the group said.
Laos produced 3.09 million tons of rice in 2011, according to the United States Department of Agriculture (USDA).
But the agency said that Laos faces considerable constraints for future rice production, including limited arable land suitable for rice cultivation, a vastly underdeveloped irrigation capacity, and extreme underfunding for agricultural crop extension programs.
The USDA also cited inadequate funding for scientific agricultural research and seed production, stagnating rice yield growth rates, and increasing pressure on highland agricultural lands as obstacles to the country’s production growth.
Rice cartel
One of the ways the three countries hope to mitigate some of the impediments to their annual rice output levels is by forming a cooperative to help provide them with leverage on the international rice market.
The Association of Southeast Asian Nations (ASEAN) is currently drafting a proposal for the cooperative plan, which would also serve to protect producers from extremely fluctuating prices.
On Wednesday, Laos became the latest country to agree to join the cooperative—along with fellow ASEAN members Thailand, Cambodia, Burma, and Vietnam—during talks with Thailand on the sidelines of the ASEAN Economic Ministers’ Meeting being held in Siem Reap, Cambodia.
ASEAN is also comprised of Brunei, Indonesia, Malaysia, the Philippines, and Singapore—nations which import the majority of their rice.
The plan is expected to be announced during the ASEAN Summit in the Cambodian capital Phnom Penh in November.
According to the plan, Thailand would assist the Lao rice industry by helping the country develop its farms, harvesting techniques, and milling.
Laos would also provide maize to Thailand, which would be purchased at market price and distributed to farmers as feed for livestock to reduce feed-meal costs and bring down retail prices on meat.
While such a cooperative would benefit large-scale rice farmers in the world’s biggest rice exporting countries, most of which are located in Southeast Asia, the idea has been met with criticism from importing nations which say it could lead to artificially high prices set by monopoly.
Price-fixing could also lead to a drastic increase in food shortages for the populations of the same impoverished nations that are exporting rice.
The ADB said in its report that it is supportive of regional cooperation as a means by which to steady fluctuating market prices.
“To enhance resiliency and ensure that rice prices do not jump beyond the reach of the region’s poor, policymakers must think and act regionally,” said Lourdes Adriano, an official in the regional sustainable development department at ADB.
The bank also recommended measures including the trading of futures and options on existing commodities exchanges in Hong Kong, China, or Singapore based on a regional rice index and the establishment of domestic commodities exchanges by top exporters.
Removing export restrictions, it said, would make importing countries feel less of a need to insure themselves against trade disruptions and provide exporters with new markets.
The ADB said rice output among ASEAN nations is expected to grow at 1.37 percent annually, from 110.5 million tons in 2010-2011 to 128.3 million tons by 2021-2022.
Reported by Joshua Lipes.