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FOOD RESERVES:A Comparative Study

on Food Reserve Management and Policies

in Southeast Asia

EditorsPaul S. Teng

Bernice Anne C. Darvin

The Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) is one of the 24 specialist institutions of the Southeast Asian Ministers of Education Organization (SEAMEO). Founded on 27 November 1966, SEARCA is mandated to strengthen institutional capacities in agricultural and rural development in Southeast Asia through graduate scholarship, research and development, and knowledge management. It serves the 11 SEAMEO member countries, namely, Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Timor-Leste, and Vietnam. SEARCA is hosted by the Government of the Philippines on the campus of the University of the Philippines Los Baños (UPLB) in Laguna, Philippines. It is supported by donations from SEAMEO members and associate member states, other governments, and various international donor agencies.

Suggested Citation:

Teng, P.S., and B.A.C. Darvin. 2019. Food Reserves: A Comparative Study on Food Reserve Management and Policies in Southeast Asia. SEARCA College, Los Baños, Laguna, Philippines.

Printed in the Republic of the Philippines

First Printing 2019

Philippine Copyright 2019 by SEARCA

Part of this publication may be quoted without permission by other scholarly writing and in popular writing as long as credit is given to the source. However, it may not be reproduced or transmitted in its entirety in any forms or any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system without permission in writing from SEARCA.

The opinions expressed in this publication are those of the authors and do not necessarily reflect SEARCA’s position.

This publication was peer reviewed.

Cover photo credits: Tien Ho Anh (main), https://bit.ly/2TxuARe (background)

p-ISBN: 978-971-560-259-4 e-ISBN: 978-971-560-260-0

Contents

List of Tables vList of Figures viiForeword ixContributors xiAcronyms and Abbreviations xv

IntroductionOverview of Food Reserve Management and Policies in Southeast Asia

1

Paul S. Teng, Suzette C. Simondac-Manilay, and Bernice Anne C. Darvin

Regional Level Food ReservesThe Implications of International Trade and Climate Change for Southeast Asia’s Food Security

13

Paul S. Teng and Bernice Anne C. Darvin

Regional Food Reserve Mechanism: The Case of ASEAN Plus Three Emergency Rice Reserve

25


National Level Food ReservesThailand 49Oranutda Chinnasri

Vietnam 63Nguyen Trung Kien and Vo Thi Thanh Tam

Myanmar 75Shwe Mar Than

Cambodia 83Yoeu Asikin

The Philippines 95Suzette C. Simondac-Manilay, Bernice Anne C. Darvin, Henry M. Custodio, and Bessie M. Burgos

Indonesia 121Drajat Martianto

Malaysia 133Amin Mahir Abdullah

Lao PDR 139Phoutthasone Sibounnavong

Cross-country AnalysisA Comparative Analysis of Southeast Asia’s Food Stockpiling Mechanisms

143


SynthesisFood Reserves in Southeast Asia: A Common Ground for Regional Food Security

157


List of Tables

1 Summary of food security policies in Asia and the Pacific 62 Policy responses to the global food crisis of selected ASEAN

countries8

3 Main components and limitations of the trade narratives for food security

15

4 Key milestones leading up to the establishment of APTERR, 1979–2013

27

5 Earmarked emergency rice reserves of APTERR member countries starting 2012

28

6 The three-tiered APTERR program 307 Capital contribution of APTERR members

for the endowment fund starting 201231

8 Annual contribution of APTERR members for operational costs (over the first five years of implementation)

31

9 Rice supply and demand balance (‘000 MT) in marketing year 2005–2006 (April/March), by district

35

10 Rice demand and supply estimates during selected calamities in Asia

43

11 APTERR emergency response and relief programs, 2004–2016

44

12 Thailand rice export volumes, 2007–2016 4913 Advantages and disadvantages of food stockpiling

in Thailand54

14 Existing rice banks in Thailand and type of stockpiles 5915 Targeted volumes of food commodity stockpiles in Vietnam

since 201565

16 Targeted storage capacities (in ‘000 tons) of state-owned warehouses in Vietnam

67

17 Rice buffer stock volumes Myanmar, 2011–2013 77

18 Advantages and disadvantages of food stockpiling in Myanmar

79

19 Social assistance programmes for emergency response in Cambodia

85

20 Total rice industry inventory of the Philippines, 2016 9921 NFA rice stock inventory of the Philippine, 2016 10122 Philippine import arrivals by source, 2011–2013 10523 Philippine rice import arrivals (in tons) by source,

2011–2013106

24 National and community rice stock estimates of Indonesia 12325 CBP initial stocks and utilization (in tons) of Indonesia,

2005–2015124

26 Rice self-sufficiency performance of Malaysia, 2005–2014 13427 Major legislation on food reserves in selected Southeast

Asian countries146

28 Comparison of rice marketing costs in Thailand and the Philippines, 2006

149

29 Comparison of public spending on stocks in selected countries

150

30 Priority commodities for public stockpiling in the ASEAN 15331 Cross-country comparison of food reserves in selected

Southeast Asian countries 154

List of Figures

1 Four-dimensional conceptual model of food security 22 Potential vicious cycle of rice stockpiling policies 103 ASEAN Economic Community major accomplishments

in 201519

4 The impact of disasters on agriculture sector and its wider potential consequences

21

5 The APTERR stocks releasing mechanism 296 Worst calamities in Asia by number of deaths, 1991–2015 337 Aerial view of Banda Aceh a month after the Boxing Day

tsunami hits Indonesia34

8 Aerial view of the after effects of Cyclone Nargis in Myanmar 369 Aerial view of the northeastern coast of Honshu after the

Great East Japan earthquake and tsunami39

10 Aerial view of a devastated area near the Tacloban airport in the Philippines after Typhoon Haiyan

40

11 Thailand rice production, consumption, and stock volumes, 2007–2016

51

12 Traditional rice barns in Northern Thailand 5613 Traditional rice barn in Southern Thailand

(Ngu District, Satun Province)57

14 Alternative rice storages in Thailand 5815 The first rice bank in Thailand 5916 Paddy stockpile volumes of Vietnam, 2006–2014 6517 Inter-agency food reserve management system in Vietnam 6818 Rice granaries in Quang Nam Province, Vietnam 7219 Emergency food support project of the Daw Khin Kyi

Foundation in Myanmar in 201681

20 Rice production volumes of Cambodia, 2005–2015 84

21 Food security and nutrition framework in Cambodia 8622 Main strategies and policies related to food security

and nutrition in Cambodia89

23 Traditional food stockpiles in Cambodia 9124 Monthly rice stock inventory of the Philippines, 2007–2016 9625 Annual rice stock inventory of the Philippines, 2007–2016 9726 National rice stock inventory of the Philippines by sector,

2007–201699

27 Timeline of activities for rice importation in the Philippines 10328 Monthly rice stock inventory of Philippine NFA, 2011–2013 10529 Community food stockpiling in Northern Philippines 10930 National corn stock inventory of the Philippines by sector,

2007–2016110

31 Monthly corn stock inventory of the Philippines, 2007–2016 11132 Paddy production volumes of Indonesia, 2005–2015 12233 Tribal and indigenous community stockpiles in Indonesia 13034 Paddy and rice production volumes of Malaysia, 2005–2014 13535 Historical milled rice production volumes of selected SEA

countries, 2012–2016144

36 Historical rice ending stock volumes of selected SEA countries, 2012–2016

145

Foreword

This publication draws substantially from the findings of the research project titled Food Reserves: A Comparative Study on Food Reserve Management and Policies in Southeast Asia. It is a collaborative work between the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) and the Southeast Asian University Consortium for Graduate Education in Agriculture and Natural Resources (University Consortium) under the Umbrella Program on Food and Nutrition Security for Southeast Asia.

This book provides in-depth discussions on the role that food reserves play in stabilizing food availability in the national and regional levels. It focuses on the recent developments, experiences, challenges, and opportunities about the policies, processes, and technologies that make food stockpiling a viable food security strategy in the region.

SEARCA and the University Consortium wish to express our sincerest gratitude to Dr. Paul S. Teng, Managing Director/Dean of NIE International Pte Ltd; Adjunct Senior Fellow at the Centre for Non-Traditional Security Studies, S. Rajaratnam School of International Studies, Nanyang Technological University (RSIS/NTS); and SEARCA Senior Fellow. We would also like to thank the following researchers and their respective institutions, without whom this publication would not have been possible: Dr. Yoeu Asikin of Royal University of Agriculture (RUA), Cambodia; Dr. Drajat Martianto of Institut Pertanian Bogor (IPB), Indonesia; Dr. Phoutthasone Sibounnavong of National University of Laos (NUOL), Lao PDR; Dr. Amin Mahir Abdullah of Universiti Putra Malaysia (UPM),

Malaysia; Dr. Shwe Mar Than of Yezin Agricultural University (YAU), Myanmar; Dr. Oranutda Chinnasri of Kasetsart University (KU), Thailand; and Dr. Nguyen Trung Kien and Ms. Vo Thi Thanh Tam of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), Vietnam.

We hope that the insights, policy recommendations and courses of action provided in this publication guide and encourage policymakers and other relevant stakeholders, to develop and improve policies in relation to food reserve management in Southeast Asia, and ultimately contribute to food and nutrition security in the region.

Fernando C. Sanchez, Jr. Chair, SEARCA Governing Board

Editors

Paul S. TENG is the Managing Director/Dean of NIE International Pte Ltd., Adjunct Senior Fellow of the Centre for Non-Traditional Security Studies, S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore, and SEARCA Senior Fellow. He is internationally recognized for his expertise in food security, commercialization and biosafety of crop biotechnology, agrotechnology innovations and bio-entrepreneurship, and sustainable development. He has over thirty years of experience in agri-food issues from positions in international organizations, U.S. universities and the private sector. Prof. Teng has won awards for his work such as the Eriksson Prize in Plant Pathology, an Honorary Doctor of Science (from Murdoch University, Australia) and is a Fellow of the American Phytopathological Society, and The World Academy of Sciences. He chairs the Genetic Modification Advisory Committee, Singapore and is also currently Chairman, International Service for the Acquisition of Agri-biotech Applications (ISAAA). He has published/ co-published eight books and over 200 technical papers.

Bernice Anne C. DARVIN was the Project Associate for the SEARCA research project Food Reserves: A Comparative Study on Food Reserve Management and Policies in Southeast Asia. She co-authored a technical paper for the Economy and Environment Program for Southeast Asia (EEPSEA) in 2007 and two policy papers for SEARCA published in 2016 and 2019, respectively. Her research interests include food security, environmental and natural resource management, and climate change. Ms. Darvin also served as the Project Associate for the International Fund for Agricultural Development

Contributors

(IFAD)-funded project Agricultural Transformation and Market Integration in the ASEAN Region: Responding to Food Security and Inclusiveness Concerns or ATMI-ASEAN, which is currently being implemented by SEARCA and the International Food Policy Research Institute (IFPRI). She is now a Program Specialist of the Research and Development Department of SEARCA. Concurrently, Ms. Darvin is a Master of Science in Economics student at the University of the Philippines Los Baños from where she likewise gained her bachelor’s degree in the same field. Prior to joining SEARCA, she worked for the private sector under some of the Philippines’ top companies including San Miguel Brewery Inc., Amaia Land Corporation (a subsidiary of Ayala Land, Inc.), and Filinvest Land, Inc., where she specialized in business planning and intelligence, and project development and management.

Country Authors

Amin Mahir ABDULLAH, PhDAssociate Professor, Department of Agribusiness and Bioresource Economics Faculty of Agriculture, Universiti Putra Malaysia (UPM), Malaysia

Bessie M. BURGOS, PhDFormer Program Head, Research and Development Department (RDD)Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), Philippines

Oranutda CHINNASRI, PhDAssistant Professor, Department of Sociology and AnthropologyFaculty of Social Sciences, Kasetsart University (KU), Thailand

Henry M. CUSTODIOFormer Program Specialist, RDDSEARCA, Philippines

Bernice Anne C. DARVINProgram Specialist, RDDSEARCA, Philippines

Drajat MARTIANTO, PhDVice Rector, Education and Student AffairsInstitut Pertanian Bogor (IPB), Indonesia

NGUYEN Trung Kien, PhDDirector, Commodity Markets DivisionInstitute of Policy and Strategy for Agriculture and Rural Development (IPSARD), Vietnam

Phoutthasone SIBOUNNAVONG, PhDLecturer, Department of Plant ScienceFaculty of Agriculture, National University of Laos (NUoL), Lao PDR

Suzette C. SIMONDAC-MANILAY Former Project Associate, RDDSEARCA, Philippines

Shwe Mar THAN, PhDDeputy Director, Advanced Centre for Agricultural Research and Education (ACARE), Myanmar Yezin Agricultural University (YAU), Myanmar

VO Thi Thanh TamPolicy Researcher, Commodity Markets DivisionIPSARD, Vietnam

YOEU Asikin, PhDDeputy Director, Ecosystem Services and Land Use (ECOLAND) CenterRoyal University of Agriculture (RUA), Cambodia

Acronyms and Abbreviations

ACO ASEAN Agricultural Commodity OutlookADB Asian Development BankAEC ASEAN Economic CommunityAERR ASEAN Emergency Rice ReserveAFPTC Agricultural and Farm Produce Trade CorporationAFSIS ASEAN Food Security Information SystemAFSR ASEAN Food Security ReserveAIFS ASEAN Integrated Food Security FrameworkAMAF+3 ASEAN Ministers on Agriculture and Forestry Plus ThreeAMIS Agriculture Market Information SystemAMS ASEAN Member StatesAO Administrative OrderAPTERR ASEAN Plus Three Emergency Rice ReserveASEAN Association of Southeast Asian NationsATIGA ASEAN Trade in Goods AgreementBAAC Bank of Agriculture and Agricultural CooperativesBAS Bureau of Agricultural StatisticsBERNAS Padiberas Nasional BerhadBULOG Badan Urusan LogistikCA Competent AuthorityCARD Council for Agriculture and Rural DevelopmentCAS controlled atmosphere storageCBP Cadangan Beras PemerintahCCSWA Committee on CSW AccreditationCFRS Cambodia Food Reserve SystemCSS Commercial Stocks SurveyCSW cold storage warehouseCSWCT DA -CA CSW Composite TeamCURE Consortium for Unfavorable Rice EnvironmentsDA Department of AgricultureDSWD Department of Social Welfare and DevelopmentDTI Department of Trade and IndustryEAERR East Asia Emergency Rice ReserveFAF food, agriculture, and forestry

FAO Food and Agriculture Organization of the United NationsFAOSTAT Food and Agriculture Organization Corporate Statistical

DatabaseFDI foreign direct investmentFRSMC Food Reserve System Management CommitteeFSC Food Security CommitteeFSSP Food Staples Sufficiency ProgramG2G government-to-governmentG2P government-to-privateG-33 Friends of Special ProductsGDNR General Department of National ReservesGDP Gross Domestic ProductGRBS Government Rice Buffer StockHLFT High Level Task Force on Global Food and Nutrition SecurityIRRI International Rice Research InstituteLGUs local government unitsM millionMAFF Ministry of Agriculture, Forestry and FisheriesMARD Ministry of Agriculture and Rural DevelopmentMOALI Ministry of Agriculture, Livestock and IrrigationMOC Ministry of CommerceMOF Ministry of FinanceMRIA Myanmar Rice Industry AssociationMSS Minimum Service StandardsMT metric tonsNASC National Assembly Standing CommitteeNASS National Agricultural Statistical ServiceNDRRMC National Disaster Risk Reduction and Management CouncilNFA National Food AuthorityNGA National Grain AuthorityNGOs non-government organizationsNMIS National Meat Inspection ServiceNPRA National Paddy and Rice AuthorityNTBs non-tariff barriersPCSS 1 Palay and Corn Stocks Survey 1PD Presidential DecreePDP Philippine Development PlanPIDS Philippine Institute for Development StudiesPPPs public-private partnershipsPSA Philippine Statistics AuthorityPWO Public Warehouse OrganizationR&D research and development

RA Republic ActRaskin Beras untuk Rakyat MiskinRB Republic BillRBI Rice Bowl IndexRRSC Rice Reserve Supervisory CommitteeSAMB State Agricultural Marketing BoardSPA-FS Strategic Plan of Action on Food SecuritySRA Sugar Regulatory AdministrationSRR Strategic Rice ReserveTCG Tripartite Core GroupTTI Toko Tani IndonesiaUSAID United States Agency for International DevelopmentUSDA United States Department of AgricultureWFP World Food ProgrammeWTO World Trade Organization

Food availability is an important dimension of a country’s food security. At the regional level, the latter entails a balance between food production, exports and imports. The main sources of food in most Southeast Asian

countries are called “food taps” (Teng 2013), which is comprised of self-production, imports, contract farming, stocks and reserves, and food aid. Anecdotal information shows that countries stockpile food, particularly rice, in different modalities. To maintain a supply of rice stocks for the population, most countries in Southeast Asia adopt a mix of trade instruments such as government-to-government (G2G) trade, local procurement, and procurement through the private sector. Thus, rice is a good starting point to study food reserve management and policies in Southeast Asia.

Given the potential role that stocks and reserves can play to stabilize food availability at the regional levels, it is important to research the policies, processes, and technologies, which allow this to be a viable strategy in Southeast Asia.

Food Security and its DimensionsFood security exists “when all people, at all times, have physical and economic access to sufficient, safe, and nutritious food to meet their dietary needs and food preference for an active and healthy life” (World Food Summit 1996). This definition points to the four dimensions of food security identified by the Food and Agriculture Organization of the United Nations (FAO), which are:

Introduction

Overview of Food Reserve Management and Policies in Southeast Asia

Paul S. Teng, Suzette C. Simondac-Manilay, and Bernice Anne C. Darvin

2

Food Reserves: A Comparative Study on Food Reserve Management and Policies in Southeast Asia

1. Food availability. The availability of sufficient quantities of food of appropriate quality, supplied through domestic production or imports (including food aid);

2. Food access. Access by individuals to adequate resources (entitlements) for acquiring appropriate foods for a nutritious diet, inclusive of physical and economic access;

3. Utilization. Utilization of food through adequate diet, clean water, sanitation and health care to reach a state of nutritional well-being where all physiological needs are met; and

4. Stability. Access of a population, household or individual to adequate food at all times.

In 2010, Teng and Escaler devised a four-dimensional conceptual model of food security to further elaborate on these dimensions, and this is shown in Figure 1. Teng (2013) explained that although each of the four dimensions is necessary to achieve food security in the household, they may vary in weightings depending on the setting (rural or urban), or across countries based on their

Figure 1. Four-dimensional conceptual model of food security

Source: Teng and Escaler (2010)

3

Introduction

income differences, and net food trade balances. Each dimension is influenced by a unique set of factors. Public policies, services, and interventions are needed to support countries in resolving their food security problems.

A popular mechanism being implemented as a response to food insecurity is food stockpiling. To understand the role food stockpiling plays in ensuring food security, it is important to look into the first component of the framework, which is food availability. This component deals with the supply side of food security, and is dependent on the level of food production, stock levels, food aid, and net trade (Teng and Escaler 2010). Stockpiles, being one of the determinants of food availability, can influence not only changes in the food supply, but also in the entire food security system. Thus, there is a need to give preferential attention to food reserves and stockpiling as one of the possible interventions in meeting the goal of food security.

Stocks − DefinitionsStocks are the quantities of a commodity held in storage by any of the various agents along a supply chain, from farmer to consumer, at an instant in time (Abbott 2013). Stocks are categorized based on which agents hold them, why they are held, and what purpose they ultimately serve. One key distinction that needs to be drawn is between working stocks and reserves. Working stocks, or pipeline stocks, refer to those held by agents such as a food processor, or a livestock feeder, to ensure continuous operations. Reserves, on the other hand, refer to those stored in excess of the working stocks. These stocks are often held to influence market outcomes or maintain food supplies across crop years (Abbott 2013).

Reserves can be further classified depending on their purpose. Caballero-Anthony et al. (2015), identified three types of stockpiles, which are as follows:

1. Public stockpiles. Directly owned, monitored, and administered by government via state owned enterprises;

2. Private stockpiles. Exclusively/completely owned by private enterprises but can be monitored and co-administered by private owners and the government; and

3. Household stockpiles. Directly owned by the consumer/small producer but monitored to some extent by the government.

4


Public stockpiles are further categorized into four types (Caballero-Anthony et al. 2015), to wit:

1. Emergency/humanitarian stocks. Maintained to protect access to food especially for vulnerable groups in the event of food shortage during emergencies;

2. Buffer stocks. Stocks for food security used to ensure stability in the availability and price of food;

3. Safety net stocks. Targets certain groups or beneficiaries based on defined poverty lines and are intended to improve availability and access for population who suffer from chronic food security; and

4. Stocks for trade. Those that are held by exporting countries.

Stock Estimation MethodsHaving a reliable agricultural stock information monitoring system is a prerequisite to fully understand why food crises occur and to identify the appropriate response measures. Data on stocks are crucial for analyzing market performance. This is supported by the United Nation’s High-Level Task Force on the Global Food Security Crisis (HLTF), which puts emphasis on the need for well-functioning information, monitoring, and accountability systems (HLTF 2010). It is also along this line that the Bill and Melinda Gates Foundation (BMGF) funded a project called the Agriculture Market Information System (AMIS), which aims to improve stock estimation methodology, especially in the case of developing countries.

According to Abbott (2013), there are three existing stocks estimation methods. First is through public records of government agencies or parastatal marketing boards. Second is the residual approach, which uses the food balance or the supply utilization equilibrium. Third is the use of surveys to determine national stock estimates. However, issues on stock estimation usually arise from the first and second approaches. For instance, while data from government agencies are available, they are oftentimes incomplete. As for the second approach, the problem can be explained by looking into the supply-utilization equilibrium as presented below:

Carry-in stocks + production + imports = supply = demand = food use + feed use + industrial use, + waste, losses, and seed use + exports + carry out stocks

Data on the supply side, especially those of production and imports, are usually known. While constraints in the supply utilization approach may arise in the setting of the initial stocks, the problem is mostly rooted on the

5

Introduction

unavailability of accurate data, most especially on the demand side. Most of the time, expert judgment, which could further add to inaccuracy of data, is employed to estimate these unknown demand determinants. Although stocks constitute a small fraction of supply and use, a small error either in supply or use estimation may result in relatively large errors in stocks. It is in this context that Abbott (2013) recommended the conduct of separate surveys for farm and commercial entities instead of relying on the first two approaches. Although there are still identified hindrances in the conduct of survey, such approach is seen to be the most suitable to improve data collection on stocks.

Good practice on the use of surveys can be observed in the United States through its National Agricultural Statistical Service (NASS), which conducts quarterly surveys of farmers and commercial storage agents. Almost the same procedures are being employed in Canada. In the case of developing countries, the Philippines, for the last 30 years, is the lone country in Southeast Asia that conducts monthly stocks survey for rice and corn.

Food Stockpiling PoliciesOne of the most crucial challenges faced by governments in food policy history was the 2007–2008 Food Price Crisis. Mittal (2009) identified the short-term, long-term, and unique factors that caused the escalation in prices, which eventually led to the crisis:

• Decline in growth of agricultural production;

• Decline in global grain stocks;

• Rise in production costs due to higher energy prices;

• Increase in demand from the emerging economies;

• Speculation in financial markets;

• Increase in demand for coarse grains due to biofuels production;

• Decline in investment in agricultural productivity;

• Reduced state regulatory role in agricultural production and trade;

• Removal of agricultural tariffs and resulting import surges; and

• Shift to export crops.

The impacts of these crises were catalytic to the realization of governments to rethink their existing food security policies. Policies that address high

6


or volatile food prices can be generally categorized into two, international and national. International policies can be in the form of trade agreements, possible international stockpiling arrangements, or controls on activities in futures markets. National policies, on the other hand, can take the form of food security stocks, export bans, variable export taxes or import tariffs, measures against speculation, and direct price controls (Gilbert 2011).

To avoid food insecurity, policies should be made to address both the short- and long-term issues that contribute to it (ADB 2013). A multilayered policy framework covering strategic directions aimed at immediate, short-term needs, and in preparation for medium- to long-term issues is key. Table 1 presents a summary on the priority actions needed to combat food insecurity

Table 1. Summary of food security policies in Asia and the Pacific

Actions National Regional/GlobalInterventions to Meet Immediate Needs

• Provide emergency food assistance and enhance social safety nets

• Offer programmed cash transfers

• Target interventions and nutrition

• Provide timely and reliable data and information

• Coordinate crisis policy responses

• Facilitate flows of emergency assistance

• Reduce agricultural trade restrictions and market distortions

Actions to Improve Long Term Resilience

• Promote agriculture and rural development Invest in human development

• Improve nutrition awareness

• Consider building an emergency fund for disaster relief

• Introduce insurance and disaster mitigation measures

• Establish national and regional food reserves and crisis management systems

• Promote research and development (R&D), knowledge exchange, and capacity building Improve monitoring and surveillance of food market conditions

• Promote food trade liberalization

• Consider mechanisms to promote price stability

• Enhance collaboration on climate change and accelerate adaptation measures

Source: FAO (2016)

7

Introduction

and poverty, enhance the efficiency of food market systems, promote sus-tainable agriculture, and improve risk management and community resilience.

Actions identified aim to address both short- and long-term needs, at the national and global levels. Short-term policies should be concerned not only in mitigating the immediate impact of high food prices but also in facilitating access to adequate and high-quality food. On the other hand, long-term actions should deal not only in enhancing agricultural productivity and investment but also in responding to the concerns of poverty reduction, and in the pro-motion of economic resilience as an aid towards achieving a sustainable food security system.

The establishment of national and regional food reserves and crisis management systems has been identified as one of the actions needed to improve medium- to long-term resilience (Table 1). This only affirms the significant role of food stockpiling in relation to food security. There is also a growing recognition, especially for developing countries, on the need to adopt food stockpiling strategies to attain price stabilization in domestic markets, and emergency responses. The FAO survey in 2008 revealed that 35 out of the 81 countries examined in Asia, Africa, Latin America, and the Caribbean used public stocks as a measure to reduce consumer prices (Demeke, Pangrazio, and Maetz 2008).

Another aspect to consider is the time gap between consumption and food production. As consumption must be assured daily while food production takes time, storage is essential to bridge the gap between these two. Thus, maintaining food reserves in preparation for the occurrence of natural calamities can lessen exposure to risk and uncertainty in agricultural production (Briones and Galang 2011).

Further evidences were provided by Chandra and Lontoh (2010) in support of the claim that food stockpiling is a common policy response to food crises in the Association of Southeast Asian Nations (ASEAN). In this study, the authors have presented the diverse response of ASEAN countries regarding food security. Such responses were mainly dependent whether the country in question was a net exporter or net importer of food. For instance, policy responses commonly used by net rice-exporting countries in the region include building up of rice reserves or stockpiles, and the imposition of export restrictions. While for the rice-importing countries, typical responses were the reduction of import duties, building up of extra reserves, relaxation of import restrictions, price controls through subsidies, and more importantly, the promotion of food self-sufficiency (Table 2).

8


Aside from price and supply stabilization, and for emergency response, the rationale behind developing countries’ decision to stockpile are the following (South Centre 2013):

• Building national reserves has been widely acknowledged to be a critical part of countries’ food security strategy;

• Acquiring surpluses from some regions of the country and sending them to other regions that are food deficit remains to be an important food security instrument for developing countries; and

Table 2. Policy responses to the global food crisis of selected ASEAN countries

Policy responses

ASEAN member countries*Cambodia Indonesia Malaysia Myanmar The

Philippines Singapore Thailand Vietnam

Reduce import duties X

Increase supplies using reserves X X X

Build up reserves/ stockpiles X X X X X X

Increase imports/ relax restrictions X X X X

Increase export dutiesImpose export restrictions X X

Price controls/ consumer subsidies

X X X X X

Minimum support prices X X

Minimum export pricesSubsidies to farmers X

Promote self-sufficiency X X X

Cash transfers X

Food rationing X X

Note: Cambodia, Thailand and Vietnam are considered to be net exporting countries, whereas Indonesia, Malaysia, Myanmar, the Philippines, and Singapore are net importing countries.

Source: Chandra and Lontoh (2010)

9

Introduction

• Many developing countries continue to struggle with widespread rural poverty. The governments’ programs of acquiring food stocks at administered prices support resource poor farmers’ in such a way that their incomes are stabilized and guaranteed.

Public Stockpiling in AsiaFor many millennia, public stockpiling has been a common go-to strategy for mitigating food supply instability. Hence, stockpiling and building up of reserves, particularly rice, has been a common component of food policies around the world. The establishment of such public stockpiles usually aims to mitigate several risks faced by the food insecure and vulnerable populations. These risks include: (1) global food price shocks, (2) local supply shocks, (3) income shocks, (4) disruptions in trade, and (5) emergencies and calamities (Caballero-Anthony et al. 2016).

In the occurrence of international trade uncertainties and volatilities, maintaining food stockpiles has become a familiar response. With the learnings derived from the 2007–2008 Food Price Crisis, stockpiling policy options have regained popularity in terms of guaranteeing food security, particularly for both food importing and developing countries in Asia. For Southeast Asia, rice stocks and stockpiles were mainly built by countries through the adoption of mixed trade instruments. These include G2G trade, local procurement, and procurement through the private sector, among others (Caballero-Anthony et al. 2016).

Empirical evidences show that the use of public grain stockpiling as a form of food security intervention is most effective in the short-term. This is particularly true for bridging the time needed to import food and targeting support to help ensure that food will be available for the most short term vulnerable segments in the occurrence of market shocks. In the long term, however, the use of public grain stocks needs to be incorporated into a coherent long-term strategy through the combination of trade, investments in agricultural productivity, and well-managed, targeted safety net programs (World Bank 2012).

On the regional level, food reserves are believed to have the following value-added as compared to national level stockpiles: (1) cost savings from economies of scale, (2) independent management of regional reserves that prevents governments from using reserves for political gains and ensures that vulnerable people benefit through safety nets, and (3) existence of a forum for collective agreement to avoid trade restrictions during major food crises (World Bank 2012).

However, the adoption of public stockpiling policies was seen to have spill-over effects in the international market. In the case of rice, which is a thinly-traded

10


commodity, the use of stockpiling policies is likely to result in a reduction in the available stock for exports. This reduction could potentially lead to limited supply and sustained higher prices, which endanger international market stability. Moreover, for importing countries that rely heavily on stockpiling policies, these could do more harm than good. Thus, this type of intervention must be used with caution (Caballero-Anthony et al. 2016).

There is also the concern over excess stocks off-loading in the international market, owing to sustained high levels of production or as part of periodic storage rotations. Thus, keeping up large stocks and reserves could bring about a contradicting effect, exacerbating volatilities in food supply and price rather than solving the food security problem. Figure 2 illustrates a potential vicious cycle of stockpiling policies in Southeast Asia (Caballero-Anthony et al. 2016).

Lastly, since the establishment of regional food reserves would require stock provisions and releases from multiple countries, challenges in coordination and trust issues among countries could potentially complicate implementation (World Bank 2012). Moreover, if the level of food demanded is large enough to create shocks, this could induce negative psychological effects in the world market such as perception of greater competition due to pressure on demand, “stocks race” among importing countries and information gaps owing to state secrecies (Caballero-Anthony et al. 2016).

Figure 2. Potential vicious cycle of rice stockpiling policies

Decision to stockpile

Higher demand for commodity

Increase in prices

Greater potential of market

vulnerability

Threat of not securing sufficient

stocks on time

Source: Caballero-Anthony et al. (2016)

11

References

Abbott, Philip. 2013. Improved Methodology for Estimation of Food Stocks. Accessed on March 2017. Retrieved from www.foodreserves.org/wp-content/uploads/2014/03/Abbott-Report-on-stocks-data.docx

ADB (Asian Development Bank). 2013. Food Security in Asia and the Pacific. Manila, Philippines: Asian Development Bank.

Briones, Roehlano M., and I.M.R. Galang 2011. “Food Security.” Economic Issue of the Day. Vol. XI. No. 2. Makati City, Philippines: Philippine Institute for Development Studies.

Caballero-Anthony, Mely, P.S. Teng, M. Shrestha, T. Nair, and J.A. Lassa. 2015. Public Stockpiling and Food Security. Singapore: S. Rajaratnam School of International Studies.

Caballero-Anthony, Mely, P. Teng, J. Lassa, T. Nair, and M. Shrestha. 2016. Public Stockpiling of Rice in Asia Pacific. Singapore: S. Rajaratnam School of International Studies.

Chandra, Alexander C., and L.A. Lontoh. 2010. Regional Food Security and Trade Policy in Southeast Asia: The Role of ASEAN. Canada: International Institute for Sustainable Development.

Demeke, Mulat, G. Pangrazio, and M. Maetz. 2008. Country Responses to the Food Security Crisis: Nature and Preliminary Implications of the Policies Pursued. Italy: Food and Agriculture Organization.

Gilbert, Christopher L. 2011. Food Reserves in Developing Countries: Trade Policy Options for Improved Food Security. Switzerland: International Centre for Trade and Sustainable Development.

HLTF (High Level Task Force on Global Food Security Crisis). 2010. Updated Comprehensive Framework for Action. Italy: Food and Agriculture Organization.

Mittal, Anuradha. 2009. The 2008 Food Price Crisis: Rethinking Food Security Policies. Switzerland: United Nations Conference on Trade and Development (UNCTAD).

South Centre. 2013. The WTO’s Bali Ministerial and Food Security for Developing Countries: Need for Equity and Justice in the Rules on Agricultural Subsidies. Switzerland: South Centre.

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Teng, Paul S. 2013. A Food Security Framework for Collaboration. Laguna, Philippines: Southeast Asian Regional Center for Graduate Study and Research in Agriculture.

Teng, Paul, and M. Escaler. 2010. The Case for Urban Food Security: A Singapore Perspective. Singapore: S. Rajaratnam School of International Studies, Nanyang Technological School.

World Bank. 2012. Using Public Foodgrain Stocks to Enhance Food Security. USA: The World Bank.

World Food Summit. 1996. Rome Declaration on World Food Security and World Food Summit Plan of Action. Italy: Food and Agriculture Organization.

Food Security and Trade: Nexus or Conundrum?Rice is considered as a thinly-traded commodity in the international market because the majority of its production is consumed domestically. Moreover, its prices are relatively more volatile as compared to other staple crops (Headey and Fan 2010). Yet, rice continues to be a widely traded commodity in Asia. Housing the world’s leading rice exporters and importers, Asia accounted for 74 percent of total world exports, and 39 percent of imports in 20131.

Under normal circumstances, local rice production is capable of meeting domestic demand as influenced by local prices, which are usually higher than the world prices due to import restrictions. Major rice-importing countries have the tendency to significantly increase import volumes during cases of extreme climatic situations, or when domestic production fails to cover for expected utilization requirements, or when a tightening of global rice supply is predicted. This behavior of ASEAN rice-importing countries has resulted to the bulk of the region’s exports going outside (NUS 2016).

The debate on whether trade is a threat or an opportunity for food security remains unresolved, especially for the agricultural sector. The interplay between these two is highly complex, and policy directions are not always

Regional Level Food Reserves

The Implications of International Trade and Climate Change for Southeast Asia’s Food Security


1 Data retrieved from the IRRI World Rice Statistics

14


straightforward, more often diversified. Hence, policymakers are often concerned on how international trade can either improve or hinder their country’s ability to balance their social and economic goals in relation to agriculture and food security (Clapp 2015).

Like food reserves, agricultural trade is also considered vital to food security initiatives. Although the volume of food traded in the international market is relatively small, agricultural trade continues to be a critically important growth driver for most countries, especially for those within the poorest regions of the world (Murphy 2010) and those with limited natural resources for food production (Teng and Oliveros 2015).

The relative merits of trade and food reserves have been widely debated amongst economists, under the assumption that the policies related to these two are somehow in competition with each other rather than complementary (Table 3). Those who do not believe in trade liberalization as a support strategy to food security, are inclined towards the idea of using food reserves. On the contrary, those who are persuaded by free trade arguments tend to consider food reserves as market distorting, and unnecessary public expense (Murphy 2010).

Although trade cannot be considered as an inherent threat to, nor a panacea for, improved food security and nutrition, the potential challenges and risks that come with it need to be considered in policy decision-making. Moreover, it must be noted that how trade affects food security is relatively context-specific. That is, countries differ in circumstances and development levels under which they engage in trade. Effects of trade can be measured by looking at overall economic growth, employment, incomes, government revenues, and other key factors that determine the economic and social status of the country (FAO 2015).

In Asia, the dilemma on whether to put food security before trade is a controversial and longstanding topic of discussion. This is especially so if assuring national food security is treated to mean self-sufficiency in production. For a region prone to natural calamities, and home to a huge segment of the world’s poorest, ensuring ample supply of food stocks would then seem an imperative to guarantee food security. Yet most countries in Asia are still at their developing stage, and economic growth in these nations are strongly reliant on external forces, predominantly trade. Thus, choosing between food security and trade as priority places policymakers in a very tight position. This complex, intertwined relationship between the two can be illustrated in the case of the Bali Agreement.

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Table 3. Main components and limitations of the trade narratives for food security

Narrative Main Components WeaknessesTrade as opportunity

• Reference to the classical trade theory of comparative advantage which demonstrates that efficiency gains through more open trade increase food supplies both globally and nationally, resulting in more available and more affordable food.

• Reference to trade as a “transmission belt” that helps to smooth out of food deficits and surpluses across countries.

• Reference to the ways in which trade restrictions negatively impact food security.

• The theory of comparative advantage builds on assumptions that do not hold in today’s global economy:

• Capital and labor is highly mobile between countries through global value chains, and transnational corporations are often characterized by a high degree of concentration.

• The agriculture sector is highly inflexible, and mobility of agricultural labor and capital is low.

• Externalities, including environmental impacts of specialized agriculture, are not captured in food prices.

• Competitive advantage prioritizes short-term conditions versus long-term structural transformation.

• Efficiency goals are prioritized over other social goals.

Trade as threat

• Reference to sovereignty and the right of states and communities to determine the shape of their own food systems and food security policies.

• Reference to the multiple functions associated with the agriculture sector that constitute public goods.

• Reference to the risks associated with liberalized trade in agriculture, particularly in the circumstance of uneven trade liberalization across countries.

• Self-sufficiency is not feasible for all countries.

• Protection measures may have extraterritorial impacts that can harm food security of others.

• Farmers’ right to choose also includes the option of producing/exporting cash crops.

• Challenges ensuring that small-scale agriculture produces sufficient food for all in an increasingly urbanized world.

• Distributional and nutritional issues are not well addressed.

• In the absence of external competition food prices tend to be higher, disproportionally affecting the poor.

• Supplies may be more volatile as downfalls in domestic production are not compensated by external sources.

Source: Clapp (2015)

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In December 2013, the World Trade Organization (WTO) held its 9th Ministerial Conference in Bali, Indonesia. The G-332, a coalition of developing countries, mostly from Asia, submitted a proposal that raised food security issues in relation to the current WTO regulations. Specifically, the proposal called for the WTO to allow developing countries to place acquisition of food for public stockpiles in the Green Box3, with the objective of supporting low-income or resource-poor producers, even at higher than local market prices (FAO 2014). This is in some part related to the WTO’s supposed double standard regulations, where developed countries can continue price distortions with very few limits, while leaving developing countries with too little policy space (Fritz 2014).

As a result, the Ministerial Decision on Public Stockholding for Food Security Purposes was adopted as an interim solution to the problem. The so-called peace clause states that “Members shall refrain from challenging through the WTO Dispute Settlement Mechanism, support provided for traditional staple food crops in pursuance of public stockholding programmes for food security purposes”. However, for the protection of the other non-G-33 and developed countries, conditions were also set by the WTO to control trade-distorting activities, which could affect prices and volumes on world markets, as well as threaten food security in other non-participating nations (FAO 2014).

The ASEAN is faced with two key challenges, the achievement of food security and the promotion of open trade. For ASEAN, trade is a major driver of economic growth. It is crucial to the Association’s fight to reduce poverty, and also has a huge impact on welfare improvement, and food security in the region. Additionally, with the establishment of the ASEAN Economic Community (AEC), trade is considered as a core component of the Association’s economic integration initiatives. However, the region is still struggling to create the balance between food security and trade openness. This is mainly a result of the region’s high regard for food security as a coping mechanism to international food prices volatility and climate change (Chandra and Lontoh 2010).

2 Also called “Friends of Special Products” in agriculture. Coalition of developing countries pressing for flexibility for developing countries to undertake limited market opening in agriculture (WTO definition).

3 WTO defines a Green Box as domestic support for agriculture that is allowed without limits because it does not distort trade, or at most causes minimal distortion.

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The ASEAN Economic Community (AEC) In January 2007, the ASEAN leaders agreed to establish the AEC by 2015 and to transform the region into one with free movement of goods, services, investment, skilled labor, and free flow of capital. In November 2007, the first AEC Blueprint was signed, indicating the four interrelated and mutually-reinforcing characteristics of which the AEC will be built on—(1) a single market and production base, (2) a highly competitive economic region, (3) a region of equitable economic development, and (4) a region fully integrated into the global economy (ASEAN 2008).

Under the AEC Blueprint 2015, 12 priority integration sectors were identified, which included food, agriculture, and forestry (FAF). Specifically, for the FAF, the implementation of AEC 2015 aims to (ASEAN 2008):

• Enhance intra- and extra-ASEAN trade and long-term competitiveness of ASEAN’s food, agriculture and forestry products/commodities;

• Promote cooperation, joint approaches and technology transfer among ASEAN member countries and international, regional organizations, and private sector; and

• Promote ASEAN agricultural cooperatives as a means to empower and enhance market access of agricultural products, to build a network mechanism linking agricultural cooperatives for the benefit of farmers in the region.

In line with this, Desker, Caballero-Anthony, and Teng (2014) argued that food security must be considered an integral part of the ASEAN community building agenda. Moreover, the authors suggested that food security be given more attention than what has been covered in the first AEC Blueprint. They stressed the need of the region to be infused with a new perspective on food security that is responsive to emerging global threats and challenges.

The said authors pointed out five key issues that must be addressed by the AEC in relation to food security as follows:

1. Current impediments to agricultural trade and food production

Although the AEC is expected to increase trade competitiveness and food access, concerns about the politicization of the food sector and structural shortcomings could impede agricultural free trade in 2015. Factors such as high trade costs (e.g., shipping expenses and logistics) and food safety regulations and standards will challenge intra-ASEAN agricultural trade. Furthermore, there are still several sensitive and highly sensitive agricultural commodities that may not be applicable for open markets.

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2. Standardization mechanisms and regulatory frameworks

Amid the looming threats, there is still a lot of opportunities for ASEAN food trade in the short term. The success or failure of food trade in the region will be determined by how effective their regional cooperation and national policies are. These factors will determine how ASEAN will be able to respond to the changes in the regional environment and increase the region’s competitiveness in the global market, particularly for food exports.

3. Disjunctions between regional arrangements and domestic policies

Despite the initial positive results of the intra-ASEAN food trade to move towards the AEC, the conflicting initiatives on the regional and national levels threaten its success. Trade volumes were seen to increase owing to the existence of formal and informal intra-regional production networks. Moreover, a reduction in domestic production dependency was observed for countries such as Cambodia, Lao PDR, and Myanmar because of their liberalized foreign direct investment (FDI) policies. However, the consistently high non-tariff barriers (NTBs) and the region’s failure to lower them down, remains to be a challenge.

There is a need for the current ASEAN leaders to refrain from protectionist policies that could weaken overall food availability for trade. Therefore, their decision to whether go for national food self-sufficiency or self-reliance is considered crucial to this point.

4. Public-private partnerships

The private sector’s involvement in food security initiatives can be highly beneficial to the cause. They could support smallholder farmers to have access to modern production methods and agricultural practices. This would in turn increase their yields and eventually allow them to move up the value chain and engage in farm specialization.

Additionally, engagement in research and development (R&D) activities with national and international agricultural research institutes, as well as development of new technologies can help prepare farmers for future challenges. Therefore, the private sector must be considered as an important partner in technology transfer initiatives in support of food security.

5. Crucial indicators for food security robustness

Lastly, factors such as urbanization, R&D investments, health and nutrition are considered to play a vital role in achieving food security

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robustness. A good measure of food security robustness is the Rice Bowl Index (RBI). The RBI is designed to facilitate positive productive dialogue, collaboration and action between governments, the private sector and other key stakeholders in food security (Syngenta 2012).

In 2015, a new comprehensive master plan was created, the AEC Blueprint 2025, which would serve as a guide for the continued economic integration in ASEAN from 2016 to 2025. Under this new blueprint, five characteristics were adopted: (1) a highly integrated and cohesive economy; (2) a competitive, innovative, and dynamic ASEAN; (3) enhanced connectivity and sectoral cooperation; (4) a resilient, inclusive, people-oriented, and people-centered ASEAN; and (5) a global ASEAN (ASEAN 2015).

For this blueprint, the FAF goals include ensuring food security, food safety, and better nutrition, gaining from access to global market, as well as increasing resilience to climate change. These will be done mainly through the following interventions: (1) enhancing trade facilitation and economic integration,

Figure 3. ASEAN Economic Community major accomplishments in 2015

Source: ASEAN (2016)

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(2) strengthening cooperation and capacity for sustainable production, (3) enhancing agricultural productivity, (4) increasing investment in agricultural science and technology, and (5) ensuring the involvement of agricultural producers in globalization process (ASEAN 2015).

Specific to the rice sector, the impact of the AEC on rice trade is predicted to be not that significant. However, experts believe that regional initiatives on food could build confidence in rice trading in ASEAN, which can consequently soften the ground for market integration. Moreover, establishing trade links to the top rice-exporting countries outside ASEAN, mainly India, could also enhance the impact of the AEC on the rice sector (Caballero-Anthony, Teng, and Ching 2013).

In addition to these, despite the importance of ensuring stable and affordable access to rice in Southeast Asia, experts point out that there might be a need to go beyond rice in terms of food security strategies that leverage on regional market integration such as the AEC. This rice-centric approach fails to consider other factors such as nutrition, as well as the needs of poor and vulnerable groups in the region (Caballero-Anthony, Teng, and Ching 2013).

Finally, there is also a need to consider the potential impacts of climate change. As the majority of the rice-producing areas in the region are extremely vulnerable to climatic shifts such as higher temperatures, rise in sea levels, and extreme weather events, these would put additional stress on the rice market (Caballero-Anthony, Teng, and Ching 2013).

Natural Disasters and Climate Change as Threats to Food SecurityAsia is highly susceptible to natural disasters. The frequent occurrence of these catastrophes has been a constant challenge to the region more specifically to agricultural production and consequently to food security. The impacts of natural disasters on agriculture goes way beyond production. Figure 4 maps out the wide range of potential consequences of these disasters to the sector.

The wider impact of disasters on the agriculture sector and its potential consequences can be grouped into six major categories, which are: (1) direct physical damage; (2) losses across the food value chain; (3) losses to manufacturing; (4) consequent macro-economic impact; (5) impact on livelihoods, food security, and nutrition; and (6) effect on sustainable development (FAO 2015). For this study, the discussion will only focus on categories four and five.

Agricultural livelihoods, food security, and nutrition are usually directly affected by disasters. The occurrence of these catastrophes can bring about

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Figure 4. The impact of disasters on agriculture sector and its wider potential consequences

Figure 5: The impact of disasters on the agriculture sector and its wider potential consequences

Lossesinthemanufacturingsector,particularlyfoodandnon-foodagro-industries,suchasfoodprocessingandtextiles.

Lossesinproduction(crops,livestock,fishery,forestry)Lossesinecosystemservices

Erosionoflivelihoods,increasedfoodinsecurityandmalnutrition

Direct physical damage

Deteriorationofcountry’sbalanceofpayments,and

increasedborrowing

Losses to manufacturing(agro-industries)

Damagetoagriculturalinfrastructure(irrigation,

storagefacilities,livestockshelters,fishingvessels,etc.)

Damagetosuppliersofagriculturalinputsto

financialandbusinessservicestothesector

Damagetotransportandcommunication

suchasfarmaccessroads

Damagetoforestsandothernatural

resourcesthatsupportagriculture

Losses across the food value chain(backward-forward linkages) Impact on livelihoods, food security and nutrition

Damagetoassets,suchascrops,grainreserves

andseedstocks,livestockmortality,etc.

Lossestosuppliersofinputs,andlowersales/supplyofagricultural

inputs(seedsfertilizers,feed,tools,etc.)

Disruptionoffinancialandbusinessservicestoagriculture(credit,

farmschools,etc.)

Lowersupplyoffoodandagriculturalcommoditiesto

processors,traders,markets,wholesalers

andretailers

Foodinflation

Reducedfoodconsumptionand

dietaryquality

Increasedindebtedness

Increasedhouseholdexpenditure

Incomelossandlowerpurchasingpower

forretailers

Weaksocialsupportnetworksforretailers

Loweravailabilityandaccesstofood

UnemploymentDisruptionoffarmer

organizationsandsocialnetworks

The macro-economic impact The effect on sustainable development

DropinnationalGDP

Increasedimportsoffood,

agriculturalcommodities,

inputs,andreliefitems,increasing

expenditures

Lowerexportsofagriculturalcommodities

andagro-industrialgoods,decreasingexport

earnings

Reducedagriculturesector

growth(%ofGDP)

Reducedmanufacturingsectorgrowth(%ofGDP)

Compromisesthecapacitytomeetglobalcommitmentstoachievesustainabledevelopmentgoals,particularlySDG2whichstrivesto“Endhunger,achievefoodsecurityandimprovednutrition,

andpromotesustainableagriculture”

Stuntsnationalsectorgrowth

andsustainableagricultural

development

Arrestsnationaleconomicgrowth

andprosperity

Limitsnationalcapacitytoeradicate

hunger,foodinsecurityandpoverty

Source: FAO (2015)

unemployment and/or a decline in wages, which in turn affects farmers’ incomes. Moreover, they can also trigger food inflation, owing to lower availability of food commodities in local markets. Consequently, households had to endure reduced purchasing capacity, restricted access to food, depleted savings, forced sale of vital productive assets, increased indebtedness and eventually eroded livelihoods. As a result, households suffer from food

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insecurity and malnutrition as quantity and quality of food consumption is reduced, particularly among the most vulnerable sector of society (FAO 2015).

Another heavily affected is agricultural trade. Natural disasters significantly lower agricultural production, this can trigger changes in agricultural trade flows. This eventually increases import expenditures and reduces export revenues (FAO 2015).

In the case of rice, climate change is one of the most serious and longstanding challenge in productivity growth. Rice is known to be highly sensitive to climate extremes particularly to abiotic stresses such as high temperatures, floods, salinity, and drought spells (Mohanty et al. 2013).

With these, it can be expected that the effects of natural disasters and climate change will eventually take their toll on food reserves as well. If the amount of food supply is not enough to meet consumption requirements, more so agricultural trade, then food stockpiling for other purposes such emergency responses would be highly unlikely.

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References

ASEAN (Association of Southeast Asian Nations). 2008. ASEAN Economic Community Blueprint. ASEAN Secretariat. Jakarta, Indonesia: Association of Southeast Asian Nations.

______. 2015. ASEAN Economic Community Blueprint 2025. Jakarta, Indonesia: Association of Southeast Asian Nations.

Caballero-Anthony, Mely, P. Teng, and B. Ching. 2013. ASEAN Economic Community (AEC) 2015: Opportunities and Challenges for Food Security. Singapore: S. Rajaratnam School of International Studies, Nanyang Technological School.

Chandra, Alexander C., and L.A. Lontoh .2010. Regional Food Security and Trade Policy in Southeast Asia: The Role of ASEAN. Canada: International Institute for Sustainable Development.

Clapp, Jennifer. 2015. Food Security and International Trade Unpacking Disputed Narratives. Italy: Food and Agriculture Organization.

Desker, Barry, M. Caballero-Anthony, and P. Teng. 2014. ASEAN Food Security: Towards a More Comprehensive Framework. Indonesia: Economic Research Institute for ASEAN and East Asia.

FAO (Food and Agriculture Organization of the United Nations). 2014a. After Bali: WTO Rules Applying to Public Food Reserves. Italy: Food and Agriculture Organization.

______. 2014b. Rice in the Shadow of Skyscrapers Policy Choices in a Dynamic East and Southeast Asian Setting. Italy: Food and Agriculture Organization.

______. 2015a. The State of Agricultural Commodity Markets. Italy: Food and Agriculture Organization.

______. 2015b. The Impact Disasters on Agriculture and Food Security. Italy: Food and Agriculture Organization.

Fritz, Thomas. 2014. Putting Food Security Before Trade: The WTO and the conflict over food reserves. Germany: Forschungs-und Dokumentationszentrum Chile-Lateinamerika e.v. (Center for Research and Documentation Chile-Latin America).

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Headey, Derek, and S. Fan. 2010. Reflections on the Global Food Crisis. How Did It Happen? How Has It Hurt? And How Can We Prevent the Next One? USA: International Food Policy Research Institute.

Mohanty, Samarendu, R. Wassmann, A. Nelson, P. Moya, and S.V.K. Jagadish. 2013. Rice and Climate Change: Significance of Food Security and Vulnerability. Laguna, Philippines: International Rice Research Institute.

Murphy, Sophia. 2010. Trade and Food Reserves What Role does the WTO Play? USA: Institute for Agriculture and Trade Policy.

NUS Centre for International Law. 2016. International Trade and Food Security Exploring Collective Food Security in Asia. Cheltenham, UK: Edward Elgar Publishing Limited.

Syngenta. 2012. Rice Bowl Index Translating Complexity into an Opportunity for Action. Singapore: Syngenta.

Teng, Paul .S., and J.A.P. Oliveros. 2015. Challenges and Responses to Asian Food Security. COSMOS 11 (1): 1–18. doi: 10.1142/S0219607715500019

BackgroundFood availability in the context of food security has been a longstanding topic. For Asia, where most of the world’s population resides, it is the undeniable responsibility of governments to assure sufficient food supply. However, being able to continually feed their burgeoning populace is a perpetual challenge for governments. Thus, ensuring a steady supply of food has been a common component of many food policies across the region.

A popular choice among policymakers is food stockpiling. This type of food policy has been adopted even as far back as the time of the World Wars (Caballero-Anthony et al. 2015). Maintaining food reserves is viewed as a practical and forward-looking strategy for governments in dealing with food security issues. It has been a prevalent practice in Asia, which does not only suffer from chronic hunger, but is also caught in an era when natural disasters and calamities have become stronger and frequent. Moreover, with widespread globalization, the idea of forming a regional food reserve can be viewed as a way to promote cooperation and assistance among the developing countries in the region (Daño and Peria 2006).

When the Food Price Crisis hit Asia in 2007–2008, prices skyrocketed, primarily for rice, recording as high as 149 percent inflation during the first quarter of 2008. This was triggered by the implementation of stringent export restrictions by India and Vietnam, combined with the consequential panic-

Regional Food Reserve Mechanisms: The Case of ASEAN Plus Three

Emergency Rice Reserve


26


buying of rice-importing countries such as the Philippines. The crisis drove almost a billion people in Asia into poverty and raised alarming issues about food security (Wailes et al. 2012).

As a response, ASEAN formulated the ASEAN Integrated Food Security (AIFS) Framework and Strategic Plan of Action on Food Security (SPA-FS) 2009–2013. The AIFS Framework focused mainly on four key components: (1) emergency/shortage relief, (2) sustainable food trade, (3) integrated food security information system, and (4) agricultural innovation. These were concretized through the implementation of the SPA-FS 2009–2013, which included the establishment of the ASEAN Plus Three Emergency Rice Reserve (APTERR). The current AIFS and SPA 2015–2020 expects to have a fully functional regional food security reserve through APTERR.

The ASEAN Plus Three Emergency Rice Reserve (APTERR)4

In the aftermath of the 2007–2008 Food Price Crisis, the ASEAN Member States (AMS) together with the People’s Republic of China, Japan, and Republic of Korea, realized the need for a stable emergency rice reserve mechanism in the region. Thus, in 2009, during its 9th meeting, the ASEAN Ministers on Agriculture and Forestry Plus Three (AMAF+3) approved the formation of the ASEAN Plus Three Emergency Rice Reserve (APTERR).

APTERR is a regional cooperation scheme aimed at strengthening food security and reducing poverty within the ASEAN Member States, the People’s Republic of China, Japan, and the Republic of Korea. Its main purpose is to address immediate threats to food security brought about by: (1) natural and artificial disasters that threaten food supply availability at the local and national levels, (2) market volatility, which greatly amplifies the risks posed by calamities, and (3) severe inflation that can trigger a food crisis.

APTERR’s origin can be traced back as early as the 1970s. Table 4 shows key milestones, from the establishment of the first regional cooperation scheme for food security (i.e., AERR) in 1979 up to the inauguration of the APTERR Secretariat in 2013.

The AMAF+3 established its first earmarked rice reserve system called the ASEAN Emergency Rice Reserve (AERR) in 1979, with total stocks amounting to 87,000 tons. However, the AERR struggled with ineffective releases

4 This section of the paper is sourced heavily from the 20 FAQs about APTERR found in its official website <www.apterr.org>.

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for decades. This paved the way for the AMAF+3 to create and pilot an improved and expanded regional emergency rice reserve called the East Asia Emergency Rice Reserve (EAERR) in 2003. Under the EAERR, both earmarked and stockpiled emergency rice reserves were established. Japan led its funding through the ASEAN Trust Fund, while Thailand, together with the rest of the ASEAN Plus Three provided in-kind support.

By 2010, the EAERR was able to distribute 3,000 tons of stockpiled rice to disaster victims and poor households across the ASEAN region. Moreover, a total of 10,000 tons of earmarked stocks from Vietnam were released to the typhoon victims in the Philippines during the same year. With the success of the EAERR Pilot Project, the AMAF+3 immediately started the preparations for a permanent emergency rice reserve scheme in the form of APTERR.

The APTERR Agreement was signed in 2011, but formally entered into force in July 2012. In 2013, the APTERR Council, together with the APTERR Secretariat were created to oversee its operations. At present, APTERR continues to maintain both earmarked5 and stockpiled6 emergency rice reserves.

Table 4. Key milestones leading up to the establishment of APTERR, 1979–2013

Year Milestones1979 The ASEAN Emergency Rice Reserve (AERR) was established according to the ASEAN

Food Security Reserve (AFSR) Agreement of 1979

2002 The 2nd ASEAN Ministers on Agriculture and Forestry Plus Three Meeting approved piloting an improved and expanded regional emergency rice reserve

2004 The pilot project of East Asia Emergency Rice Reserve (EAERR) was implemented from 2004 to 2010

2009 The 9th AMAF+3 Meeting, held in Bandar Seri Begawan, Brunei, approved a permanent scheme called, ASEAN Plus Three Emergency Rice Reserve

2010 The preparatory stage of APTERR started on 1 March 2010 after the termination of the pilot project of EAERR on 28 February 2010

2011 The APTERR Agreement was signed by the Ministers of Agriculture and Forestry of the ASEAN and the Plus Three countries on 7 October 2011 during the 11 AMAF+3 Meeting, held in Jakarta, Indonesia

2012 The APTERR Agreement entered into force on 12 July 2012

2013 The first meeting of APTERR Council was held on 28-29 March 2013 in Bangkok, Thailand and the APTERR Secretariat was officially launched on 29 March 2013

Source: APTERR (2017)

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These reserves must satisfy international food safety standards to ensure suitability for human consumption. A total of 787,000 tons of rice stocks is currently earmarked under APTERR (Table 5).

Table 5. Earmarked emergency rice reserves of APTERR member countries, 2012

Country Volume (in tons) Percent ShareASEAN Member CountriesThailand 15,000 1.91Myanmar 14,000 1.78Vietnam 14,000 1.78Indonesia 12,000 1.52Philippines 12,000 1.52Malaysia 6,000 0.76Singapore 5,000 0.64Brunei Darussalam 3,000 0.38Cambodia 3,000 0.38Lao PDR 3,000 0.38Subtotal 87,000Plus Three CountriesPeople’s Republic of China 300,000 38.12Republic of Korea 250,000 31.77Japan 150,000 19.06Subtotal 700,000TOTAL 787,000 100.00


5 Earmarked emergency rice reserves are specific quantities of milled rice, which remained owned and/or controlled by the government of the earmarking country for the purpose of meeting emergency requirements of one or more APTERR member countries.

6 Stockpiled emergency rice reserves are rice voluntarily donated to APTERR in the form of cash (termed stockpiled cash) and/or physical rice stocks (termed stockpiled rice), which are owned collectively by the APTERR member countries and managed by the APTERR Secretariat under the supervision of the APTERR Council.

7 An emergency is defined as “the state or condition in which an APTERR member country, due to extreme and unexpected calamity, is unable to cope with the state or condition through its natural reserve and is unable to procure the needed supply of rice through normal trade”.

APTERR works on a three-tier system for releases from its reserves (Figure 5). To qualify for an APTERR release, there must be a shortfall in the supply of rice resulting from an emergency7 situation. APTERR categorizes these emergencies as either: (1) emergencies that can compromise food availability at the national level, or (2) acute emergencies that threaten accessibility of food for affected households. Acute emergencies may be localized, such as a

29


subset of the population that requires humanitarian food assistance, regardless of availability of sufficient rice stocks at the national level.

The Tier 1 program implements a pre-arranged release of rice reserves, formalized through a forward contract between the supplying and recipient countries (Table 6). The contract shall contain information such as the specific quantity and grade of rice, pricing method, terms of payment and delivery, and other requirements in relation to the rice release. The contracted rice will be delivered by the supplying country in the event of an emergency at the recipient country, with the amount based on a medium-term rice shortfall. Payments will be based on the prevailing international market price for rice.

The Tier 2 program, on the other hand, caters to emergency rice requirements for other unanticipated events (Table 6). In short, this program covers for the release of rice reserves beyond what is already arranged under Tier 1. Rice deliveries follow an on-the-spot agreement between a supplying country and a recipient country. The pricing scheme is similar to that of Tier 1. Payments can be made in cash or through long-term loans or grants, based on mutual agreements of the countries involved.

Figure 5. The APTERR stocks releasing mechanism


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The Tier 3 program provides rice donations for acute emergencies through humanitarian assistance during calamities and other natural disasters (Table 6). Upon an APTERR member country’s request, special cases can be considered where rice distribution is fast-tracked under an automatic trigger.

Table 6. The three-tiered APTERR program

Tier Mechanism1 • Anticipated emergencies

• Release of earmarked stocks under a pre-arranged scheme to address problems of food availability

2 • Unanticipated emergencies• Release of earmarked stocks for emergencies not addressed by Tier 1

3 • Acute emergencies and other humanitarian responses• Release of stockpiled emergency rice reserves to address problems of food

accessibility


Moreover, Tier 3 rice stocks may also be supplied for other purposes such as for poverty alleviation and malnourishment eradication programs.

There are limits as to how much rice is provided by APTERR depending on the program under which an emergency is categorized. For Tier 1, the quantity of stocks released is limited based on the forward contract. For both Tier 1 and Tier 2, the total stocks released by any APTERR member over each 12-month cycle, may not exceed its respective earmarked stock commitment. Moreover, member countries are required to replenish their earmarked reserves back to their original quantities annually. Finally, both Tier 2 and Tier 3 releases are limited by the estimate of rice needed to address an emergency.

There are two governing bodies that oversee APTERR’s operations. First is the APTERR Council, which is composed of representatives from each member country. It is responsible for the approval of rice provisions through a consensus, decision-making and spearheading council, and ad hoc meetings. Next is the APTERR Secretariat, which is responsible for the day-to-day operations. The Secretariat’s office is stationed in the host country of the General Manager selected by the Council.

APTERR operates through cash and in-kind assistance from its member countries. Other non-member countries and donor organizations are likewise welcome to donate for the stockpiled emergency rice reserves. Moreover, the members decided to establish the APTERR Fund, which is comprised of an Endowment Fund and Annual Contributions for Operational Costs. Tables 7 and 8 present details on individual country contributions for these funds, respectively.

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Table 7. Capital contribution of APTERR members for the endowment fund starting 2012

Country Amount (in USD) Percent Share

ASEAN Member CountriesThailand 107,500 2.69Myanmar 83,000 2.07Vietnam 107,500 2.69Indonesia 107,500 2.69Philippines 107,500 2.69Malaysia 107,500 2.69Singapore 107,500 2.69Brunei Darussalam 107,500 2.69Cambodia 83,000 2.07Lao PDR 83,000 2.07

Subtotal 1,001,500Plus Three Countries

People’s Republic of China 1,000,000 25.00Republic of Korea 1,000,000 25.00Japan 1,000,000 25.00

Subtotal 3,000,000TOTAL 4,001,500 100.00


Table 8. Annual contribution of APTERR members for operational costs (over the first five years of implementation)

Country Amount (in USD) Percent Share

ASEAN Member CountriesThailand 8,000 2.68Myanmar 6,000 2.00Vietnam 8,000 2.68Indonesia 8,000 2.68Philippines 8,000 2.68Malaysia 8,000 2.68Singapore 8,000 2.68Brunei Darussalam 8,000 2.68Cambodia 6,000 2.00Lao PDR 6,000 2.00

Subtotal 74,000Plus Three Countries

People’s Republic of China 75,000 25.08Republic of Korea 75,000 25.08Japan 75,000 25.08

Subtotal 225,000TOTAL 299,000 100.00

Source: ASEAN (2017)Note: For the first five years only

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Building on the viable storage practices under the EAERR, the earmarked stocks for APTERR are held by the earmarking country, while the stockpiled rice are stored by the assigned host member country under contract with the Secretariat. The host country is also responsible for maintaining the quality of the stocks based on set standards. Beyond the duration of the contract, the Secretariat is responsible for extending storage or releasing the stockpiled rice. However, at present, there is no provision for APTERR-owned warehousing facilities.

As for the distribution of stocks, releases are done through the national food security agencies of member countries affected by the emergencies. The APTERR program employed in an affected country is on a case-to-case basis. For example, Tier 1 and Tier 2 releases would likely be used to augment the national food security reserves. On the other hand, Tier 3 releases are directly distributed to needy households by the public food aid agency. Furthermore, distributions may also be done in partnership with international organizations (e.g., the World Food Programme) and/or non-government organizations.

Before and with APTERR: Responding to Asia’s worst disastersThe past decades have borne witness to Mother Nature’s ire, and Asia is the most affected. From the Boxing Day tsunami, which engulfed Aceh Province in 2004, to the super typhoon Haiyan, which wiped out almost the entire city of Tacloban in 2013, natural disasters have become the region’s unrelenting dilemma (Figure 6). These calamities left millions of people homeless and without food, with damages reaching billions of dollars (ADB 2016).

It is in these types of events that emergency food reserve mechanisms such as APTERR are put to the test. Quick (food) releases, organized logistical operations, ample supply of food stocks, and efficient storage and distribution systems are just some of the factors that determine the effectiveness of emergency response schemes.

The next section assesses how APTERR performed as an emergency response mechanism compared to its previous form EAERR, as well as with the more established civilian aid organizations such as the World Food Programme (WFP) and the United States Agency for International Development (USAID). Additionally, demand and supply situations for rice in the aftermath of selected Asian calamities were also analyzed.

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Indian Ocean Boxing Day earthquake and tsunami (2004)The scenario

In 2004, the day after Christmas, a 9.1 magnitude earthquake shook the west coast of Sumatra, Indonesia, triggering a massive tsunami that flattened infrastructure along the Indian Ocean coastline (Figure 7). With approximately 250,000 people either killed or missing, the Indian Ocean earthquake and tsunami was considered one of the deadliest natural disasters since the 1900s. Based on a 2005 FAO/WFP report, about 2.8 million people were affected in the Province of Aceh alone, two million of whom needed support, including the 700,000 people that were displaced. Damage costs were initially estimated at United States Dollar (USD) 10 billion (NCEI n.d.).

Demand and supply

According to the United States Department of Agriculture (USDA), Indonesia is one of the top 10 rice consuming countries in the world. In 2004, its per capita

Figure 6. Worst calamities in Asia by number of deaths, 1990s to 2015

Source: ADB (2016)Note: PRC-People’s Republic of China

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rice consumption was at 125.88 kg. Indonesia was able to produce 36.1 million MT of milled rice during the same year. 8

Thus, given the number of people who needed food support in Aceh, and the per capita rice consumption during the time of the incident, the amount of rice needed by the tsunami victims in the province was estimated at 352,464 MT per year. This is still well within the annual earmarked rice reserves of the EAERR, which is at 787,000 MT.

However, based on available data, the only recorded amount of rice stocks released to Indonesia during the time of the calamity was 100 MT. The distribution was done as part of a relief and rehabilitation program in Sampang and Jember districts in East Java, with total beneficiaries reaching 33,000 people. The program started in November 2005, which is almost a year after the tsunami struck Indonesia.

The WFP, on the contrary, was able to immediately assist a total of 425,000 people during the first month of the emergency. They established a base camp in Banda Aceh and other hard-hit areas and set up a transport system

Figure 7. Aerial view of Banda Aceh a month after the Boxing Day tsunami hits Indonesia

Source: WFP (2005)


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to facilitate the distribution of the food aid (WFP 2005). Moreover, the WFP was able to ship a total of 53,103 MT of rice (food aid) to Indonesia in 2004, and 28,581 MT in 2005, (FAOSTAT 2017)9.

The USAID, on the other hand, claimed to have extended its support to over 580,000 people in Banda Aceh through the delivery of food, hygiene kits, medical aid, and psycho-social assistance. The agency also provided cash for work to clean and clear out damaged infrastructure. Total amount of emergency aid from the USAID was over USD 400 million (USAID 2014).

One possible explanation for the relatively small contribution of EAERR is the stable supply of rice in Indonesia. Despite the devastation brought about by the tsunami, the Province of Aceh was able to produce enough rice in 2005, even recording a rice surplus over effective demand of about 200,000 MT (Table 9, Josserand et al. 2005).

9 Breakdown as to which specific disasters the food aid shipments were made for is not available on FAOSTAT.

Table 9. Rice supply and demand balance (‘000 MT) in marketing year 2005–2006 (April/March), by district

District Production Food Use Total Use BalanceBanda Aceh 0.7 29.0 30.5 -29.8Lhokseumawe 3.6 25.7 27.3 -23.7Aceh Tengah 29.4 41.9 47.3 -17.9Langsa 5.8 18.9 20.4 -14.6Aceh Singkil 9.0 19.2 21.9 -12.9Aceh Jaya 1.0 11.6 13.6 -12.6Sabang 0.1 3.8 4.0 -3.9Simeulue 7.9 9.1 11.5 -3.6Aceh Barat 47.9 27.9 34.3 13.6Aceh Selatan 52.0 30.4 37.3 14.7Aceh Tenggara 45.1 23.2 28.5 16.6Aceh Tamiang 60.7 34.6 42.1 18.6Gayo Lues 37.1 10.2 15.2 21.9Pidle 119.9 78.9 96.7 23.2Aceh Timur 89.5 51.0 63.6 25.9Bireuen 96.1 55.4 68.7 27.4Nagan Raya 63.8 21.9 29.5 34.3Aceh Barat Daya 61.9 17.7 25.5 36.4Aceh Utara 140.0 80.1 99.4 40.6Aceh Besar 78.3 19.9 29.2 49.1NAD 949.8 610.4 746.5 203.3

Source: Josserand et al. (2005)

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Additionally, the government of Indonesia, through its Bureau of Logistics (BULOG), is said to be targeting around 3.2 million MT of rice stocks annually (USDA 2016), where 10 percent is stored as rice reserves. Thus, given these, even with the lack of external support, there is more than enough supply to cover the victims’ rice requirements.

Cyclone Nargis (2008) The scenario

On 2 May 2008, Cyclone Nargis, a Category 4 tropical storm, made landfall at the western edge of the Ayeyarwady delta, sweeping across nearby villages, and reaching the populous city of Yangon (TCG 2008). Within the first two days, Cyclone Nargis was able to wipe out entire villages, killing more than 140,000 people (Figure 8). Almost 2.4 million people were left homeless and without food, including the 800,000 who were displaced (WFP 2009).

Figure 8. Aerial view of the after effects of Cyclone Nargis in Myanmar

Source: British Broadcasting Corporation <www.bbc.co.uk>

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Cyclone Nargis was considered as one of the worst storms to hit Asia since 1991, when another typhoon devastated Bangladesh killing 143,000 people. It is the next most deadly natural disaster in Asia after the 2004 Indian Ocean tsunami. Based on the Tripartite Core Group’s (TCG) estimates, total damages reached USD 4 billion, with 42 percent of the country’s food stocks destroyed.

Demand and supply

The Burmese people have the highest per capita rice consumption in Asia according to Myanmar’s Ministry of Agriculture, Livestock and Irrigation (MOALI). In 2008, an average Burmese consumed about 129.41 kg of rice in a year. Myanmar was able to produce 21.7 million MT of milled rice in 2008.10

Given these numbers, an estimated 310,584 MT of rice per annum was needed by Cyclone Nargis survivors. This is approximately 40 percent of the annual earmarked stocks under the EAERR. Yet, APTERR records show that only 164 MT of rice were distributed to the victims of Cyclone Nargis in Myanmar. The rice distributions started in November 2008, six months after the storm. This benefitted a total of 13,120 people in the towns of Laputta and Bogalay. Clearly, the contribution of the EAERR in the emergency needs of the Cyclone Nargis victims was relatively smaller than expected.

As with the WFP, the organization was able to distribute food aids to over 27,000 people in the worst affected areas of the Irrawaddy delta and Yangon just a few days after the cyclone (WFP 2008). Furthermore, the WFP was able to ship rice food aid to Myanmar amounting to 59,584 MT in 2008, and an additional 943 MT in the following year11 (FAOSTAT 2009). Throughout the rest of 2008 to 2009, the WFP continued to deliver food assistance to the storm survivors using a combination of helicopters, trucks, and barges. In a year, the WFP was able to provide food reliefs to over one million people, which translated to over 70,000 tons of food (WFP 2009). The USAID, on the other hand, provided humanitarian assistance to about 445,000 victims of Cyclone Nargis through food and emergency materials (USAID n.d.).

In the aftermath of the storm, fear of starvation spread across the country, as an estimated 200,000 MT of harvested rice were damaged by Cyclone Nargis (CNN 2008). Moreover, the hard-hit Ayeyarwady division accounted for 25 percent of total sown area and 26 percent of total paddy production in 2007. Based on the assessment made by Fang et al. (2009), from the 60–80 percent

10 Data retrieved from the IRRI World Rice Statistics11 Breakdown as to which specific disasters the food aid shipments were made for is not available on

FAOSTAT.

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of paddy land planted in Ayeyarwady and Yangon divisions in 2008, only 50–60 percent became successful due to the effects of the storm.

In terms of national stockpiles, 150,000 MT of rice were set aside for Myanmar’s national reserves in 2008 (USDA 2009). Combining this with the annual earmarked rice stocks of EAERR of 787,000 MT, there should have been adequate rice to supply the victims of Cyclone Nargis.

Great East Japan earthquake and tsunami and the Fukushima Daiichi nuclear disaster (2011)The scenario

In the afternoon of March 11, 2011, a 9.1 magnitude earthquake hit the northeastern coast Honshu, triggering a tsunami that formed 30-foot waves that engulfed a huge portion of the island (Figure 9). A few days after, a series of nuclear reactor explosions happened at the Fukushima Daiichi plant, raising concerns of radiation poisoning in nearby villages (CNN n.d.). These events were later coined as “Japan’s triple catastrophe/disaster”. According to Japan’s Fire and Disaster Management Agency, the combined total of fatalities and missing persons was around 22,000. Moreover, the number of displaced population was estimated at 500,000 (NCEI 2015).

Demand and supply

Rice consumption in Japan is relatively lower as compared to its neighboring Asian countries, with its per capita rice consumption of just 43.33 kg in 2011. Total milled rice production according to FAO data was 7.0 million MT in 2011.12

The amount of rice relief needed based on the number of displaced victims is projected at 21,665 MT. Unfortunately, there is no available record on the rice support provided by APTERR to Japan during this incident. This might be due to the transition from EAERR to APTERR, which took place around the time of the disaster.

On the other hand, support provided by the WFP was primarily logistical in nature. Through the Japan government’s request, the organization aided them in the delivery of relief items to the survivors. Moreover, the WFP also provided mobile warehouses for relief items storage, particularly for the worst affected locations (WFP 2011). For the USAID, its support for Japan was focused on


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Figure 9. Aerial view of the northeastern coast of Honshu after the Great East Japan earthquake and tsunami

Source: Encyclopedia Britannica (2017)

getting financial donations, to ensure that victims can access basic items at the quickest way possible (USAID 2011).

On the supply side, despite the 20,000 hectares of rice paddy damaged by the triple disaster, rice production in 2011 was normal in Japan according to the USDA. The Ministry of Agriculture, Forestry and Fisheries (MAFF) of Japan is said to hold emergency rice stocks, with an annual target of one million MT. In 2011, the country was able to store 880,000 MT of domestic rice stocks. Moreover, the government of Japan also sets aside about 200,000 MT of rice annually for its food aid programs (USDA 2012). With more than enough rice available to support the disaster victims, Japan could definitely do away with the APTERR rice release.

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Typhoon Haiyan (2013)The scenario

Considered as the most powerful storm ever recorded, Typhoon Haiyan wreaked havoc in the Philippines in early November 2013 (Figure 10). The super typhoon made landfall in the municipality of Guiuan, and later widely devastated the provinces of Eastern Samar and Leyte. The city of Tacloban was the hardest hit, with 90 percent of its infrastructure destroyed (WFP 2013).

Figure 10. Aerial view of a devastated area near the Tacloban airport in the Philippines after Typhoon Haiyan

Source: The New York Times (2017)

According to the final tally of the National Disaster Risk Reduction and Management Council (NDRRMC) released in April 2014, a total of 16.1 million people were affected by Typhoon Haiyan in the Philippines. Around 6,000 were confirmed dead with more than 1,000 missing. Moreover, 4.1 million people were displaced, and 1.1 million houses were damaged or destroyed. The total amount of damages was estimated at PHP 40 billion (USD 890 million).

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Demand and supply

In 2013, an average Filipino consumed around 119.44 kg of rice in a year. Just like most of its Southeast Asia neighbors, rice is a staple food in the Philippines. Based on 2013 estimates, total production of milled rice reached 12.3 million MT.13

Typhoon Haiyan was the largest catastrophe to hit Southeast Asia after the conversion of EAERR to a permanent scheme, in the form of APTERR. With the huge number of typhoon victims recorded in the Philippines, the projected amount of rice aid needed for a year was at 489,704 MT. This is approximately 62 percent of the total annual APTERR earmarked rice reserves. Japan was the quickest to respond, extending USD 500,000 worth of rice to the Philippines through its APTERR contributions during the first month of the disaster. A few months after, China and Thailand followed, providing 800 and 5,000 MT of rice, respectively.

Then in early 2015, a ceremonial turnover and distribution of the rice donations from the government of Japan to the victims of Typhoon Haiyan was held in the Philippines. Japan provided 580 MT of rice through the APTERR Tier 3 programme. This is a portion of the 6,700 MT combined contributions of China, Thailand, Malaysia, and Japan. Moreover, an additional 240 MT of rice was also stored in Cebu as an emergency stock according to the APTERR Secretariat.

Locally, the National Food Authority (NFA) was able to distribute a total of 616,355 50-kg bags of rice within the month of November 2013. The bulk of this comes from the Department of Social Welfare and Development’s (DSWD) earmarked stocks for relief operations. As of end-October 2013, NFA has a stock inventory of 353,935 MT, which is equivalent to 12 days based on the 30,710 MT national daily rice consumption requirement (NFA 2013).

For the WFP, the organization was able to reach approximately 3.0 million people in 71 different locations in a month’s time after the typhoon. The initial food dispatches consisted of 5,683 MT of rice, 190 MT of high energy biscuits and two MT of nutritious food for children. The Programme likewise provided various logistical and telecommunications support to the typhoon victims and set up base camps in various locations (WFP n.d.).

In support of the WFP, the USAID provided USD 10 million for emergency food assistance in November 2013. This funding covered for the immediate airlift


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of 55 MT of emergency food products from the states of Miami and Florida, as well as the shipment of 1,020 MT of rice from Colombo and Sri Lanka, among others (USAID 2013).

Summary

To summarize, Table 10 shows a comparison of the projected rice demand and supply situation during the selected Asian natural disasters discussed. Here, it is assumed that the only sources of emergency rice reserves during the time of these catastrophes were EAERR/APTERR earmarked stocks and existing national public stockpiles.

Based on the estimated results, ample amounts of emergency rice reserves are supposed to be available for relief. The annual EAERR/APTERR earmarked stocks alone can cover the amount of rice needed to feed the victims of Asian calamities in the past decades.

However, actual rice releases made were far below expectations, especially prior to the enforcement of APTERR as a permanent regional rice reserve mechanism in 2012. Interestingly, there was a significant increase, in the volume of rice released after APTERR officially started its operations. From a few hundred metric tons in 2004 and 2008, to thousand metric tons by 2013.

Aside from the abovementioned rice releases, Table 11 presents a list of other emergency responses made by APTERR in the past decade.

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Table 10. Rice demand and supply estimates during selected calamities in Asia

Units

Indian Ocean

Earthquake and Tsunami

(2004)

Cyclone Nargis (2008)

Great East Japan

Earthquake and Tsunami

(2011)

Typhoon Haiyan (2013)

Total Populationa million persons

223.3 127.3 51.0 97.6

Total Milled Rice Productionb

’000 MT 36,007 21,726 7,003 12,299

Per Capita Rice Consumptionc

kg/yr 125.88 129.41 43.33 119.44

Number of Victims in Need of Emergency Relief

million persons

2.0 2.4 0.5 4.1

Estimated Amount of Rice Neededd

MT 352,464 310,584 21,665 489,704

EAERR/APTERR Earmarked Rice Reservese

MT 787,000 787,000 787,000 787,000

Available National Rice Reserves

MT 320,000 150,000 200,000 353,935

Variancef MT 754,536 624,416 965,335 651,231

Actual Amount of Rice Released by EAERR/APTERR

MT 100 164 No data 6,730

(2015)

Notes:

a Total population estimates were sourced from FAOSTAT (2017).b Total quantities of milled rice produced per country were also sourced from FAOSTAT (2017). c Per capita rice consumption data were sourced from the IRRI World Rice Statistics.d The estimated amount of rice needed were computed by using the per capita rice consumption

and the number of recorded calamity victims in need of emergency relief.e The amount of available national rice reserves for Indonesia, Myanmar and Japan were sourced

from the Grain and Feed Reports of USDA, while for the Philippines, it is the actual figure reported by NFA in its October 2013 Monthly Update.

f The variance was computed simply as the difference between the available rice reserves (APTERR + National) and the estimated amount of rice needed.

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Table 11. APTERR emergency response and relief programs, 2004–2016

Location Program Duration

Amount of Rice

Released (in MT)

Beneficiaries

Lao PDR Food assistance program (poverty alleviation)

Dec 2004–Jun 2005 13.37 87 households and students (Vientiane)

Philippines Relief program (volcanic eruption and typhoon)

Nov 2005–Nov 2006 930.24 154,500 households

(Leyte, Cebu, Davao provinces and Manila)

Cambodia Relief and poverty alleviation programs (flood)

Jul 2007–Jan 2008 379.76 11,798 households (Kampong Thom, Ratanakiri, Kandal, Kompong Chhnang and Takeo provinces)

Indonesia Relief program (flood)

Mar 2008–May 2009 186.50 18,182 households (Central and East Java)

Philippines Rehabilitation program (Typhoon Ketsana and flashfloods)

Nov 2009–Feb 2010 520.00 7,137 households (Metro Manila and Ifugao provinces)

Lao PDR Rehabilitation program (Typhoon Ketsana)

Jul 2010–Oct 2010 347.00 9,207 villages

(Saravan and Attapeu provinces)

Thailand Emergency relief program (flood)

Nov 2011–Dec 2011 50.00 8,100 households (Central region)

Indonesia Food assistance program (poverty alleviation and malnutrition eradication)

Oct 2012–Dec 2012 200.00 20,000 households (Yogyakarta, Central Java, Banten and East Java)

Philippines Emergency relief program (Typhoon Bopha)

Sep 2013–Nov 2013 230.00 21,230 households (Davao Oriental and Compostela Valley)


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Table 11. APTERR emergency response and relief programs... (continued)

Location Program Duration

Amount of Rice

Released (in MT)

Beneficiaries

Lao PDR Emergency relief program (drought and flood)

May 2013–June 2013;

Dec 2013–Jan 2014

230.00 26,666 people (Luang Prabang and Saravane provinces)

Philippines Emergency relief program (Typhoon Melor)

May 2016 240.00 7,992 households (Northern Samar province)

Cambodia Emergency relief and poverty alleviation programs

Aug 2016–Oct 2016 210.00 4,200 households (Takeo, Svay Rieng, Battambang, Pursat, Tbong Khmom, and Prey Veng provinces)


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References

ADB (Asian Development Bank). 2016. Recent Significant Disasters in the Asia and Pacific Region. Manila, Philippines: Asian Development Bank. Accessed on March 2017. Retrieved from https://www.adb.org/news/infographics/recent-significant-disasters-asia-and-pacific-region

Caballero-Anthony, Mely, P.S. Teng, M. Shrestha, T. Nair, and J.A. Lassa. 2015. Public Stockpiling and Food Security. Singapore: S. Rajaratnam School of International Studies.

CNN (Cable News Network) International Edition. 2008. Starvation threatens in once fertile Myanmar. Accessed on March 2017. Retrieved from http://edition.cnn.com/2008/WORLD/asiapcf/05/20/myanmar.farming/index.html?iref=newssearch

______. 2011. Japan Earthquake–Tsunami Fast Facts. Accessed on March 2017. Retrieved from https://edition.cnn.com/2013/07/17/world/asia/japan-earthquake---tsunami-fast-facts/index.html

Daño, Elenita, and E. Peria. 2006. Emergency or Expediency? A Study of Emergency Rice Reserve Schemes in Asia. Philippines: Asian Farmers Association for Sustainable Rural Development and Asian Partnership for the Development of Human Resources in Rural Asia.

Fang, Cheng, M. Mar, A. Mon, T. Kyi, B. Cartella, J. Delbaere, M. Sheinkman, N.S. Aye, A. Chariop-Powers, S. Krishnaswamy, and R. Varela. 2009. FAO/WFP Crop and Food Security Assessment Mission to Myanmar. Italy: Food and Agriculture Organization / World Food Programme.

Josserand, Henri, C. Fang, J. Fleuren, D. Bhattacharyya, and K. McLennan. 2005. FAO/WFP Food Supply and Demand Assessment for Aceh Province and Nias Island (Indonesia). Italy: Food and Agriculture Organization/ World Food Programme.

NDRRMC (National Disaster Risk Reduction and Management Council). 2014. NDRRMC Update SitRep No. 108 Effects of Typhoon Yolanda (Haiyan). Manila, Philippines: National Disaster Risk Reduction and Management Council.

NFA (National Food Authority). 2013. Accomplishment Report October 2013. Manila Philippines: National Food Authority.

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NCEI (NOAA National Centers for Environmental Information). 2015. 11 March 2011 Japan Earthquake and Tsunami. USA: NOAA National Centers for Environmental Information. Retrieved from ftp://ftp.ngdc.noaa.gov/hazards/publications/2011_0311.pdf

______. n.d. Comments for the Significant Earthquake. USA: NOAA National Centers for Environmental Information Accessed on March 2017. Retrieved from https://www.ngdc.noaa.gov/nndc/struts/results?eq_0=5823&t=101650&s=13&d=399,26,13,12&nd=display

TCG (Tripartite Core Group). 2008. Post-Nargis Periodic Review I. Myanmar: Tripartite Core Group.

USAID (U.S. Agency for International Development). 2011. How Can You Help Japan: Give Cash not Goods. USA: U.S. Agency for International Development. Accessed on March 2017. Retrieved from https://blog.usaid.gov/2011/03/how-you-can-help-japan-give-cash-not-goods/

______. 2013. Philippines-Typhoon Yolanda/Haiyan Factsheet #1. USA: U.S. Agency for International Development.

______. 2014. Indonesia Emergency Response and Reconstruction in Aceh Province (2004–2009). Indonesia: U.S. Agency for International Development.

______. n.d. Fact Sheet. USAID Assistance to Burma from 2008–2012. USA: U.S. Agency for International Development.

USDA (U.S. Department of Agriculture). 2009. Union of Burma. Grain and Feed Annual. USA: U.S. Department of Agriculture.

______. 2012. Japan Grain and Feed Annual 2012. USA: U.S. Department of Agriculture.

______. 2016. Indonesia Grain and Feed Update. USA: U.S. Department of Agriculture

Wailes, Eric, R. Clarete, R. Briones, and F. Pochara. 2012. Food Security in Asia: The 2007-2008 Food Price Crisis. Manila, Philippines: Asian Development Bank. Accessed on March 2017. Retrieved from https://www.adb.org/features/has-world-learned-2007-2008-food-price-crisis

WFP (World Food Programme). 2005. World Food Programme Annual Report 2004. Italy: World Food Programme.

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______. 2008. Myanmar: Cyclone Nargis Update. Italy: World Food Programme. Accessed on March 2017. Retrieved from https://www.wfp.org/stories/myanmar-cyclone-nargis-update

______. 2009. Nargis: What Happened and How WFP Responded. Italy: World Food Programme. Accessed on March 2017. Retrieved from https://www.wfp.org/stories/nargis-what-happened-and-how-wfp-responded

______. 2011. WFP Extends Support to Disaster Response Efforts in Japan. Italy: World Food Programme. Accessed on March 2017. Retrieved from https://www.wfp.org/news/news-release/wfp-extends-support-disaster-response-efforts-japan

______. 2013. Multi-Cluster/Sector Initial Rapid Assessment Philippines Typhoon Haiyan. Italy: World Food Programme.

______. n.d. Philippines: Typhoon Haiyan Profile. Italy: World Food Programme.

Overview of Food StockpilingIn Thailand, rice is considered as the most important agricultural crop. It is a staple food for the Thais, and a vital part of their culture. It is also the country’s largest agricultural export. In 2016, Thailand was able to export a total of 9.9 million MT of rice (Table 12), making it one of the world’s top rice exporters.

National Level Food Reserves

ThailandOranutda Chinnasri

Kasetsart University (KU)

Table 12. Thailand rice export volumes, 2007–2016

Year Volume (in ‘000 MT)2007 9,557.382008 10,011.042009 8,592.832010 9,047.392011 10,666.122012 6,734.432013 6,611.622014 10,969.342015 9,795.762016 9,883.29

Source: Thai Rice Exporters Association (2017)

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About 50 years ago, people in the rural areas were known to keep rice stockpiles for food security purposes. At present, however, the numbers have been declining, and rice is being stocked mainly for exports. The country has the capacity to produce most of its food requirements, except for soybeans (Pongsrihadulchai 2014). Hence, the country has no immediate concerns over food availability. However, despite having sufficient supply, food accessibility is being hampered by high poverty incidence and limited land ownership among farmers. There are also issues over food utilization, safety, and wastage in the country.

As societies change, and diets diversify, Thailand began to stockpile other agricultural products besides rice. These include commodities such as soybeans, corn, cassava, dried longan, garlic, sugar, palm oil, eggs, and meat. The stocks are mainly sourced from local procurement, G2G trade and through the private sector.

Analysis of Food Reserve EstimatesThailand was estimated to have produced a total of 195.0 million MT of rice during the 2007–2016 period. Consumption, on the other hand, reached 102.2 million MT.14 A sudden uptick in the country’s rice stockpiles was experienced during the period 2011–2013 owing to the implementation of the Paddy Pledging Program, estimated at a record high of 17 million MT. The Thai government was eventually forced to sell excess rice supply to the global market, with ending stock recorded at 6.3 million MT by the end of 2016 (Figure 11).

For rice information and data management, there are a number of public and private institutions engaged in rice research in Thailand. In order to further encourage collection, exchange and dissemination of information related to rice, the Rice Department and eight other organizations hold the National Rice Conference every two years since 2010. The conference serves as a venue for presenting research results and knowledge management initiatives of the government, private sector, farmers, and local communities across the country. It also aims to further develop rice researchers, as well as establish researcher networks (Bhumikiattiyot 2014).

Initiatives on Food Reserves ManagementRice market intervention in Thailand began after World War II when the Allies demanded the country to pay its war indemnity in rice. This paved the way for the

14 Data retrieved from the IRRI World Rice Statistics 2017

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imposition of a rice export monopoly, which later evolved into a specific export tax, or a rice premium. Several pieces of legislation and programs followed, such as the export premium collected by the Ministry of Commerce (MOC), an ad valorem export duty of five percent collected by the Ministry of Finance (MOF), and quantitative restrictions on exports, among others (Siamwalla and Setboonsarng 1991).

With regard to food reserve management, the following are some of the more recent initiatives of the Thai government, specifically on rice:

Rice Reserve Requirement (1972)During mid-1972, the failures in global rice production were significantly felt when they drove prices up. The government acted to stabilize the prices by using a Rice Reserve Requirement scheme, complemented with restrictions in private exports. Implemented by the MOC, rice exporters were required to sell a portion of their stocks to the government before they can export. The government procured rice were then sold to domestic consumers at a subsidized price (Siamwalla 1975).

Figure 11. Thailand rice production, consumption, and stock volumes, 2007–2016

Source: IRRI World Rice Statistics (2017)

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Rice-price Pledging Scheme (1982)The Rice-Price Pledging Scheme was first introduced in 1982 with the goal of providing soft loans to farmers who prefer to hold their rice stocks until such time that it was most profitable to sell in the market (Caballero-Anthony et al. 2016). The Bank for Agriculture and Agricultural Cooperatives (BAAC) was tasked to lend money to the farmers, equivalent to the value of their pledged rice. The amount of the loan was calculated based on a predetermined government price at three percent net interest per annum. Farmers were given up to five months to redeem their pledged rice, otherwise, the unclaimed rice will go the government’s public stock (Chulaphan et al. 2012).

Paddy Pledging Program (2011)In 2011, the Thai government started implementing the Paddy Pledging Scheme, which aimed to not only improve the income and living standards of farmers through higher domestic prices, but also to increase rice export prices. Farmers were offered around USD 500 per ton of paddy (Mahathanaseth and Pensupar 2014). During its implementation, the government’s intervention prices were set at approximately 50 percent and 30 percent higher than market prices for white rice and fragrant rice, respectively. Moreover, there were no imposed limits on the amount of rice that can be pledged by the farmers (USDA 2017).

On-farm Paddy Pledging Program (2014)Due to problems encountered from the Paddy Pledging Program, the new military government introduced in 2014, short-term measures to stabilize rice prices. One of these was the On-Farm Paddy Pledging Program. In 2016, the program was renewed with an approved budget of Thailand Baht (THB) 6.8 billion (USD 193 million). This was to ensure stability of rice prices by encouraging farmers to stockpile rice or paddy. Low interest rate loans were offered to farmers through the Farmer Assistance and Price Stabilization Program of the BAAC (USDA 2017).

Over the years, a number of public and private institutions have been involved in Thailand’s food reserve management and stockpiling initiatives. These include:

• Ministry of Agriculture and Cooperatives (MOAC);

• Ministry of Commerce (MOC) including the PWO;

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• Ministry of Interior (MOI);

• Ministry of Public Health (MOPH);

• Ministry of Industry and the Ministry of Social Development and Human Security (MSDHS);

• Prime Minister’s Office;

• Local government units (LGUs); and

• Other private organizations.

Currently, public stockpiles in Thailand encompass all four known types, namely, emergency or humanitarian, food security, safety net, and export stockpiles. However, it was pointed out that among the four categories, stockpiles for export purposes is the most dominant form adopted. Export stockpiles are not solely for rice. The government is also keeping stocks of cassava, sugar, and dried longan for exports. For food security purposes, cattle and buffalo meat are also being stored. The selection of which commodities to keep is based on whether it is a staple, and if it is a source of income for farmers.

To estimate the amount of food to stockpile, particularly rice, an indirect method, called the “food balance sheet” has been used with the following formula:

Stockpile = Supply – Demand/Utilization

Where:

Supply = beginning stocks + domestic production + imports

Demand = consumption (human + commercial + animal) + exports + ending stocks

Unit of measure: kwian = 2,000 liters or 2 cubic meters

Dr. Apichart Pongsrihadulchai, a consultant of the Thailand Rice Department, stressed that the MOC should kept track of public stocks. In late 2016, the actual amount of rice stocks was estimated to be around seven to eight million tons. Keeping this amount of stockpile entailed high costs to the government. Thus, it was suggested that the optimal amount of rice stocks must be around two million tons only.

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Another relevant initiative of the Thai government is reducing climate change vulnerability through a seed program. The Department of Agricultural Extension was tasked to set up the program to produce 3,000 tons of seeds annually in preparation for possible occurrence of natural disasters such as drought and floods.

Key Issues and Challenges in Food StockpilingMore does not always imply good. Thailand is known as one the largest producers of rice in Asia and even the world. However, with the high volume of rice being produced by the country, challenges in maintaining quality and storage can arise. Table 13 summarizes some of the advantages and disadvantages of food stockpiling in Thailand.

Table 13. Advantages and disadvantages of food stockpiling in Thailand

Advantages Disadvantages

• Limiting the amount of rice sold in the market through stockpiling raises its price, favoring farmers

• Saves farmers some money if they set aside a portion of their harvests as reserves for their own consumption

• Secures households’ food supply in times of emergencies and calamities

• Assures farmers that the rice they eat are fresh and chemical free

• Storing reduces rice moisture over time, which improves its quality and increases its value

• May limit the availability of rice in the market if most farmers opt for it, causing consumers to suffer from higher market prices

• Makes farmers less liquid, making it harder for them to pay loans on time, increasing interests paid

• Most farmers no longer own their own silos or barns owing to high construction costs and lack of land

• Farmers are forced to sell their rice immediately after harvest to prevent them from going bad

Source: Survey interviews conducted by the author in 2016

Aside from the issues mentioned, Thailand is also faced with other issues in relation to food stockpiling such as:

• Lack of storage and drying facilities;

• Mismanagement of subsidized drying equipment;

• High government expenditures in relation to the implementation of the rice barn scheme;

• Lack of statistical database for stockpiles;

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• Weak coordination among government agencies involved;

• Non-strategic timing of rice releases in the market; and

• Inaccurate land zoning mechanism resulting to false land declarations by farmers to avoid high taxes.

Proposed Actions and RecommendationsTo resolve the issue on storage and drying, Thai farmers can consider setting up collective stockpiles. This could be done through cooperatives, or the government can build a rice storage center equipped with drying machineries to support the farmers. The farmers, in return, should be held responsible for the maintenance of the equipment provided.

Institutional and policy reforms are also encouraged to ensure proper management of the country’s rice reserves. For instance, agencies involved in stockpiling activities must be well-coordinated. The government should also reduce its intervention in the rice market and allow it to operate based on actual demand. Policies can be formulated or developed in support of food stockpiling initiatives one of which is to identify and require appropriate government agencies to collect data on and monitor public stockpiles.

Despite the absence of a direct policy on food reserve and stockpiling in Thailand, it is believed that the government does have a rice reserve, although the quantity cannot be verified. This lack of specific legislation for food stockpiling can be attributed to the country’s surplus production of agricultural products.

Community Food Stockpiling in ThailandThailand is divided into four major regions: Northern, Northeastern, Central, and Southern. Each region has its own local techniques when it comes to food stockpiling, depending on their main agricultural products and geographic location. Rice, as a staple, is being stockpiled in all four regions.

In the Northern and Northeastern regions, people are used to eating sticky rice as part of their culture. Thus, the locals are accustomed to stocking this variant. These regions are also known to have abundant supply of longan, garlic, and onions. Some also keep fresh limes in opaque baked clay containers full of high-moisture sand. The Northeastern people also preserve and dry fish. For those in the Southern region, which is closer to the coastlines, they tend to make and keep shrimp pastes and salted or dried fish.

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Communities in Northern and Northeastern parts of Thailand are said to still have granges or silos where most of their rice are stored (Figure 12) and they are usually made of wood like teak and bamboo. The size of the barns depends on the owners’ financial capacity, as well as on the availability of materials. However, according to the Community Development Department (2016), there has been a significant decline in the number of rice barns being used in the communities. Anecdotal evidence indicates there were previously about 4,000 barns. Today, there are only about 1,200 in use across 55 provinces in the country.

Figure 12. Traditional rice barns in Northern Thailand

Source: Chiang Mai University Research Institute (2016)

There is no specific method used to calculate the amount of rice stockpiled in these communities.

In the Southern part of Thailand, rice granges are built high not only to prevent pests from damaging the grains, but also to allow more air to circulate and speed up the drying process. This is also advantageous in terms of transport

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since the commonly used carts or kwian used by the farmers are almost of the same height as the granges. An example is shown in Figure 13, which is a rice barn in Ngu District in Satun Province (Simsuay 2015).

Figure 13. Traditional rice barn in Southern Thailand (Ngu District, Satun Province)

Source: Simsuay (2015)

For the Central portion of the country, the use of rice silos has declined over the years owing to changes in farmers’ lifestyles. With the introduction of a new high-yielding rice variety in 1967, the Kor Khor 1 (or RD 1), farmers focused on planting rice for exports. Quantity was eventually preferred over quality. The old rice silos or granges were eventually torn down because farmers found no reason to stock rice for their own use. Since the said variety was found to be tasteless, the farmer households decided that it is better to purchase other rice varieties in the market for their consumption15.

15 Based on the interview with Decha Siripat of Suphanburi Province in November 2016

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One current practice among Thai farmers is to use jute or plastic bags to store their rice and place them in a spare room or on top of pallets (Figure 14). In some places, the silos are already being used as storage for other belongings. Those who do not have their own rice barns resort to community silos, entering under an agreement, which requires them to either do community service or pay in cash or in kind.

Figure 14. Alternative rice storages in Thailand

Source: Chinnasri (2017)

For villages that are far from the cities, the locals have established the so-called rice banks to ensure availability of rice for their own consumption. The first rice bank was established in 1970 by the Lua hilltribe of the Ban Pa Pae village of the Mae Hong Son Province, which is around 700 km away from Bangkok (Figure 15). After a tragic incident that burned down the community rice barn, the villagers were forced to borrow rice from the neighboring villages. These villages imposed a 50 percent interest on the borrowed rice. When King Bhumibol found out about the situation, he provided THB 20,000 for the establishment of Thailand’s first rice bank. The purpose of these rice bank is to lend rice to the villagers in case of shortages, to be paid back at 20 percent interest (Karnjanatawe 2016). The villagers used this money to buy 200,000 kg of rice to start up the bank (First Rice Bank of Thailand 2016). At present, there are already several rice banks existing in Thailand (Table 14).

There are also several rice seed community banks in Thailand, where good quality rice grains are being stored under the management of the local community and the government. Moreover, the Thailand Rice Department offers support to rice farmers by subsidizing the rice grains for the first year of planting, and then the members will have to pay for it with some pre-arranged interests. At present, there are about 73 rice seed community banks across the country.

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Figure 15. The first rice bank of Thailand

Source: Nation Multimedia (2018)

Table 14. Existing rice banks in Thailand and type of stockpiles

Community Rice Bank Type of Stockpile(s)

Surin Rice Community Food security stockpilesKalasin Rice Community Food security stockpilesSuphanburi Rice Seed Complier and Supplier Association

Food security stockpiles; stockpiles for export purposes

Mae Hong Son Rice Bank Food security stockpilesSakon Nakhon Rice Bank Food security stockpilesBeung Gaan Rice Bank Food security stockpilesRice Seed Community Bank Food security stockpiles

At the community level, food reserve and stockpiling initiatives are mainly for food security purposes. Despite the drastic reduction in the number of rice barns or silos, the practice is seen to continue in Thailand. The current implementation of the On-Farm Paddy Pledging Program raises the possibility that farmers will invest in the construction of these storage facilities.

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References

Bhumikiattiyot. 2014. 3rd National Rice Research Conference. Thailand: NRCT. Accessed on March 2017. Retrieved from http://en.nrct.go.th/en/News/tabid/78/ctl/ArticleView/mid/388/articleId/171/3rd-National-Rice-Research-Conference.aspx

CDD (Buriram Community Development Department). 2016. The Operations to Assist Farmers (Yoong, Chang, and Rice Banks Networks Activities of Saving Groups for Production). Accessed on March 2017. Retrieved from http://www.cdd.go.th/web/buriram/admin/media/media_ id648.pdf

Caballero-Anthony, Mely, P. Teng, J. Lassa, T. Nair, and M. Shrestha. 2016. Public Stockpiling of Rice in Asia Pacific. Singapore: S. Rajaratnam School of International Studies.

Channel 7. 2016. Special Report: First Rice Bank of Thailand. 15 November 2016. Retrieved from http://www.ch7.com/watch/200051/รายงานพิเศษ_ธนาคารข้าวแห่งแรกของประเทศ.html

Chulaphan, Wanvilai, S. Chen, C. Jatuporn, and P. Jierwiriyapant. 2012. “The Effects of Rice Price-Pledging Scheme on Price Transmission of Rice Markets in Thailand”. Asian Journal of Empirical Research 2 (5): 141–148.

Karnjanatawe, Karnjana. 2016. “Building a Village: How His Majesty King Bhumibol Adulyadej’s Royal Project Saved a Community.” Bangkok Post. 1 December 2016. Retrieved from http://www.bangkokpost.com/print/1148749/

Mahathanaseth, Itthipong, and K. Pensupar. 2014. Thai Agricultural Policies: The Rice Pledging Scheme. Department of Agricultural and Resource Economics, Kasetsart University, Bangkok.

Pongsrihadulchai, Apichart. 2014. Food Security Policy of Thailand. A paper presented during the Department of Agricultural Extension Staff Seminar on 8 December 2014 at the Rama Garden Hotel Bangkok.

Reuters. 2015. Thai govt aims to sell 17 mln tonnes of stockpiled rice over 2 years. Retrieved from https://in.reuters.com/article/thailand-rice/thai-govt-aims-to-sell-17-mln-tonnes-of-stockpiled-rice-over-2-years-idINL3N0US3D520150113

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Siamwalla, Ammar. 1975. “A History of Rice Policies in Thailand.” Food Research Institute Studies 14 (3): 233–249.

Siamwalla, Ammar, and S. Setboonsarng. 1991. “The Political Economy of Agricultural Pricing Policy.” In Thailand, edited by Anne O Krueger; Maurice Schiff, and Alberto Valdés The International Bank for Reconstruction and Development/The World Bank. The John Hopkins University Press.

Simsuay, Chaowalit. 2015. “Wisdom of Rice Storage Resulting in the Form and Location of Barn in Residential Area of Agricultural Society .” Journal of Research and Development. Buriram Rajabhat University. 10 (1): 23–32.

Welcher, Paul. 2017. Thailand: Rice Market and Policy Changes over the Past Decade. USA: US Department of Agriculture.

Overview of Food StockpilingVietnam is the second largest rice exporter in Southeast Asia. The country’s total rice exports amounted to USD 2.2 million (ITC 2016). Rice is both an important export product and a staple food in Vietnam. Yet, this situation has proven to be paradoxical. The high export volumes boosted farmers’ incomes and the country’s foreign exchange earnings. However, this has also increased domestic prices, which significantly affected local consumers such as during the 2007–2008 crisis. Likewise, the rising costs of labor in Vietnam has resulted in lower export competitiveness. As a response to this dilemma, the government of Vietnam implemented several policies starting in 2009, and one of these is the enhancement of its current food stockpiles (Inoue, Okae, and Akashi 2015).

At present, Vietnam’s National Reserve is composed of both food and non-food commodities, which are grouped into five main categories depending on their intended purpose:

1. Assurance of economic and social securities;

2. Response to natural disasters, search and rescue, and other types of emergencies;

3. National defense and security; protection of the national border, territorial seas and islands; and industrial mobilization;

VietnamNguyen Trung Kien and Vo Thi Thanh Tam

Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD)

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4. Prevention and control of animal and plant diseases, and emergency treatment for humans; and

5. Prevention and suppression of epidemics for humans.

Vietnam’s food stockpiles fall under the first category, and is comprised of paddy, white salt, and seeds (i.e., rice, corn, and vegetables), among others. Any revision to the list of commodities being stockpiled has to be approved by the National Assembly Standing Committee (NASC). The goods are selected based on the following criteria:

1. Strategic and essential, or those which are frequently used during emergencies;

2. Special types, or those which cannot be easily replaced; and

3. Supplies, equipment, and commodities used for national defense and security, which the country cannot produce based on quantity, quality and type requirements.

The National Reserve is financed mainly through the state budget and is included in the annual state budget estimates. The Ministry of Finance (MOF) manages and allocates this budget for the purchase of commodities to be stored in the country’s reserve. Moreover, the commodities used for the National Reserve are procured in accordance with the bidding law, which is carried out through public bidding, direct procurement, competitive offering and appointment of contractors. Another way of purchasing stocks is through direct public purchase from stakeholders. This method is only employed when purchasing grains.

Analysis of Food Reserve EstimatesAs specified under Decision 2091/QD-TTg (2012) approving the National Reserve Development toward 2020 Strategy, the following are the targeted levels of food stockpiles (Table 15).

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During normal conditions, the national rice reserve is usually below 85,000 tons. However, in 2013, this amount was significantly raised owing to the Prime Minister’s decision to assist public school children (Figure 16). Starting 2015, the targeted amount of rice for stockpiling was further increased to 500,000 tons. Data on storage and release of commodities under the National Reserve are collected by assigned government agencies as mandated by the Prime Minister.

Table 15. Targeted volumes of food commodity stockpiles in Vietnam since 2015

Commodity Stockpiled Targeted Volume of Stocks (in MT)Food (paddy equivalent) 500,000 White salt 130,000 Plant seeds

Rice 10,000 Maize 1,500 Vegetables 130

Source: GDNR (2012)

Figure 16. Paddy stockpile volumes in Vietnam, 2006–2014

Source: GDNR (2015)

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There are four main conditions for the storage and release of commodities of the National Reserve, and these are:

1. Prime Minister’s order. The Prime Minister has the right to approve the storage and release of commodities from the National Reserve in the following cases: (1) the Provincial People’s Committee announces the occurrence of an epidemic in their localities; (2) prevention, suppression, or alleviation of the consequences of natural disasters, as well as relief of famine; (3) market price fluctuates; and (4) defense or security purposes.

2. Emergencies. Aside from the Prime Minister, other ministries such as Finance, National Defense, Public Security, and Agriculture and Rural Development can also decide when to store or release national reserves during emergencies.

3. Annual planning and commodities exchange. The agencies delegated to maintain the National Reserve must draw up plans on storage, exchange and release of commodities to be summarized by MOF and approved by the Prime Minister. These agencies will also oversee the implementation of the approved plans for the year. In cases when the amount of money earned from the sale of the commodities for rotation is not enough to cover for the planned quantities to be procured owing to increase in prices, the number of commodities to be procured will be based on the actual budget on hand. For seasonal commodities, should the need to procure happens before the old stocks are sold, the MOF can consider advanced payment using the state budget. The corresponding ministry managing the commodity will in turn repay it within the fiscal year.

4. Other special cases. Storage or release of commodities from the National Reserve can also happen in cases when there is a need to liquidate or destroy existing stocks or when there is an oversupply.

In December 2010, the Ministry of Agriculture and Rural Development (MARD) released Decision 3242/QD-BNN-CB, which ordered the stockpiling of four million tons of paddy in state-owned warehouses. MARD placed these facilities all across the country, with 70 percent of the stocks stored in the provinces of Long An, Tien Gang, Dong Thap, Can Tho, An Giang, and Kien Giang. These provinces are known to have centralized commercial rice production facilities, as well as favorable transportation and infrastructure systems (Table 16).

There are two existing types of rice storage facilities in Vietnam. These are the silos and the pre-fabricated steel frame warehouses. The silos are primarily used to stockpile paddy with an average capacity of 500 tons per silo. They are

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also equipped with a synchronized system of tower drying, automatic conveyor feeder, and mixer to ensure rice storage requirements are achieved. Most silos are located in Long An, Dong Thap, An Giang, Can Tho, and Ho Chi Minh with an estimated joint storage capacity of 860,000 tons. The pre-fabricated steel frame warehouses, on the other hand, have storage capacities reaching 3.14 million tons and are equipped with drying machines and courtyards. This type of storage is harder to maintain as it needs to meet lighting and ventilation requirements, as well as prevent infestations. It also needs to have waterproof floors and walls.

Initiatives on Food Reserve ManagementThere are several legislations being implemented in relation to food reserve management in Vietnam. The Law on the National Reserve of 2012, which was issued by the National Assembly, is the main legal framework for food reserve management in the country. Other government institutions such as the Prime Minister’s Office, the MOF, the General Department of National Reserves (GDNR), and MARD also have their own specific regulations.

Law on the National Reserve (Law No. 22/2012/QH13)This law covers the formation, management, and use of Vietnam’s National Reserve. It also specifies the rights and responsibilities of all the stakeholders involved. According to this law, the main objective of establishing a national

Table 16. Targeted storage capacities (in ‘000 tons) of state-owned warehouses in Vietnam

Province Current Capacity

New Capacity

Location of Newly Established Rice Warehouses

Total Capacity

(Current + New)Vinafood 2 Vinafood 1 Other

Stakeholders

An Giang 346 450 165 100 185 796Can Tho 300 400 159 - 241 700Kien Giang 164 350 81 100 169 514Dong Thap 200 310 88 112 110 510Long An 150 350 124 50 176 500Tien Giang 120 250 77 - 173 370Others 208 390 281 - 109 598TOTAL 1,488 2,500 975 362 1,163 3,988

Source: MARD (2010)

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reserve is to proactively meet unexpected or urgent requirements in cases of natural disasters, catastrophes, fires, and epidemics, as well as for national defense and security purposes. The various government agencies involved in food stockpiling in Vietnam are depicted in Figure 17.

Figure 17. Inter-agency food reserve management system in Vietnam

The amounts of national stockpiles are determined through surveys, statistical analyses, weather forecasts (e.g., expected occurrence of natural disasters) across the country, as well as the capacity of reserve units in various localities. The Prime Minister approves the reserve plans submitted by the local governments. This ensures that allocations are appropriately based on the requirements of the areas and the quality of the stockpiles is preserved.

The Vietnam government, through the GDNR, is currently prioritizing initiatives on R&D, as well as the use of advanced technologies and sciences in food reserve management in the country. One major concern with regard to national reserve management is climate change. To cope with this, the government has issued policies that aim to modernize preservation technologies, promote research and knowledge transfer in the use of such technologies across the regions.

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Vietnam is implementing several good practices in relation to food stockpiling activities in the country. These include cost reductions through the implementation of the in-kind and in-cash reserves split allocations, and strategic positioning of storage facilities based on security, economic, and population concentration. Furthermore, the government is reducing the number of small-sized warehouses and replacing them with larger and more modern facilities.

Key Issues and Challenges in Food StockpilingHaving a diverse national reserve has proven to be a challenge for the government of Vietnam especially in terms of management, storage, and quality preservation. The current stockpile systems are unorganized and sometimes deemed ineffective. Storage facilities also have low capacities and employ underdeveloped preservation technologies. There has been limited research initiatives regarding the use of advanced technologies for the preservation of the commodities stocked, as well as in mechanizing the storage process and transport of goods to reduce losses. The capacities of the people assigned to manage the National Reserve must also be enhanced.

The National Reserve accounts for a very small portion of the country’s GDP, but the required quantities, and duties imposed on the commodities to be stored are quite high. With this, the government targeted to increase its reserve’s share in the GDP by 0.8–1.0 percent by 2015, and 1.5 percent by 2020. At present, the National Reserve supply is unable to satisfy the amount of commodities needed to address severe and long lasting disasters in Vietnam.

Another challenge for Vietnam is the incomplete system of National Technical Regulations, as well as unconformity of technical-economic norms for the National Reserve with the Vietnamese and international standards.

Proposed Actions and RecommendationsTo facilitate the development of Vietnam’s National Reserve mechanism, the following factors and actions have been identified:

• Specific policies and legislation for the National Reserve. Policymakers must formulate and develop specific policies and legislations that will take into consideration the financial, storage and distribution, and preservation requirements of the National Reserve.

• Monitoring and implementation of policies and programs. To encourage efficient management and use of commodities under the National Reserve, the government should strengthen its monitoring initiatives and continually improve them. This will prevent possible corruption

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and reduce wastage, as well as allow them to see the gaps on current regulations that need to be addressed.

• Centralization of National Reserve management. To achieve effective management of the stockpiles, a management team should be put in place and this should include experts especially in preservation technologies.

• Uniform and centralized information system. A uniform and centralized information system must be established to connect the national and local offices involved in the management of the National Reserve. This would ease the flow of information among offices and facilitate access to complete and accurate data on the reserves that can be used to develop or improve policies.

• Annual review and revision of the list of commodities stockpiled. The goods to be stored as part of the National Reserve should be selected based on the current socioeconomic conditions and must conform with the government’s targets to effectively serve its purpose.

• Selection of strategic and essential commodities. Instead of storing commodities with short shelf life, or those which can be easily produced and procured locally, the National Reserve should include goods with high economic value, as well as those which are non-renewable. The commodities to be stockpiled must also be based on the actual needs of the localities where they are placed considering the type of natural disasters or epidemics that frequently occur in each area.

• Availability of funds and a specific financial mechanism. The amounts of commodities to be stored as part of the National Reserve, as well as the corresponding budget needed must be analyzed and planned on an annual basis. Funds from both the state budget and other legal sources must be made available should the need to increase the stocks arises. Continuous improvement and maintenance of facilities and other infrastructure related to the National Reserve is likewise important, and funds to shoulder these costs must also be provided.

• Standardization of National Reserve facilities. The government should develop standards and models for all National Reserve facilities and increase its investments on infrastructure development to continually modernize its facilities and offices.

• Suitability of warehouses. The warehouses used for the National Reserve must be made suitable to specific commodities or commodity groups, as well as the corresponding preservation technologies needed.

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• Research on and adoption of advanced storage and preservation technologies. To ensure efficiency in the management of the stocks and reduction of wastes, the government should research on new technologies that can be used for the National Reserve. A good start would be to develop a complete system of quality standards, national technical standards, and techno-economic norms. Adoption of proven technologies from other countries is also encouraged.

• Human resources development. The proper management of the National Reserve is strongly hinged on the capacity of the people involved in the process. The government should ensure that there is an adequate number of people with the capacity and expertise to handle the tasks at hand.

• Increase public awareness on the importance of the National Reserve. People across all social strata must be informed of the importance of having reserves and their respective roles in maintaining it. The people who manages the National Reserve should practice transparency and share to the public their reports and other forms of communication.

Community Food Stockpiling in VietnamFood stockpiling activities in Vietnamese communities have lessened over time especially in the large provinces. For instance, in the Mekong River Delta, farmers no longer stockpile paddy and seeds, instead, they sell their fresh paddy immediately after harvest. However, in the mountainous province of Quang Nam, most of the natives have their own warehouses for storing rice and other food products (Figure 18). These warehouses are usually shaped like small houses and are primarily made of wood. To avoid incidents such as fires, these warehouses are usually built near the forests and away from the villages. These rice granaries have been a part of the Quang Nam culture and tradition and has been considered a symbol of prosperity among the locals.

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Figure 18. Rice granaries in Quang Nam Province, Vietnam

Source: danviet.vn (2017)

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References

Bjornstad, Liv. 2009. “Fiscal Decentralization, Fiscal Incentives, and Pro-Poor Outcomes: Evidence from Viet Nam.” ADB Economic Working Paper Series No. 168. www.adb.org/sites/default/files/pub/2009/Economics-WP168.pdf. Manila, Philippines: Asian Development Bank.

Finance Times website <http://thoibaotaichinhvietnam.vn>

FAO (Food and Agriculture Organization of the United Nations) and OECD (Organisation for Economic Co-operation and Development). 2012. Sustainable Agricultural Productivity Growth and Bridging the Gap for Small-Family Farms. Interagency Report to the G20 Mexican Presidency. Accessed on March 2017. Retrieved from http://www.oecd.org/tad/agricultural-policies/50544691.pdf

GDSR (General Department of State Reserve). n.d. Home Page. Retrieved on 11 September 2016 from http://gdsr.mof.gov.vn/Pages/Home.aspx

Inoue, Sotaro, T. Okae, and K. Akashi. 2015. Rice Policy Trends in Southeast Asian Countries: Thailand, Vietnam and Indonesia. PRIMAFF Review No. 66, pp. 4–5. Japan: Ministry of Agriculture Forestry and Fisheries (MAFF). Accessed on March 2017. Retrieved from http://www.maff.go.jp/primaff/e/review/pdf/150728_pr66e_03.pdf

Law Library. n.d. Home Page. Retrieved on 16 September 2016 from http://thuvienphapluat.vn

MARD (Ministry of Agriculture and Rural Development). n.d. Home Page. Retrieved on 16 September 2016 from http://www.mard.gov.vn/Pages/home.aspx

______. 2014. Background Paper on Vietnamese Domestic Agricultural Policies. Prepared for OECD Review of Agricultural Policies in Viet Nam.

Ministry of Industry and Trade. n.d. Home Page. Retrieved on 16 September 2016 from http://www.moit.gov.vn/vn/Pages/Trangchu.aspx

Phan, S.H., and V.T. Trinh. 2014. Review of Agricultural Policies: Vietnam 1976–2013.

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Tran, Cong Thang. 2014a. Overview of Agricultural Policies in Vietnam. Agricultural Policy Database. FFTC Agricultural Policy Database. Accessed on March 2017. Retrieved from http://ap.fftc.agnet.org/ap_db.php?id=195

______. 2014b. Paper on Vietnamese Domestic Agricultural Policies. Prepared for OECD monitoring and evaluation report.

Overview of Food StockpilingDecades ago, during the Socialist Era in Myanmar, food reserves were managed by the Agricultural and Farm Produce Trade Corporation (AFPTC) under the Ministry of Commerce (MOC). Particularly for rice, a blanket policy was implemented where farmers were required to sell a portion of their harvests to the government at a standard procurement price regardless of their actual yield. This policy became a major challenge to farmers especially during poor harvests. The procured paddy were then stored in the so-called public godaungs, which were owned by the State Agricultural Marketing Board (SAMB).

Prior to public distribution, the stocked paddy were milled, and the millers were paid in kind. Since the price was set very low, only equivalent to a tenth of the market price, the rice were generally of poor quality. The cooperatives were tasked to distribute the rice to registered constituents of each state or division. In case of a shortage in supply, surplus from the nearby state or division is procured. This practice, however, was strictly controlled by the government. Owing to excessive government intervention, the cooperative system eventually failed.

In the late 1980s, the government introduced an open-door economic policy and rice trading was finally liberalized. Rice could be traded in any part of the country, and traders were allowed to export. However, there was no policy formulated for rice stockpiling. Instead, the government focused on exporting its rice surplus.

MyanmarShwe Mar Than

Yezin Agricultural University (YAU)

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By 2010, the country was transformed into a democracy. When rice prices went below actual production costs in 2011, the government took action by intervening in the market. A central committee was formed and tasked to procure paddy from the farmers at MMK 3,100 per basket. This was about 10 percent higher than the prevailing market price of MMK 2,800. The procured paddy were then stored as buffer stocks. The government likewise increased the money supply to induce demand. When the prices of rice where finally stabilized, the buffer stocks were sold in the domestic market while some were exported.

At present, Myanmar is a member of APTERR, with an earmarked rice quantity of 14,000 MT. However, since Myanmar is considered as one of the major rice exporters in Southeast Asia with a huge production surplus, the country did not feel the need to establish its own emergency reserves. Instead, the government strengthened its initiatives to be rice self-sufficient in order to ensure food security.

Analysis of Food Reserve EstimatesFrom 2011 to 2013, Myanmar kept rice as buffer stocks to stabilize prices. A total of 61,807 MT were stockpiled during this period. For the period 2011–2012, the total amount of rice stockpiled was recorded at 42,591.38 MT where half of it was distributed to the people of Yangon and the rest were exported. As for the succeeding period, the stocks were significantly lowered, only amounting to 19,215.70 MT. This amount was distributed across Yangon, Rakhine, and Mandalay (Table 17).

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Initiatives on Food Reserve ManagementOwing to the damages brought about by Cyclone Nargis in Ayeyarwady and Bago divisions during 2008, MOALI urged the Myanmar Rice Industry Association (MRIA) to review its exporting decisions in consideration of the country’s food security. MRIA had to reconsider whether or not to export 50,000 tons of rice or keep it as a reserve.

In 2012, the government formed the Rice Reserve Supervisory Committee (RRSC). The RRSC was then composed of 10 members with the following responsibilities:

Table 17. Rice buffer stock volumes in Myanmar, 2011–2013

Year Season Source Volume2011–2012 Monsoon Ayeyarwady Division 490,364.41

East Bago 179,851.00West Bago 382,609.39Yangon Division 273,921.00Season Total (in Baskets) 1,326,745.80

Summer All Sources (Ayeyarwady Division, Bago) 396,497.53

Season Total (in Baskets) 396,497.53

Paddy Annual Total (in Baskets) 1,723,243.33In Metric Tons 35,946.86

Rice Conversion:Equivalent Milled Rice (in MT) 21,526.43Procured Rice (in MT) 21,424.94

TOTAL STOCKS (2011–2012) 42,951.37

2012–2013 Monsoon All Sources (Yangon, Mandalay, Rakhine) 19,215.70

Equivalent Milled Rice (in MT) 19,215.70 Summer

No Procurement -

TOTAL STOCKS (2012–2013) 19,215.70 Source: MOC (2014)Notes:a 35,946.86 is paddy in MT converted to rice amounting to 21,526.43 MTb 42,951.37 is the total of the converted rice plus procured from other sour

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• Determine the type and amount of buffer stocks to purchase and maintain, the sources of the stocks, and hiring qualified personnel;

• Determine the procurement price based on the cost of production;

• Perform quality standardization;

• Determine specific type of stockpile to purchase in respective zones and regions;

• Supervise and monitor the amount and quantity of stocks;

• Determine when to buy and when to replace the stocks;

• Adjust the amount of stockpile by estimating the amount of production, surplus and export of major rice producing countries;

• Ensure timely distribution of food stocks in case of emergencies;

• Coordinate with the Ministries and other involved organizations regarding financial matters, management and physical facilities;

• Handle the budget allotted by the State; and

• Encourage PPP for the development of Myanmar rice sector.

A total budget of MMK 14.5 billion was allotted to the committee for the procurement of rice buffer stocks. The paddy stocks were sourced from rice traders at a price higher than the market price. The equivalent milled rice was stored at MOC’s facilities free of charge. These buffer stocks were kept to support farmers to earn profits, make rice affordable to the consumers, and to serve as a source of food in case of emergencies.

Currently, there is no specific law on food stockpiling in Myanmar for emergency purposes. Instead, the government keeps an emergency fund for such cases. However, there are already moves on creating legislation for the purpose of ensuring food security in Myanmar. As early as the 1980s, food security has been considered a key component of agricultural policies in the country. The key strategy was to promote agricultural commercialization in line with an open-door market economy.

Moreover, under the National Plan of Action for Food and Nutrition (2006–2010), the National Nutrition Center of the Ministry of Health identified four major action plans:

1. Strengthen household level food security,

2. Ensure food quality and safety,

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3. Improve nutrition related health care services, and

4. Prevent malnutrition and implement nutrition promotion actions.

Under the household food security strategy, the activities involved were: (1) the dissemination of technology related production, preservation, storage, and distribution; (2) family income generation through the development of financial institutions; and (3) close monitoring of food security status especially in relation to emergency situations.

Key Issues and Challenges in Food StockpilingThe advantages and disadvantages of keeping food stockpiles in Myanmar were identified as follows (Table 18):

The major challenge concerning food stockpiling in Myanmar is the lack of specific legislation catering to it. The country used to adopt a centrally-planned economy where food stock storages were owned and managed by the government. When Myanmar transformed into an open market economy, the private sector dominated the rice industry.

Additionally, there are a few issues on food stockpiling being experienced in Myanmar, to wit:

Table 18. Advantages and disadvantages of food stockpiling in Myanmar

Advantages DisadvantagesIt secures food availability. Failure to maintain storage facilities may lead to

food wastage.It can prevent price fluctuations controlled by traders.

Prone to corruption and briberies to those managing the stocks.

Price stability can be achieved. Farmers will be at a disadvantage if practices are not fair.

Food availability during emergencies. Huge budgetary requirement for the government especially during market intervention.

The farmers are protected when prices go below production costs.Private sector involvement becomes crucial.

Source: Survey interviews (2016)

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• Inaccuracy/lack of information to determine level of market intervention needed, and the optimal amount of food to stockpile;

• Food wastage especially of good quality crops; and

• Government intervention with buffer stock storage is a bit profit-oriented.

Proposed Actions and RecommendationsThere is an immediate need to formulate policies pertaining to food stockpiling in Myanmar. There should also be a high regard for maintaining the quality of food stocks so that those who will benefit from the stocks in case of emergencies will be able to get more value. Food emergencies could arise from natural or man-made disasters such as civil wars. Some states or regions in Myanmar are prone to these types of calamities. For instance, Sagaing, Bago, and Ayeyarwady regions are prone to flooding. Moreover, there are still ongoing civil wars in certain border areas such as Kachin State and Rakhine State despite the government’s efforts to maintain peace and order in the country.

Given these situations, the government should formulate a policy to establish a food reserve in Myanmar. The reserve should not be solely for rice but also other basic needs or staple crops such as oil seeds, onions, chili, and pulses. The amount to be stockpiled should be estimated based on time series data analysis of climatic patterns and the number of victims. Furthermore, storage facilities should be upgraded to meet international standards to enable them to maintain the quality of the food stored.

Community Food Stockpiling in MyanmarAt present, Myanmar communities do not engage in food stockpiling activities. Instead, the Myanmarese people are known to be fond of donating and helping people who are in need through charitable groups or foundations. One of them is Daw Aung San Suu Kyi, the founder of the Daw Khin Kyi Foundation, which was established to honor her mother. Another is the Wailu Kyaw Foundation, which was founded by the actor Wailu Kyaw. Lastly is the Free Funeral Service Association founded by another famous actor, Kyaw Thu. These foundations do a variety of philanthropic activities such as provision of rice, food, clothes, buildings, roads, free health care, and funeral service, among others.

Well-known monks also do rescue and donation activities during emergencies. For example, when Cyclone Nargis struck Myanmar in 2008, almost all philanthropic groups went to help the cyclone victims by providing food, shelter, clothing, and medicines. The occurrence of Cyclone Nargis became an

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eye opener for the people of Myanmar to think about disaster preparedness, emergency rescue, and early warning systems. However, the government does not have enough strategic plans for food reserve systems, and the emergency funds are not under the direct control of the President or the Ministry of Social Welfare, Relief and Resettlement.

Even after Cyclone Nargis, Myanmar still suffers from natural disasters from time to time. There were widespread floods in 2015 and 2016. Eleven states and divisions out of the total 14 suffered from floods in 2015. Flood victims were provided with food, shelter and clothing not only by the government but also by other Burmese people from in and out of the country. The donation money went to the flood victims through different channels, majority of which are the trusted foundations. These foundations took the responsibility of arranging food purchases especially for rice (from the rice traders), as well as taking care of transportation, temporary storage, and distribution (Figure 19). They likewise provided other basic necessities such as clean drinking water, kitchen ware, utensils, clothes, and books for school children.

Figure 19. Emergency food support project of the Daw Khin Kyi Foundation in 2016

Source: Facebook account of the Daw Khin Kyi Foundation (2016)

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References

ActionAid International. 2011. No More Food Crises: The Indispensable Role of Food Reserves. http://www.actionaid.org/sites/files/actionaid/polcy_briefing_-_the_role_of_food_reserves.pdf. South Africa: ActionAid

Daño, Elenita, and E. Peria. 2006. Emergency or Expediency? A Study of Emergency Rice Reserve Schemes in Asia. http://asiadhrra.org/wordpress/wp-content/uploads/2008/05/rice%20reserve%20scheme.pdf. Philippines: Asian Farmers Association for Sustainable Rural Development and Asian Partnership for the Development of Human Resources in Rural Asia.

Food Security Portal. 2011. Emergency Humanitarian Food Reserves: Feasibility Study, Cost-Benefit Analysis and Proposal for Pilot Programme (Pre-Positioning for Predictable Access and Resilience (PREPARE) system). http://www.foodsecurityportal.org/sites/default/files/PREPARE_feasibility_study_and_pilot_proposal.pdf

Murphy, Sophia. 2009. Strategic Grain Reserves in an Era of Volatility. https://www.iatp.org/sites/default/files/451_2_106857.pdf. USA: Institute for Agriculture and Trade Policy.

Shwe, Tin Maung, and Thida Chaw Hlaing. 2011. Scoping Study on Food Security and Nutrition Information in Myanmar. Italy: Food and Agriculture Organization of the United Nations.

Von Braun, Joachim, M. Torero, and J. Lin. 2009. Eliminating Drastic Food Price Spikes—a Three Pronged Approach for Reserves. USA: International Food Policy Research Institute.

Overview of Food StockpilingSimilar to most Southeast Asian countries, rice is also a staple food in Cambodia. In fact, 75 percent of the total cultivated land is devoted to rice, making it a major source of income for Cambodians. The remaining 25 percent of the agricultural land is used for other crops such as rubber. Rice planted in the country is generally categorized as either white or fragrant. Fisheries is also a primary source of livelihood, employing around three million Cambodians. Fish is the main source of protein in the domestic diet.

In 2004, The Ministry of Agriculture, Forestry and Fisheries (MAFF) of Cambodia declared a policy of self-sufficiency in rice. This was in view of the increasing formal exports, as well as the even larger informal, cross border exports. However, in the aftermath of the 2007–2008 food price crisis, Cambodia strengthened its rice stockpiling efforts to control food price inflation.

Analysis of Food Reserve EstimatesFor the period 2005–2015, paddy production in Cambodia increased continuously, reaching 9.3 million MT by 2015 (Figure 20). Domestic rice consumption was also increasing, but at a decreasing rate. The per capita rice consumption in Cambodia increased by 4.7 percent on the average from 2004 to 2011, which is consistent with the country’s GDP growth (CGIAR 2013). In terms of volume, an average Cambodian consumes around 143–160 kg of rice per year as of 2011.

CambodiaYoeu Asikin

Royal University of Agriculture (RUA)

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During the 2007–2008 Food Crisis, the Royal Government of Cambodia (RGC) realized the importance of establishing rice reserves. The government increased its budget allocations to the Green Trade Company at USD 4 million and to the Rice Millers Association at USD 6 million to build up its strategic stockpiles. In 2008, the Rural Development Bank likewise augmented its funding for private rice millers from USD 6 million to USD 10 million to encourage them to stockpile rice and boost domestic supply. These stocks were released in the succeeding years to control food price inflation as necessary.

However, in the years after the crisis, the national government did not immediately establish a food reserve system. Instead, Cambodia received a USD 17.5 million grant (and SDR11.1 million loan financing) from the Asian Development Bank (ADB) through the Emergency Food Assistance Project (EFAP). The project was implemented to help Cambodia’s poor population that is struggling to cope with escalating food and fuel prices. EPAF supported a number of safety-net programs in the Tonle Sap Basin and urban slums of Phnom Penh, targeting to improve the food security of around 500,000 poor and vulnerable people. Free rice and other food subsidies, seed, and fertilizers,

Figure 20. Rice production volumes of Cambodia, 2005–2015

Source: Department of Planning and Statistics (2017)

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as well as job opportunities and scholarships were provided (ADB n.d.). Approximately 12,000 MT of rice were distributed to 68,000 vulnerable families from October to November 2008 (EFAP n.d.). Table 19 shows an inventory of Cambodia’s social protection programmes for emergency response.

Table 19. Social assistance programs for emergency response in Cambodia

Programme/Scheme

Type and

Value of Transfer

Eligibility Coverage Ministry/Agency

Emergency Food Assistance Project Food

Food insecure households:

ID Poor 1 and 2 affected by

food price crisis

Beneficiaries: 500,000

Provinces: 10Districts: 33

Communes: 100

Ministry of Economy and Finance (MoEF)

Food Reserve System Food

Food insecure households

affected by natural disasters

Nationwide

MoEF/National Committee for Disaster Management

Social Interventions for emergency and relief

Food

Households affected by

natural disaster and other

vulnerabilities

Provinces: 2

Beneficiaries: Approximately

15,000

Ministry of Social Affairs, Veterans and Youth Rehabilitation (MoSVY)

Cash-for-work programme

Cash; on average USD 5

per work day

Food insecure households

affected by natural disasters

The first phase of the programme (ended 2012),

created 2 million work

days; sustaining temporary jobs in a three-year

cycle

MoEF

Reducing the vulnerability of rural Cambodian livelihoods through enhanced sub-national climate change planning and execution of priority actions

Cash Poor households

Provinces: 2

Beneficiaries: close to 15,000,

about 4,000 of whom are

poor/vulnerable women

MoE/Secretariat of the National Committee for Democratic Development (NCDD-S)

Source: OECD (2017)

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It was in 2012, that the RGC finally decided to create a permanent food reserve mechanism called the Cambodia Food Reserve System (CFRS). The CFRS was created to assist disaster and crisis victims through its food (rice) and seed (rice and vegetables) emergency reserves. The Food Reserve System Management Committee (FRSMC) was established to oversee its operations by managing the stocks and related information systems (FAPDA 2014).

Under the CFRS, a combination of in-kind and cash reserves totaling 16,000 tons of rice has to be maintained. The 10,000 tons, or 62.5 percent of the food reserve is kept in the form of physical rice stocks, while the remaining 6,000 tons, or 37.5 percent, is kept as cash food reserve fund. As for the Seed Stock, a total of 3,050 tons of seeds must be kept where 3,000 tons is made up of early rice varieties seed, and 50 tons of vegetable and other crops seed (RGC 2012).

Initiatives on Food Reserve ManagementFood security and nutrition have always been included in Cambodia’s National Strategic Framework, which includes the Cambodia Millennium Development Goals (2003), the Rectangular Strategy (2004), and the National Strategic Development Plan (2009–2013). The Government of Cambodia aims to promote agricultural productivity and diversification through land use intensification rather than cultivated land expansion. With rice as its top agricultural export, Cambodia has placed it as one of the priority crops considered in policy formulations (Figure 21).

Figure 21. Food security and nutrition framework in Cambodia

Source: Kato, Kosal, and Mischler (2011)

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Rectangular Strategy (2004)Cambodia’s Rectangular Strategy has four components: (1) agricultural development, (2) infrastructure rehabilitation and development, (3) private sector development, and (4) capacity building and human resource development. Good governance is considered as the core strategy.

Strategy on Agriculture and Water (2006)Adopted by the MAFF and the Ministry of Water Resources and Meteorology (MoWRAM), the Strategy on Agriculture and Water focused on the rehabilitation and construction of physical infrastructure to enhance crop productivity. This strategy was considered as one of the key policy frameworks for agricultural development in Cambodia.

Strategic Framework for Food Security and Nutrition (2008)The Strategic Framework for Food Security and Nutrition was under the implementation of the Council for Agriculture and Rural Development (CARD). This strategy pursued a holistic approach to achieving food security through improved access to sufficient, safe and nutritious food for Cambodia’s poor and food insecure population in 2012.

Emergency Food Assistance Project (2008)As discussed in the previous section, the EFAP, which was established in 2008, helped alleviate food insecurity for half a million poor and vulnerable Cambodians. Funded by the ADB, this project has three main objectives:

1. Compensatory consumption support through free rice distribution, cash-for-work, food-for-work, school feeding, etc;

2. Productivity enhancement support through distribution of subsidized quality seeds and fertilizers, extension services and support during disaster; and

3. Food crisis and project management.

For the free rice component of the EFAP, the target group was composed of 20 percent of the poorest villagers from 200 communes in the seven target provinces. These beneficiaries were determined using a set of criteria, which include: (1) with ID Poor card, (2) widow/woman-headed households, (3) handicapped, and (4) small and marginal farmers, among others.

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Each household was given 35 kg of rice for three months consumption. The NGOs, Cambodian Center for Study and Development in Agriculture (CEDAC) and Buddhism for Development (BFD) identified the beneficiary households and monitored the distribution process (EFAP n.d.).

Cambodia Food Reserve System (2012)The CFRS is a permanent food reserve system created by the RGC in 2012. The CFRS was established to provide immediate food (rice) needs of the Cambodian population during disasters or emergencies. It is designed to meet the food demand of approximately 10 percent of its total population in cases of emergency or natural disasters, equivalent to one month consumption, which is equivalent to about 16,000 tons of rice. The seeds are given to farmers in order to rehabilitate damaged farms, which account for 2.5 percent of total rice and vegetable cultivated areas.

The Prime Minister has the supreme authority over the CFRS, while the CFRS Committee is chaired by a representative from the Ministry of Economy and Finance (MEF). A representative from the National Committee for Disaster Management (NCDM) serves as the Vice Chairman, while representatives from the Green Trade Company (GTC), General Directorate of Agriculture (GDA), and the Cambodian Red Cross (CRC) serve as members.

The complexity of the administrative process involved in the release of rice and vegetable seeds under the CFRS, however, has been a major issue especially during times of calamities in the country. Moreover, the seed stocks were not fully distributed to the beneficiaries and were prone to spoilage or damage.

Figure 22 presents other relevant policies on food security and nutrition in Cambodia since 2000.

Key Issues and Challenges in Food StockpilingWith food stockpiling being a relatively new practice in Cambodia, the country is faced with several constraints in its implementation such as the following:

• Complex administrative process involved in requesting seeds from the reserve during emergencies;

• Weak policy implementation;

• Post-harvest losses, lack of processing, and warehousing facilities;

• Weak formal export arrangements, quality standards eliminate producers’ competitiveness;

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• Insufficient access to finance by rice millers;

• Lack of good quality seed supply and markets for smallholders;

• Low level of trust among millers;

• Millers’ liquidity constraints hinder emergence of contract farming systems

• Poor quality control for paddy;

• Low operating efficiency of commercial mills;

• Policy constraints to emergence of large scale commercial rice and seed farms;

• Weak farm organization, which hinders use of larger equipment across multiple small plots;

Figure 22. Main strategies and policies related to food security and nutrition in Cambodia

Source: CARD (2010)

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• Lack of policies, which renders the 2008 Seed Law as ineffective;

• Poor business and investment climate, which hampers innovation and investments;

• Insufficient data/information on food stockpiling;

• Limited number of food stockpiles; and

• Lack of cooperation in food stockpiling.

Proposed Actions and RecommendationsIn line with these concerns, the following are the proposed approaches to improve or sustain existing practices on food stockpiling in Cambodia:

• Improve stockpiling data and information systems;

• Strengthen management systems; and

• Ensure quality control through minimal provision of seeds by millers.

Community Food Stockpiling in CambodiaIt was observed that most community food stockpiles were stored in barns. Examples of these are the so-called Krang Srauv and Smok Srauv, which are both used by farmers (Figure 23). The use of these barns has been a tradition among Cambodian farmers. The farmers think that both provide enough space for maintaining their rice, and are convenient for daily use. Other farmers, however, prefer to use plastic bags because it is easier for them, and it saves them some space. This is particularly so for farmers who use machines during harvest, or those who only produce small amounts of rice.

For farmers who can only produce rice during the wet season within small or medium areas, harvests are usually kept for consumption and replanting. Sometimes, these farmers are even forced to buy additional rice from the market owing to insufficient production. In case of excess production, they are usually sold or used as feeds. In contrast, farmers who can produce during both dry and wet seasons always sell their dry season harvests and keep their wet season produce for daily consumption.

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Figure 23. Traditional food stockpiles in Cambodia

Krang Srauv

Smok Srauv

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References

ADB (Asian Development Bank). n.d. Cambodia: Emergency Food Assistance Project. https://www.adb.org/projects/42186-013/main. Manila, Philippines: Asian Development Bank.

_____. n.d. Cambodia: Emergency Food Assistance Project - Additional Financing. https://www.adb.org/projects/42186-014/main. Manila, Philippines: Asian Development Bank.

CARD (Council for Agricultural and Rural Development). 2010. National Social Protection Strategy for the Poor and Vulnerable. https://www.unicef.org/cambodia/National_Social_Protection_Strategy_for_the_Poor_and_Vulnerable_Eng.pdf

EFAP (Emergency Food Assistance Project). n.d. Emergency Food Assistance Project Brochure. Cambodia: Employee and Family Assistance Program. http://www.efap.org.kh/uploads/efap/Brochure/EFAP%20Brochure-%20Final.pdf

FAO (Food and Agriculture Organization of the United Nations). 2014. Cambodia Country Fact Sheet on Food and Agriculture Policy Trends. http://www.fao.org/3/a-i3761e.pdf

Kato, M., O. Kosal, and F. Mischler. 2011. Mainstreaming food security and nutrition in development planning at sub-national level in Cambodia.

Kula, O., C. Turner, and S. Sar. 2015. “An Analysis of Three Commodity Value Chains in Cambodia.” Rice, Horticulture and Aquaculture. https://www.marketlinks.org/sites/default/files/resource/files/LEO_Cambodia_Value_Chain_assessment_FINAL_508_Compliant_v3.pdf. USA: USAID

Muthayya, S., J. D. Sugimoto, S. Montgomery, and G. F. Maberly. 2014. An overview of global rice production, supply, trade, and consumption. https://nyaspubs.onlinelibrary.wiley.com/doi/epdf/10.1111/nyas.12540

RGC (Royal Government of Cambodia). 2012. Sub-Decree on the Establishment of Cambodia Food Reserve System. https://camnut.weebly.com/uploads/2/0/3/8/20389289/2012_subdecree_emergency_food_reserve_2012.pdf

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Sobrado, C., S. Neak, S. Ly, E. Aldaz-Carroll, E. Gamberoni, F. Arias-Vazquez, T. Fukao, S. Beng, T. Johnston, M. San Joaquin, L. Bruni, and R. de Groot. 2014. Where have all the poor gone? Cambodia poverty assessment 2013 (English). A World Bank country study. USA: World Bank Group http://documents.worldbank.org/curated/en/824341468017405577/Where-have-all-the-poor-gone-Cambodia-poverty-assessment-2013

Overview of Food StockpilingThe Philippines currently stockpiles several food commodities for food security purposes. Among these are rice, corn, sugar, and frozen meat. However, priority is given to rice, as it is a staple food for majority of the Filipinos. The government officially recognized the importance of rice stockpiling with the establishment of the National Grain Authority (NGA) in 1972. Through the signing of Presidential Decree (PD) No. 4, the NGA was assigned to promote the integrated growth and development of the grains industry. This covers rice, corn, feed grains, as well as sorghum, mongo, and peanut. Then, in 1981, through PD No. 1770, the NGA was renamed as the National Food Authority (NFA), which is the sole state trading enterprise operating in the country. The NFA was mandated to ensure national food security, and to stabilize supply and prices of staple cereals both in the farm and consumer levels (NFA n.d.).

At present, there are three types of food stockpiles in the Philippines— public, private, and household stocks. These collectively form the government’s food reserve. Public stockpiles refer to those being kept by the NFA such as rice and corn, which are mainly sourced through local procurement and importation. Private stockpiles, on the other hand, refer to stocks (e.g., sugar and frozen meat) held by registered commercial enterprises that are being monitored and regulated by the government. Lastly, household stockpiles cover stocks of both farming and non-farming households.

The PhilippinesSuzette C. Simondac-Manilay, Bernice Anne C. Darvin,

Henry M. Custodio, and Bessie M. BurgosSoutheast Asian Regional Center for Graduate Study

and Research in Agriculture (SEARCA)

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Analysis of Food Reserve EstimatesThe Philippine rice stocks generally increase from March to June, and then gradually decrease from July to September (Figure 24). These observations merely coincide with the timeline of activities for rice importation, which will be discussed later. The increase in stocks from March to May can be attributed to import arrivals, and the minimal procurement of rice during the period. On the other hand, July to September are the lean months and the period where these rice stocks are mostly utilized to counter any negative effects of the reduction in supply.

Figure 24. Monthly rice stock inventory of the Philippines, 2007–2016

Source: CountryStat (2017)

In the past decade, total national rice stock volumes averaged 29.6 million MT. The highest volume was recorded in 2010 at 37.2 million MT, while the lowest was in 2007 at 20.6 million MT, respectively (Figure 25). It is important to note that the increases in stocks from 2007 to 2010 were primarily due to the significant rise in the stock level of the NFA. More specifically, in 2008, the NFA rice stock volume rose by 121.3 percent owing to the increased buying price of the government amidst the global rice crisis.

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This situation is further explained by the following:

a. During the 2005–2007 period, NFA’s support price was actually lower than the prevailing farmgate prices, and the bulk of NFA procurement was sourced from farmers in areas with excess production. In 2008, as palay farmgate prices rose to above PHP 14.00 amid fears of a global rice crisis, the President ordered the NFA to increase its basic buying price from PHP 11.00 to PHP 17.00. As a result, NFA procurement levels spiked to a record of 683,042 MT in 2008 (Senate of the Philippines 2010).

b. The spikes in commercial rice prices ranging between PHP 35.00 to PHP 40.00 per kg (even higher for premium rice) from PHP 25.00 per kg in 2007, brought unfavorable impacts to the poor and even to middle income households. For obvious economic and political reasons, the government exerted all-out efforts to increase rice stocks through imports, with direct order from the President to flood the market with heavily subsidized rice. This was even more aggravated by the devastating typhoons, which caused considerable damage in many parts of the country (Pabuayon 2008).

Figure 25. Annual rice stock inventory of the Philippines, 2007–2016


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c. It was also observed that there were decreases in rice stocks from 2011 to 2013, which could be attributed to the government’s implementation of the Food Staples Sufficiency Program (FSSP) 2011–2016. This program followed the FSS Roadmap 2011–2016, which aimed to achieve rice self-sufficiency in the country by 2013 and maintain it through 2016. The government’s strategies to attain the said objective were as follows: (1) increase and sustain the gains in production through production interventions and enabling mechanisms, (2) farm mechanization and reduction of post-harvest losses reduction, and (3) the management of consumption (DA 2011). Nonetheless, the primary goal of the FSSP was to attain zero importation by 2013. This is the same reason why the NFA opted to reduce its rice imports, which resulted not only in reduction of rice stocks but also in the price spikes particularly during the last quarter of 2013.

To gather information on commercial rice stocks, NFA field offices conduct the Commercial Stocks Survey (CSS) on all registered commercial storage facilities to generate estimates on commercial rice stock inventories at the national, regional and provincial levels. The survey is done during the last two working days of the current month up to the first two working days of the succeeding month. The reference period is the first day of the succeeding month, or the ending inventory stock of the current month. On the other hand, weekly inventories are made for rice stocks located in regional NFA warehouses. It is the NFA Central Office that consolidates the data that will serve as inputs to the monthly inventory of both public and commercial stocks (Tepora and Perido 2017).

For the household stocks, the Philippine Statistics Authority (PSA) conducts the Palay and Corn Stocks Survey 1 (PCSS 1). The PCSS 1 is done to generate estimates of current stocks of rice (as well as corn) in both farming and non-farming households. The survey is conducted on a monthly basis and covers all provinces except for Batanes. The sample size is around 15,000 households and the data collected is for palay household stocks as of 6:00 AM of the first day of the reference month (Tepora and Perido 2017).

The Census of Agriculture was used to establish the sampling frame and population sizes for the household survey (Abbott 2013). The sampling strategy started with the identification of provinces where rice is grown, and was then followed with a random selection of households in selected barangays within the provinces identified. The same set of households is surveyed for each month.

From 2007 to 2016, the estimated total stocks amounted to 296 million MT of which majority were attributed to households (42%), followed by NFA (34%),

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and commercial (24% sector [Figure 26]). Furthermore, the movement of the total national stock inventory validates earlier observations on the trend (i.e., changes in the levels of stocks, reduction in stocks in 2007, 2012, and 2013, among others) of the national rice reserve at the aggregate level.

Figure 26. National rice stock inventory of the Philippines by sector, (2007-2016)


As of 31 December 2016, the country’s total rice stock inventory amounted to 2.8 million MT, with household stocks (46%) having the highest percentage followed by the commercial (34%) and NFA (20%) (Table 20). The aggregate amount of rice stocks from the three sources is estimated to last for 86 days based on the rice consumption requirement of 32,150 MT (NFA 2017).

Table 20. Total rice stock inventory of the Philippines, 2016

Sector Inventory (in ‘000 MT) Inventory (Days) % Share

NFA 548.0 17 19.8Commercial 948.1 30 34.3Household 1,269.6 39 45.9TOTAL 2,765.7 86 100.0

Source: NFA (2017)

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During the Regional Workshop on Food Reserve Management and Policies in Southeast Asia held on 6–7 April 2017 at SEARCA, an NFA official shared the agency’s current initiative to improve its inventory monitoring through the use of a web-based integrated electronic information system. The system starts from the transaction level, from procurement of the paddy, down to rice inventories. NFA hopes to implement the full system across the country in the next two years.

At the regional level, the Philippines also provides stock information to the ASEAN Food Security Information System (AFSIS) Secretariat. The Philippine report, together with that of the other AMS, serve as inputs to the preparation of the ASEAN Commodity Outlook (ACO). This report, which is published semi-annually by the AFSIS, contains information on the five (5) major commodities, namely, rice, maize, sugarcane, soybeans, and cassava. With regard to data on stocks, the ACO report only includes the country’s beginning and ending stocks, as well as the food security ratio (i.e., beginning stock to domestic utilization ratio).

In addition, the Philippines also takes part in the Agriculture Market Information System (AMIS), which covers data on wheat, maize, rice, and soybeans. Participants in AMIS include G20 countries plus Spain and seven additional major exporting and importing countries of the AMIS crops (Egypt, Kazakhstan, Nigeria, the Philippines, Thailand, Ukraine, and Vietnam). With regard to stock estimates, AMIS only provides data on each specific country’s closing stocks.

Initiatives on Food Reserve ManagementBased on the latest Philippine Development Plan (PDP) 2017–2022, there are some intended changes in the current role of the NFA. Specifically, the government plans to amend or repeal PD No. 4 of 1972, as well as other relevant laws related to NFA, which will decouple the regulatory and proprietary (i.e., commercial) function of the agency. As a result, the NFA will continue to exist but its focus will be on rice buffer stocking for food security. This is in line with the government’s current agenda to expand opportunities in Agriculture, Fisheries, and Forestry (NEDA n.d.).

With regard to the mechanism by which rice is stockpiled, NFA currently stocks rice at the following mandatory levels and time frames:

1. Strategic Rice Reserve (SRR) - equivalent to a minimum of 15 days national rice consumption maintained year-round in government depots for food security purposes especially in times of calamities and/or emergencies.

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In 2016, the NFA was able to maintain an inventory that is sufficient enough to last for an average of 26 days based on the country’s rice consumption requirement of 32,150 MT (Table 21). According to the 2016 NFA Annual Report, the increase in the SRR can be attributed to the ample supply of rice in the country, and in anticipation of the El Niño phenomenon. The highest recorded SRR for 2016 was during the month of April wherein rice inventory reached 1,157,400 MT, which is sufficient for 36 days.

Table 21. NFA rice stock inventory in 2016

Month Days to LastJanuary 31February 34

March 35April 36May 33June 28July 25

August 19September 16

October 17November 19December 17AVERAGE 26

Source: NFA (2016)

2. Government Rice Buffer Stock (GRBS) - equivalent to at least 30 days buffer stock that should be available by July 1 of every year in preparation for the lean months. This is inclusive of the 15-day SRR.

As of end of June 2016, the NFA had an inventory of 932,875 MTGRBS, or equivalent to a 28-day buffer stock inventory. Overall, the NFA adheres to the food security benchmark of an ideal 90-day national rice buffer stock that should be in the hands of the household (45 days), commercial (15 days) and government (30 days) sectors by July 1 of each year.

Another important factor considered by the NFA is climate change. Climate change has played a pivotal part in the national government’s decision to provide firm support in the aspect of buffer-stocking of rice. This is being done through the maintenance of the required GRBS, which must be prepositioned in all provinces nationwide, and the sustenance of the required SRR, which is made available at any given time in response to calamities and emergency situation.

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3. APTERR Earmarked Rice Stocks - At the regional level, the Philippines has a commitment to maintain 12,000 MT of rice at any given time for the use of other ASEAN member countries in case of emergencies or calamities through APTERR.

The NFA Council is an inter-agency coordinating body that has the overall responsibility with regard to rice stockpiling in the Philippines. Any decision of the NFA (as an agency) with regard to food security and stockpiling plans and directions is governed by the NFA Council. Specifically, the Council has the overall responsibility of formulating a comprehensive program for the development of the domestic grains industry. As of October 2017, the Council is being chaired by the Cabinet Secretary of the Office of the President, with the NFA Administrator as the Vice-Chairman.

The other members of the 2017 NFA Council are from the following institutions (NFA, n.d.):

• Central Bank of the Philippines (otherwise known as the Bangko Sentral ng Pilipinas);

• Development Bank of the Philippines (DBP);

• Landbank of the Philippines (LBP);

• Department of Finance (DOF);

• Department of Trade and Industry (DTI);

• National Economic and Development Authority (NEDA);

• Office of the Executive Secretary; and

• Farmer’s Sector.

The required rice stocks are determined based on the results of the assessment done by the Food Security Committee (FSC) on rice. The FSC regularly conducts an evaluation of the country’s supply-demand situation and outlook on a quarterly basis or as often as needed. In its evaluation, the said body determines the rice surplus or deficit, including the probable volume of importation needed, in case the evaluation yields a possible shortfall in domestic supply. On the other hand, information on the daily rice consumption, which is also used by the FSC in the assessment, is sourced from the estimates of the Bureau of Agricultural Statistics (BAS) of the PSA. The NFA Council assesses the said FSC evaluation and recommends the probable volume of importation for approval of the President.

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The purpose of the above-mentioned evaluation and the timeline of activities for rice are clearly illustrated in Figure 27. The assessment made in the last quarter of the previous year serves as basis for the determination of the needed imports that will augment rice stocks for the succeeding year. The final quantity of rice imports has to be determined as early as December of the preceding year until January of following year since the entire importation process may take around three months. The target arrival date for the imports is expected to be within the months of May to June. Positioning of the needed rice stocks before the end of June is being carried out due to the following reasons: (1) sufficient level of stocks should be positioned before the start of the lean season so as to avoid the high cost of transporting rice as this period also coincides with the rainy season, and (2) the said period also coincides with the growing period where supplies are low and thus, prices are expected to be relatively higher (Reyes 2009).

Figure 27. Timeline of activities for rice importation in the Philippines

Source: Reyes et al. (2009)

Generally, the said timeline is a mechanism to ensure the availability of rice stocks before the onset of the lean season. The stocks mainly consist of the carry-over stocks from the previous season (including the rice produced from

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the main cropping season, which are harvested and procured during the last quarter of the year), rice produced from the second cropping or Palagad season (which are harvested and procured from March to May), and imports (Reyes et al. 2009).

In the Philippines, rice importation was previously done through the following schemes: (1) government-to-government (G2G) procurement; (2) public bidding in accordance with Republic Act 9184 or the Government Procurement Law; and (3) private sector importation. However, on May 2017, the government started to adopt a new policy wherein rice importations will only be done through government-to-private (G2P) transactions rather than the previous G2G scheme. G2P will allow private suppliers from rice-exporting countries to participate in the bidding. The government believes that this type of importation scheme is more competitive, least corrupt, and transparent. Moreover, the G2P is covered by the Government Procurement Reform Act (Domingo 2017; Salaverria 2017). Moving forward, the NFA is set to lose its rice importation function, which will be transferred to the private sector (Simeon 2017).

According to NFA, the three main reasons of rice stockpiling in the Philippines are: (1) to ensure food security and stability in the supply and price of rice; (2) to increase farmers’ income; and (3) to assure the availability, accessibility, and affordability of rice in times of calamities and/or emergency situation.

The important role that stocks play in price stabilization is clearly depicted in the mid-2013 where the retail price of regular milled rice jumped by 13 percent over a span of four months despite the stable price of the previous two years. There were three elements that have contributed to the said price hike, namely, imports, supply, and public stocks (Briones 2014).

In the period of 2011–2013, the country’s imports have fallen sharply from 1 million tons in 2011 down to just 210 thousand tons in 2013 (Table 22). Such behavior is in response to the Philippine government’s decision to pursue 100 percent rice self-sufficiency under the FSSP. In order to stabilize prices, this reduction in imports should be compensated by domestic production. However, the increment in rice production from 2012 to 2013 of about 439,000 tons is far below not only of the annual targeted increase but also of the amount needed to compensate the loss in imports (Briones 2014).

In the case of public stocks, the inventory has shown that stocks were much higher in 2011 especially when imports were available to beef them up (Figure 28). For instance, the stocks during end-June 2013 were already below target, both for the government rice buffer stock and the strategic rice reserve. Moreover, the stocks have continuously declined way below the minimum

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Table 22. Philippine rice import arrivals by source (in tons), 2011–2013

Month 2011 2012 2013January - - -February - - -March - - -April 51,300 - -May 61,000 - 91,650June 77,300 - 107,450July 36,600 50,091 6,600August 25,100 22,076 -September - 4,998 -October - 37,611 -November - - -December - - -Direct by NFA 251,300 119,777 205,700Under NFA tax subsidy 654,995 373,189 0Under country specific quota 157,691 199,255 4,746TOTAL 1,063,985 692,221 210,446

Source: Briones (2014)

Figure 28. Monthly NFA rice stock inventory (in tons), 2011–2013

Source: Briones (2014)

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strategic reserve equivalent to 15 days consumption due to the need to provide emergency relief to communities affected by calamities, notably typhoon Haiyan in the last quarter of 2013 (Briones 2014).

Based on the above-mentioned discussions, Briones (2014) concluded that the mid-2013 price hike is due to government clampdown on imports, not matched by either increased domestic production, nor accelerated releases from the buffer stock. Further analysis has pointed out the integral role that imports play in achieving food security (Briones 2014). More importantly, the study provides a concrete example of the vital role of stocks in ensuring both the objectives of food security and price stabilization. Nonetheless, it cannot be denied that there are still concerns with regard to the NFA function and capacity to stabilize the price and supply of rice.

Aside from price stabilization, stocks also play an important role during calamities. For instance, in 2016, the country suffered under the El Niño phenomenon and eight other typhoons. As a response, the NFA released a total of 895,527 MT to various LGUs and other relief-giving organizations within two hours after the requests were made (Table 23). The bulk of the releases were done in January, during the onset of El Niño in the country.

Table 23. NFA issuances of rice per relief agency in 2016 (in tons)

Calamity/Emergency Month Occurred

Relief Agency/Volume Released

PRC DSWD LGUs Others/NGOs TOTAL

El Niño 1 January 2016 - 478,420 348,292 400 827,112

Typhoon Carina 31 July 2016 - - 20 - 20

Habagat 13 August 2016 - - 12,156 - 12,156

Typhoon Ferdie 11 September 2016 - 160 540 30 730

Typhoon Julian 5 October 2016 - 0 100 - 100

Typhoon Karen 13 October 2016 - 816 4,579 - 5,395

Typhoon Lawin 18 October 2016 47 3,880 18,243 8,056 30,226

Typhoon Marce 24 November 2016 - 3,500 105 - 3,605

Flooding in Reg 8 16–17 December 2016 - 0 2,759 625 3,384

Typhoon Nina 24 December 2016 - 2,277 10,522 - 12,799

TOTAL 47 489, 053 397,316 9,111 895,527

Source: NFA (2016)

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Key Issues and Challenges in Food StockpilingAccording to NFA, there are two major constraints in public stockpiling. First, stockpiling accrues huge expenses and losses to sustain its operation. Second, public stockpiling can lead to political power dynamism affirming its significance as a political commodity.

Aside from the budgetary constraints associated with rice stockpiling in the Philippines, the NFA has also mentioned the following challenges: (1) changing economic and socio-political environment (e.g., currency exchange fluctuations, interest rates on borrowings, increasing population, and diminishing government subsidy); (2) lack of logistics; (3) peace and order; and (4) the Philippines’ geographical setting.

Proposed Actions and RecommendationsThe NFA provided the following recommendations on how to improve rice stockpiling in the Philippines:

• On the budgetary constraints, continue to concentrate in a more cost-effective way of operating food security and price stabilization to lessen its costly trading interventions;

• Revisit and institute reforms in the country’s food security policies and strategies in response to the changing economic and socio-political environment; and

• Promote early positioning and continuous replenishment of government rice stocks to augment supply especially in critical or highly depressed areas in time for the onset of traditional lean period (this particular recommendation is in response to the concerns on the lack of logistics, peace and order, and the country’s geographical setting).

In addition to these, the NFA has also identified the following good practices in relation to rice stockpiling in the country:

• Positioning of government buffer stocks in provinces susceptible to emergencies and isolation (The NFA has an existing 436 NFA owned and leased warehouses to store its rice stocks as of January 2017.);

• Strategic positioning of logistical support services;

• Development of Internal Operating Procedures and Structures;

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• Establishment of linkages or working agreements with other agencies, as well as domestic and global networks; and

• Participation in the ASEAN undertaking.

Community Rice Stockpiling in the PhilippinesThe NFA has no available documentation on rice stockpiling at the community level. This is because the agency is only tasked to monitor the level of stocks, and the compliance to government regulations of both government-owned and leased warehouses with regard to rice buffer stocking. The agency, however, provides awards and recognition to its warehouses, which exhibited good and innovative practices of managing its stocks. An interview with the Philippine Institute for Development Studies (PIDS), has also confirmed the unavailability of studies on community-level food stockpiling.

Alternatively, an interview with the technical staff of the Consortium for Unfavorable Rice Environments (CURE) of the International Rice Research Institute (IRRI) helped identify practices on rice stockpiling at the community level. The discussion focused on the heirloom rice varieties, which are mostly found in the Cordillera Region. A Filipino nonprofit, nongovernment organization, the Revitalize Indigenous Cordilleran Entrepreneurs (RICE) Inc., was established in 2005 with the goal of preserving heirloom rice varieties, as well as the culture of community rice production in the Cordillera region. This is a response to the deteriorating quality of their traditional rice varieties and production-related problems due to changes in weather, pests, and crop diseases (De Leon et al. 2012).

Given the above-mentioned concerns and the high market potential of heirloom rice, the Philippines’ Department of Agriculture (DA) with support from the various agencies of DA and IRRI have collaborated on the implementation of the Heirloom Rice Project. This project, which is under DA’s FSSP, aims to enhance the productivity, and enrich the legacy of heirloom or traditional rice through empowered communities in unfavorable rice-based ecosystems (IRRI 2014).

In terms of postharvest management, the people of Batanes, the Ivatans, have learnt to adapt to the frequent cyclones hitting the island. Most Ivatan families build kitchens as a separate structure, serving as both kitchen and food storage (Figure 29).

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Understanding the value of seeds, farmers in the Arakan Valley, known as the rice belt of North Cotabato, established community seed banks for the Dinorado rice variety. The Arkeños believe that availability of viable seeds to their farmers is important for the survival of their households, or food security. Dinorado, exotic to the Arakan Valley, has become part of the Arkeños’ pride and social identity. Although most Arkeños grow Dinorado as a cash crop, small groups of well-off farmers grow it for their own consumption (Reyes 2012).

Figure 29. Community food stockpiling in Northern Philippines

Sources: IRRI (2013) and The Philippine Daily Inquirer (2014)

Other Existing Food Stockpiles in the PhilippinesCornThe case of corn is relatively different from rice since NFA has gradually slowed down its intervention on corn. This is in lieu of the country’s membership to the General Agreement on Tariff and Trade-World Trade Organization in 1994 and the full liberalization of corn in 1996 with the implementation of Republic Act (RA) 8178 or the Act Replacing Quantitative Import Restrictions on Agricultural Products, Except Rice, with Tariffs, Creating the Agricultural Competitiveness Enhancement Fund, and for Other Purposes.

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The same mechanism on how the PSA and NFA conduct the monthly inventory of rice stocks applies with corn. However, it is important to note that the data provided by NFA only includes that of the white corn. Moreover, the data excludes stocks held by commercial livestock and poultry producers, as well as the corn mixed in feed stock.

From 2007 to 2016, the average annual corn stock inventory in the country amounted to 2,874 MT. Out of the total stocks in 2016, majority (69.93%) were attributed to commercial industries, followed by the household (29.95%) and the NFA (0.12%) (Figure 30). The minimal stocks of NFA can be attributed to the limited intervention of NFA with the corn industry.

In terms of monthly inventory, Figure 31 shows that stocks are commonly high during the lean months of April to May and September to October.

This is to compensate for the inadequacy of supply, replenished during the harvest seasons, from June to July and December to June. The rationale behind the stockpiling of corn is mainly for food security purposes only. Unlike rice, corn, does not have any requirement for the volume to stockpile.

Figure 30. National corn stock inventory in the Philippines by sector, 2007–2016


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Figure 31. Monthly corn stock inventory of the Philippines, 2007–2016


SugarThe Sugar Regulatory Administration (SRA) was created under Executive Order (EO) No. 18, signed in May 28, 1986, in which one of the objectives was to “institute an orderly system in sugarcane production for the stable, sufficient and balance production of sugar, for local consumption, exportation, and strategic reserves”. With regard to stockpiling, the SRA has the power not only to institute regulations for implementing, controlling, and monitoring the production quotas, but also to establish domestic, export, and reserve allocations.

Moreover, RA No. 10659 (An Act Promoting and Supporting the Competitiveness of the Sugarcane Industry and for Other Purposes) mandates the SRA to establish a supply chain monitoring system from sugarcane to sugar at the retail level. This is to ensure sufficiency and safety of sugar. The information gathered shall be used to develop a sugarcane industry database, which shall be administered and updated by the SRA.

Unlike rice, which has an inter-agency coordinating body that decides on matters related to food stockpiling, sugar reserves are solely managed by the SRA, a regulatory body and a government-owned and controlled corporation, which has the power and functions to establish allocations at various markets

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(domestic, export, and reserve). Specifically, the SRA is not directly involved in stockpiling as it is only responsible in the monitoring and regulating of sugar stocks that are located in SRA-registered and privately-owned sugar mills and warehouses. There is an SRA regulation officer and/or extension officer in every milling station and refineries that monitors production and compliance to requirements. Periodic inventory of quedans were also conducted regularly.

Sugar in the Philippines is produced and marketed under the long established quedan system wherein sugarcane planters allocate a percentage of their harvests to the mills in payment for the processing of the case. The miller, upon processing of the sugar, issues a warehouse receipt (quedan) that will represent not only the farmer’s share of the sugar but will also attest to the physical presence of the sugar in the storage facility.

SRA monitors and regulates the supply of raw and refined sugar. Raw sugar can be characterized as those having sucrose content, by weight, in the dry state, and a polarimeter reading of less than 99.5°, while refined sugar has a polarimeter reading of 99.5° and above. Sugar stocks are sourced from privately-owned sugar mills (for raw sugar) and sugar refineries/traders (for refined sugar) that are duly registered with the SRA. Local production is the major source of raw and refined sugar in the country catering both to the domestic and export market.

In terms of the amount of reserves, there is no computation on how much sugar to stockpile as it is pegged at 100,000 MT per month each for raw sugar and refined sugar. The stock is a running balance, wherein the amount will not accumulate and will retain the same amount for the entire month and throughout the year. The SRA will replenish the stocks in any case that portion of the stocks were used within the month. According to SRA, this mechanism is being practiced for the last 10 years. This amount of reserves correspondingly translates to the estimated level of demand for raw and refined sugar every month. On the other hand, muscovado sugar is not monitored and regulated by the SRA, as it only accounts for a small portion of the total sugar production.

Specifically, SRA has established four sugar classifications, namely: US Quota Sugar (Class A); Domestic Sugar (Class B); Reserve Sugar (Class C); and World Market Sugar (Class D). SRA issues Sugar Order No. 1 every start of the crop year, which includes estimates on sugar production and domestic requirements (including buffer stocks) for the particular cropping year. The agency also undertakes periodic assessment of sugar production and demand, and on the basis of these assessments, shall adjust from time to time the percentage distribution of the different sugar classes in consultation with the stakeholders. For example, in crop year 2004–2005, SRA issued Order No. 1 in August, which stated that sugar production is 2.28 million MT and

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quedanned in the following percentages: “A” – 4 percent, “B” – 86 percent, and “D” – 10 percent. However, in October 2004, SRA issued Sugar Order No. 4 with the subject “Providing for reserve sugar “C” and for other purposes.” The order mandated the reclassification of sugar percentage allocation into the following: A” – 4 percent, “B” – 76 percent, “D” – 10 percent, and “C” – 10 percent. The reclassification, as well as the inclusion of “C” was made because it is expected that during the peak months of production (December to March), the production volume is higher than demand causing the sugar stock inventory to build up. There was also manifestation of slow withdrawal of sugar, which made the mill gate prices weak at that time. The allocation for “C” will ensure the stabilization of prices at levels that are reasonably profitable for the producers and fair to the consumers. Nonetheless, this “C” reserve sugar, depending on the result of SRA’s assessment on production and demand of various markets, can be reallocated for the purpose of “A” and “B”.

The case for crop year 2015–2016 is different as SRA allocated 100 percent to “B” or Domestic Sugar Market. This is because there is a need to institute measures and ensure stability in the domestic sugar supply. Domestic withdrawal is estimated to be more or less 2.25 million MT while total raw production is estimated at only 2.27 million MT due to the unfavorable weather conditions and reduction of sugarcane areas. However, it is important to note that the 100,000 metric tons reserves for each of the raw and refined sugar is not reflected in any Sugar Order, which only implies that this sugar reserve is on top of the total production indicated in the order.

The policy on allocating locally produced sugar into various market destinations is considered by the SRA as a good practice in relation to sugar stockpiling. According to SRA, such practice stabilizes sugar prices and assures that the interest of local farmers is safeguarded. Moreover, such practice also responds to the concerns of climate change as the existing mechanism of classification and allocation gives priority to domestic market requirements and buffer stocks.

The advantages of sugar stockpiling in the country, as per the SRA, are the following:

• Rice of sugar in the domestic market remains stable;

• Supply of sugar during lean months is assured;

• Stabilize market forces or address speculations;

• Stable business environment for manufacturers and traders; and

• Stable income of farmers due to balanced supply and demand.

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Raw and refined sugar are not stockpiled at the community level as these types of sugar are easily transported to other areas in need of supply. These types of sugar are sourced from sugar mills and refineries scattered nationwide with majority located in Visayas.

According to SRA, community stockpiling applies only to small-scale muscovado producers. The agency does not have any documentation on how muscovado sugar are stockpiled since this type of sugar is not covered by the SRA’s monitoring and regulatory process. Muscovado is not intended for the national reserves, rather it is mostly for household or small-scale stockpiling of community level producers in the country. These muscovado producers are usually located in the province of Antique, Ilocos, Pangasinan, and Sultan Kudarat. As there are no nearby sugar mills in these areas, farmers commonly formed into cooperatives to sell their produce.

On the information on who manages stocks of muscovado sugar, the SRA mentioned that there is a Muscovado Producers Association. DTI and the Department of Labor and Employment (DOLE) have some support programs for muscovado producers. For instance, the Bureau of Product Standards of the DTI, in 2015, issued a code of practice for processing and handling of muscovado sugar, which also includes section on the handling and storage.

The SRA emphasized the need for the agency to study the impacts of climate change on muscovado sugar. It also recognizes the need of small scale muscovado producers for infrastructures that are resilient to the changing climate patterns.

In the case of sugar, it is important to note that under or overestimation of sugar stockpiled poses a constraint to the entire industry as any variation in sugar reserves can cause price instability or even attract smuggling. Another consideration is that sugar is a perishable good and that its quality may deteriorate upon prolonged storage if too much volume is stockpiled.

With regard to regional and/or global policies, the SRA has identified trade liberalization as a factor that can affect the sugar industry. Specifically, this refers to the reduction in tariff rates, which may consequently, result to a much lower price of imported sugar as compared to the domestic price. Nonetheless, the SRA pointed out that this is not much of a concern, at the moment, as the supply can meet the local demand and that prices are comparable with imported sugar. Furthermore, the country only imports a minimal amount of sugar, majority of which are confectionary sugar. However, the problem of smuggling is still a major concern of the SRA.

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Other commoditiesIn 2011, DA issued Administrative Order (AO) No. 21 or the Mandatory Accreditation of Cold Storage Warehouse (CSW) for Agricultural and Fisheries Products. The issuance of such an order is in line with the directive to DA, as stated in Article 7 of the Consumer Act, of the need to establish consumer product quality and safety standards such as but not limited to the precautions in storage, transporting, and packaging. Specifically, this order provides guidelines on the accreditation of CSW for agricultural and fisheries products nationwide but not limited to the following: (1) meat and meat products; (2) fisheries and aquaculture/aquatic products; (3) fruits, vegetables, and other plant products; (4) milk and derivatives of milk and eggs; and (5) animal feeds.

DA bureaus, which will be responsible for the implementation of this order are the following:

• Bureau of Fisheries and Agricultural Resources (BFAR) for fishery and aquatic products;

• National Meat Inspection Service (NMIS) for meat and meat products;

• Bureau of Plant Industry (BPI) for fruits, vegetables, plant parts, and plant products; and

• Bureau of Animal Industry (BAI) for eggs, milk, other milk products, and animal feeds.

These bureaus will serve as the Competent Authority (CA) with the jurisdiction over the commodity and has legal mandate to enforce relevant laws and regulations on quality and safety assurance of agricultural and fishery products both for local and export markets intended for human consumption. Moreover, these bureaus will be supervised by the DA-CA CSW Composite Team (CSWCT), which is composed of representatives from the same government agencies together with the Committee on CSW Accreditation (CCSWA). The CCSWA shall evaluate the reports of the CAs, as well as endorse the submitted documents to the CSWCT Chairman, copy furnished all CAs.

Application of the CSW for accreditation starts with the submission of required documents. Upon submission, the CA shall conduct the inspection and evaluation of the CSW and make necessary reports for submission to the CSWCT, which in turn, shall be referred to the CCSWA for further review and evaluation. A Certificate of Accreditation shall then be issued by the CSWCT Chairman to the CSW that meets the requirement. The cold storage operators and accredited CSW shall comply with the terms and conditions of the CA’s issuance of the Certificate of Accreditation.

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Generally, the function of the CAs, in relation to food stockpiling, is to monitor the compliance of the CSW with the regulations. Same with NFA and SRA, these agencies monitor the available stocks in their registered warehouses. However, unlike NFA and SRA, these CAs do not have a requirement for the amount of stocks and have no direct control with regard to the volume of commodities to stockpile. For instance, NMIS conducts weekly inventory of pork and chicken located in accredited cold storage warehouses nationwide. Such mechanism applies to both locally produced and imported frozen meat.

At the local level, monitoring is done by the NMIS regional offices through its locally deputized Meat Inspection Officers who are tasked to conduct not only the inventory of stocks but also the inspection of other activities (e.g., packaging, compliance to standards and destination, among others) of frozen meat. These Meat Inspection Officers submit reports to the NMIS Central Office, who in turn, consolidates the data and released a weekly inventory of frozen meat at the national level. There are really no specific policy that is directly related to stockpiling of frozen meat. The NMIS only intervenes in cases wherein there are reported cases of diseases and non-compliance to the standards. Almost a similar approach is adopted by the other CAs.

Community Food Stockpiling in the PhilippinesOne of the most notable food storage systems at the community level is that of the Ivatans in Batanes. The island is the smallest province in the country in terms of population and land area. Nonetheless, the island is considered to be a model for storm readiness. In terms of food storage systems, kitchens of Ivatans are mainly constructed separately from the main structures. Kitchens are normally built larger as compared to ordinary kitchens in other areas. Households store large supplies of food (e.g., bundles of dried fish, garlic and onions, and in some houses, earthen jars hanging above the stove areas) and other household needs that can last for days. The lower ground of the structures is also used for storage of root crops like camote, cassava, ube, firewood, and other household materials (Valenzuela 2014).

A possible entry point to document the food storage systems in the Philippines is through the “Sustainable Food System of the Indigenous Peoples (IP) in the Philippines” under the IP Food System Project in which one of the implementing partners is the College of Development Communication of the University of the Philippines in Los Baños. One of the objectives of the project is to document the Ifugao’s traditional and contemporary food knowledge and practices (including plant and animal food sources, food production, marketing and consumption, cultural relevance of food, etc.). This project can be tapped to include in its objectives the documentation of the indigenous food stockpiling

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systems in the Ifugao region. The result of which can be used as template and basis in the further documentation of food storage systems of other indigenous groups in the country.

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References

Abbott, Philip. 2013. Improved Methodology for Estimation of Food Stocks. www.foodreserves.org/wp-content/uploads/2014/03/Abbott-Report-on-stocks-data.docx

Briones, Roehlano. 2014. Public Stockholding in Southeast Asia: Review and Prospects. Paper presented at the FAO Expert Meeting on Stocks, Markets and Stability, FAO Headquarters, Rome, Italy 30–31 January. http://www.fao.org/fileadmin/templates/est/meetings/stocks/Briones_public_stockholding_in_southeast_asia.pdf

Domingo, Ronnel W. 2017. “NFA to import rice only from private suppliers.” The Philippine Daily Inquirer, 17 May 2017, http://business.inquirer.net/229675/nfa-import-rice-private-suppliers

IRRI (International Rice Research Institute). 2014. The Heirloom Rice Project. http://irri.org/resources/publications/brochures/the-heirloom-rice-project

NEDA (National Economic and Development Authority). 2017. Philippine Development Plan 2017–2022. Pasig City, Metro Manila, Philippines: National Economic and Development Authority.

NFA (National Food Authority). 2017. 2016 Annual Report. http://www.nfa.gov.ph/images/files/Transparency/2016AAR030717.pdf

National Food Authority Official Website <www.nfa.gov.ph>

Philippine Statistics Authority Official Website <psa.gov.ph>

Official Gazette. 2011. Department of Agriculture Briefer on the Food Staples Self-Sufficiency Roadmap 2011–2016. http://www.officialgazette.gov.ph/2011/04/12/briefer-on-the-food-staples-self-sufficiency-roadmap-2011-2016/

Pabuayon, Isabelita M. 2008. “What Do the Rice Production and Consumption Trends in the Philippines Reveal.” Agricultural and Applied Economics Research Bulletin, 2(1–2), 2–3. https://journals.uplb.edu.ph/index.php/AAERB/article/download/48/46

Reyes, C., C. Mina, J. Crean, R. De Guzman, and K. Parton. 2009. “Incorporating Regional Rice Production Models in a Simulation Model of Rice Importation: A Discrete Stochastic Programming Approach”. Philippine

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Journal of Development, 36(1), 101–131. https://dirp3.pids.gov.ph/ris/pjd/pidspjd09-1riceimportation.pdf

Reyes, Lanie C. 2012. Banking Seeds. Rice Today. International Rice Research Institute: Los Baños. Philippines. pp. 26–29.

Salaverria, Leila B. 2017. “NFA allows rice importation through private sector.” The Philippine Daily Inquirer, 16 May 16 2017, http://business.inquirer.net/229665/nfa-allows-rice-importation-private-sector

Senate of the Philippines. 2010. “Subsidizing the National Food Authority: Is it a Good Policy”. Senate Economic Planning Office, Policy Brief 10-04. https://www.senate.gov.ph/publications/PB%202010-12%20-%20Subsidizing%20the%20NFA.pdf

Simeon, Louise Maureen. 2017. “NFA ends rice import function.” The Philippine Star, 18 May 2017, https://www.philstar.com/business/2017/05/17/1700892/nfa-ends-rice-import-function

Tepora, Ermina, and J. Perido. 2017. Methodologies on Rice and Corn Stocks Inventory: The Philippine Experience. Report presented at the Regional Workshop on Food Reserve Management and Policies in Southeast Asia, SEARCA, Los Baños, Laguna, 6–7 April.

Valenzuela, Rolando G. 2014. “Batanes model for storm readiness.” Philippine Daily Inquirer, 4 January 2014,http://opinion.inquirer.net/68827/batanes-model-for-storm-readiness

Overview of Food StockpilingAmong Indonesia’s staple crops, rice is considered to be the top priority in terms of food stockpiling. Rice stocks are mainly used to (1) stabilize domestic prices and supply, (2) ensure availability of food during emergencies (e.g., food shortages, calamities), and (3) contribute to international/regional reserves and foreign food aids.

Rice reserves in Indonesia are mostly public, controlled by both the national and local governments. Since 2005, the Indonesian government has maintained its rice reserve called the Cadangan Beras Pemerintah (CBP). The CBP or the Government Rice Reserve is being managed by the Bureau of Logistics or simply BULOG (Badan Urusan Logistik).

The government mainly sources its rice stocks from domestic production as part of its self-sufficiency initiatives. Local procurement of rice is being done during the February-April harvest season. However, in recent years, the disparity between the government’s standard purchasing rates and the prevailing market prices has become a constraint to BULOG’s rice procurement process. This is due to the government’s directive to only procure rice from local producers at the standard purchase prices. Hence, the consistently higher market prices have made it difficult for BULOG to acquire its rice reserve requirements given its budget. In turn, the agency relies on imports to fill the gap.

IndonesiaDrajat Martianto

Institut Pertanian Bogor (IPB)

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Analysis of Food Reserve Estimates Paddy production has steadily increased in the last decade, with just minor volume drops experienced in 2011 and 2014. These were due to reduction in harvested areas and lower farm productivity (Figure 32).

Figure 32. Paddy production volumes of Indonesia, 2005–2015

Source: Central Bureau of Statistics (2016)

Table 24 presents a detailed breakdown of rice stock estimates for both national and community levels. These numbers were based on the results of the rice availability surveys conducted by PT Sucofindo, a state-owned inspection company, for the years 2007, 2010, and 2015.

The numbers showed a notable shift of rice stocks from wholesalers to retailers in the last five years. During the same period, most commercial and household stocks have increased. These variations in rice stock volumes are strongly influenced by price fluctuations more specifically the discrepancies between market prices and the government’s floor prices. Farmers have been capitalizing on this situation by hoarding their rice harvests until such time they deem market prices to be favorable for selling.

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Consequently, despite the continued rise in community stock levels, the government’s actual contribution to the national rice reserve has been declining. In 2007, BULOG was able to stockpile approximately 1.6 million MT of rice. Then in 2010, this was significantly reduced to only 960,000 MT. This poses a threat to rice price stability. Therefore, the government should aim to maintain a healthy amount of buffer stock to keep prices at bay.

Table 25 provides historical data on CBP’s initial stock and utilization volumes from 2005 to 2015. The CBP only accounts for 10 percent or less of the national rice reserve, which is around 350,000–400,000 MT annually (BULOG 2016). There is no standard way of computing the amount of rice stockpiled by BULOG. Rather, the quantity stored is mostly based on previous experiences of food crises, or historical data trends. Some of the factors known to influence stock estimates are production capacity, infrastructure, prices, market supply, and consumption and harvest distribution.

Table 24. National and community rice stock estimates in Indonesia

Survey RespondentsRice Stock Volume (‘000 tons)

Q3 2007 Q3 2010 Q3 2015Wholesaler 84.4 623.0 45.9Retailer 79.7 100.9 126.0Traders / Gatherers 207.5 96.7 229.5Village Cooperatives 17.0 1.6 1.9Supermarket 3.9 2.7 12.4Farmer Households 2,041.6 2,178.8 4,471.4Common Households 251.1 356.4 400.5Large Restaurants 6.5 5.9 7.0Small Restaurants 10.3 16.4 6.1Special Households 26.9 11.0 13.0Hotels 0.4 0.6 0.3Rice Processing Industry 0.1 0.3 28.8Mills 446.2 - 34.9Subtotal Community Stocks 3,175.6 3,394.4 5,377.7

Imports 2.4 - -BULOG 1,614.1 959.3 -Subtotal Government Stocks 1,616.5 959.3 -TOTAL NATIONAL STOCKS 4,792.1 4,353.7 5,377.7

Source: PT Sucofindo (2007, 2010, 2015)Note: 3rd Quarter Data for 2007, 2010 and 2015

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Despite attempts to create annual statistical reports on rice stocks, the government was unable to gather enough information. Data on the CBP is being acquired only through surveys conducted by PT Sucofindo in cooperation with the Ministries of Agriculture and Trade, the Central Bureau of Statistics and other research organizations/centers in the country. Thus, the data on Indonesian rice stocks used in this particular analysis were sourced from the named agencies.

Initiatives on Food Reserve Management Legislation has been enacted in Indonesia in connection with food security and several incorporate food reserve management. The following are some of the major regulations:

Government Regulation No. 68 on Food Security (2002)Recognizing food security as a critical component of national development, the president enacted GR No. 68 (2002). Food security is defined as “a condition where food has been fulfilled by households, which reflects in adequate supply of food, either in quantity or quality, safely, evenly, and at a reasonable price”. This policy specifies the general provisions on food supply, national food reserve, food diversification, prevention, and eradication of food problem, among others.

Table 25. Indonesia CBP initial stocks and utilization (in tons) of Indonesia, 2005–2015

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Initial Stock - 338.8 337.3 177.5 348.8 514.7 460.4 378.4 431.3 369.0 173.2Additional CBP 350.0 92.4 255.7 204.1 181.8 - 155.0 266.7 - - 180.3Returned - - - - - - - - - - (24.0)Total Initial Volume 350.0 431.2 593.0 381.6 530.6 514.7 615.4 645.1 431.3 369.0 353.5Utilization of CBP

• Emergencies

• Market Operations

• Targeted Market Operations (for the poorest)

11.2

-

-

34.1

59.8

-

19.0

318.7

77.7

8.6

-

24.2

15.9

-

-

14.9

39.4

-

15.0

222.0

-

13.3

200.5

-

16.9

45.4

-

12.3

92.3

91.1

9.3

138.1

102.3

Total Utilization 11.2 93.9 415.5 32.8 15.9 54.3 237.0 213.8 62.3 195.7 249.7Final Stock 338.8 337.3 177.5 348.8 514.7 460.4 378.4 431.3 369.0 173.2 103.8

Source: BULOG (2016)

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MoA Regulation No. 65 Minimum Service Standards (MSS) of Food Security (2010)MoA Regulation No. 65 specifies the standard amount of food reserves required to be in storage for the provincial, district/city and community levels. This regulation is in line with the country’s initiative of strengthening its food reserve system. It is stated here that the amount of government reserve that should be available at the provincial level must be equivalent to 200 tons of rice. For the district/city level, the minimum is 100 tons. As for the community-level, there must be at least 500 kg of rice available per neighborhood unit (also called the Rukun Tetangga, which is a group of 30–50 households) for three months.

To arrive at these numbers, the following formulas were used16:

Standard Provincial Food Reserve Level

=Total No. of Food Reserves (Province)

x 100% 200 tons

Standard or City Food Reserve Level= Total No. of Food Reserves (District/City) x 100%

100 tons

Standard Village Food Reserve Level= Total Amt. of Food Reserves per Vilage x 100%

500 kg

Republic Bill No. 18 on Food (2012)RB No. 18 provides a much detailed description of the National Food Reserve of Indonesia. Here, the types are each defined, together with their corresponding purposes, procurement, and distribution methods, as well as management guidelines.

BULOG is a government-owned company established in 1967 with the primary purpose of securing the country’s food supply. The CBP stocks are stored at BULOG’s warehouses found all across the country. Currently, there are 463

16 Sourced from the Ministry of Agriculture’s Minimum Service Standards (MSS) of Food Security No. 65 (2010)

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storage facilities under BULOG with a total capacity of 3.9 million MT of rice, yet the actual volume stored is only about 1.7 to 1.8 million MT.

In 2016, through Presidential Regulation (PR) No. 48 (2016), the Indonesian President appointed the state-owned enterprise to lead its initiatives toward food security in the country. In general, BULOG is to handle staple foods, which include rice, corn, and soybean, among others. Specifically, the agency handles the following:

• Security of food prices at both consumer and producer levels;

• Management of public food stockpiles;

• Supply and distribution of food;

• Importation of food;

• Development of food-based industries; and

• Establishment and maintenance of food warehouses.

The government decides which type and amount of staple food must be kept in storage as part of the CBP. The volume of food to be stored is calculated periodically, and is based on production capability, number and distribution of the population, consumption patterns, per capita consumption, and the dynamics of the international market. As previously mentioned, the government prioritizes local procurement over importation and it is usually done during the harvesting season.

Being a relatively large country, Indonesia’s agricultural production capacity varied widely, particularly for rice. Having 33 provinces and more than 500 hundred districts, Indonesia has to be able to maintain a multi-level stockpile. Yet, in the last 10 to 20 years, Indonesia has been using the same technology for food stockpiling.

Hence, with the aim of strengthening its current food reserve system, the Indonesian government has started to explore the idea of creating additional food stockpiles. These include commodities such as corn, soybean, meat (beef), sugarcane, chili, and onions, among others. In fact, BULOG has started working with the private sector and the academe in the development of the best technology for chili and onion reserves. One of these is the so-called Controlled Atmosphere Storage (CAS).

Another notable development is the government’s plan to convert its current program Beras untuk Rakyat Miskin (Raskin), which was subsidized rice for the poor, into food vouchers. These vouchers can be exchanged for food aside

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from rice such as eggs. The effectiveness of this proposed program will rely on how fast they can convert the current Raskin stocks of BULOG into food vouchers. There have also been talks of transferring Raskin distribution and management into the private sector. However, the government is still reviewing its options on how to further strengthen its food security initiatives.

On the other hand, the Government Rice Reserve has proven to be an effective program supporting the country’s food security, especially during emergency situations or natural calamities. This has been tested several times such as during the tsunami in Aceh and Nias (2004), the earthquake in Yogyakarta and Central Java (2006), the drought in East Nusa Tenggara (2016), the flood in Kutai (2017), and the fires in Riau and West Kalimantan (2017).

However, despite these recent developments, climate change continues to be a major problem. Climate change has been known to reduce household farmers’ rice production. Consequently, they are also forced to purchase rice in the market due to inadequate harvest. In order to gain enough income for their other expenses, the farmers sell their grains immediately after harvest and the government might not always be the priority buyer.

In the domestic economy, BULOG has been firm in the conduct of its market operations in order to keep prices at bay and ensure adequate supply of affordable rice for the population. In cases of rice price inflation, especially during lean seasons, the government intervenes in the market to increase the supply and temper inflation. The process starts with the Regent/Mayor writing a formal request for a BULOG Operation Market to the Provincial government who will then forward it to the Ministry of Trade. After processing the said request, the MoT will order BULOG to conduct market operations at the requesting district/city and sell rice at the government set prices for a specified period of time. This practice is being done in order to avoid social unrest due to high rice prices.

Recently, the Ministry of Agriculture adopted the Toko Tani Indonesia (TTI) or the Indonesian Farmers’ Store, which was first introduced in East Java. The TTI aims to cut short the current agricultural trading system, which usually involves around seven to nine components/agents to as low as three. Since most of the supplies are shipped directly from the manufacturers, the MoA believes that this process will be able to reduce prices significantly. These Farmers’ Stores could also serve as a benchmark for prices of basic commodities such as rice, onion, red chili, cayenne pepper, and others. The country currently has a total of 700 stores where 23 percent are located in East Java (i.e., 160 stores). This project will also allow local farmers to be competitive and would increase accessibility of cheap food to the poor.

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Key Issues and Challenges in Food Stockpiling The following are the key issues and challenges with regard to food reserve management in Indonesia:

• High budgetary requirement for the maintenance of the national food reserve (including infrastructure, procurement, and administrative costs, as well as subsidies for the poor/Raskin);

• Limited number of food stockpiles;

• Slow mobilization of CBP due to red tape;

• Limited research in food stockpiling;

• Weak monitoring of food stocks (no annual surveys conducted);

• Limited data/information on food reserves (CBP annual data only); and

• Community level food stockpiling are mostly done voluntary and not necessarily in compliance with the set standards of the LGUs

Proposed Actions and Recommendations In order to resolve issues and strengthen existing practices in food stockpiling in Indonesia, the following courses of action were suggested:

1. Improving Stockpiling Data and Information Systems. There has to be a continuous conduct of accurate data collection for the existing food reserves in the country (i.e., farmers, consumers, hotels, restaurants, hospitals, dormitories, traders, and others). These information are important to enable precise calculations of food reserves estimates for a given period. A web-based information system or database, which will allow people to collect, verify and produce brief reports on food stock statistics should be established in the country. It should cover the national and local government levels, or serve as a regional initiative of the ASEAN.

Regional and international institutions such as SEARCA and FAO could also take the lead in the development and management of such systems for at least the first two years before rolling it out to the countries involved. Information sharing among participating countries could also be done especially on the technical aspects, as well as help in training local experts in developing, maintaining and operating the system.

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2. Strengthening Management Practices. The central government must handle reserves of rice and sugar, while the LGUs can manage the other staples based on the most commonly consumed commodities in their respective areas aside from rice. The government could also involve the private sector in its food reserves management initiatives through the use of their existing warehouses as additional storage and providing compensation or incentives to businesses, which are willing to cooperate.

3. Developing the Agricultural Sector. (1) Improve domestic production to cope with the increasing population by encouraging stronger community participation; (2) Continue efforts in developing superior/hybrid seeds to increase crop productivity particularly for rice; (3) Intensify land conversion regulations through the implementation of a General Spatial Plan to protect fertile agricultural lands; (4) Construct new dams and improve existing irrigation networks to avoid water supply shortages; and (5) Strengthen the implementation of the food diversification program to divert consumption from the current staples to other types of food. Start diversification as early as toddler years and incorporate the topic in education modules or school curriculums from kindergarten to college.

Community Food Stockpiling in IndonesiaAccording to the Head of the Center for Socio-Economic and Agricultural Policy Studies, the communities have been maintaining their own food stocks in what they refer to as lumbung desa or village barns (Figure 33). These barns serve as the villages’ first line of a social safety net during droughts and/or food shortages. This is also the most accessible food stock for the poorest households in the village.

However, the number of village barns have been declining recently. At present, only certain areas in Kampung Naga, West Java Province and Kampung Badui, Banten Province have been able to maintain their lumbung. Therefore, the government will need to come up with ways on keeping these village barns operational and also be able to disseminate the technology behind the lumbung desa into the more modern villages, as well as in other ASEAN countries if possible. For the LGUs, i.e., municipalities, districts/cities, and provinces, the Food Law has already standardized the amount of food stocks, specifically for rice.

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Figure 33. Tribal and indigenous community stockpiles in Indonesia

Source: www.kkdua.com; www.tobatabo.com; http://seni.kampung-media.com; www.panoramio.com; batak-network.blogspot.com

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References

BULOG (Badan Urusan Logistik). 2010. Glimpse about CBP. Accessed 15 March 2016. http://www.bulog.co.id/sekilas_cbp.php

BPS (Badan Pusat Statistik). 2016. Rice Reserve Study Survey Results 2015. Jakarta (ID): BPS.

Domenig, Gaudenz. 2003. Consequences of Functional Change: Granaries, Granarydwellings, and Houses of the Toba Batak. Dalam Nurdiah EA. 2011. Structural and Construction Studies of Traditional Houses Toba Batak, Minangkabau and Toraja. Laporan Hasil Penelitian. Universitas Kristen Petra, Surabaya.

I Made Adhika. 2004. “Patterns of spatial units of the yard in the Bongli Tabanan village.” Jurnal Permukiman Natah 2(1):1–55.

I Nyoman Adi Tiaga. 2014. “Development and Function Change of Barn in Bali Traditional Architecture.” Study of Social Phenomena. Denpasar, Indonesia: Institut Seni.

Kis-Jovak, and Jowa Imre. 1988. “Banua Toraja: Changing patterns in architecture and symbolism among the Sa’dan Toraja, Sulawesi, Indonesia.” Dalam Domenig G. Review Article : Asian Folklore Studies Volume 49:303–320.

Lembaga Negara Republik Indonesia. 2011. Indonesian Presidential Instruction No. 5 Year 2011 on National Rice Production Security in the Face of Extreme Climate Conditions. Jakarta (ID): Sekertariat Negara.

_____. 2012. Law of Republic Indonesia Number 18 Year 2012 on Food) Jakarta (ID): Sekertariat Negara.

Marlina, Suyudi, and E. Sumarsih. 2013. “Performance of Rice Farming Systems Approach Through Cultural Agribusiness in Kampung Naga.” Jurnal Unsil.

Marthin, M., B. Suni, and H. Sujaie. 2012. Social and Cultural Shifting Cultivation of Dayak Relatives in the village of Tapang Perodah, Sekadau Hulu, Sekadau [tesis]. PMIS-UNTAN-PSS-2012

Sardjono, A.B., and S. Nugroho. 2014. “Looking at Baduy Community Site Architecture, Sustainable Architecture of Their Ground.” Jurnal Aristektur UNDIP 14(2).

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Sucofindo. 2007. Availability of National Rice Survey Year 2007 Cooperation between the Ministry of Trade and PT Sucofindo (Persero). Jakarta (ID): PT. Superintending Company of Indonesia.

_____. 2010. Rice Survey Results 2010. Jakarta (ID): PT. Superintending Company of Indonesia.

_____. 2015. Executive Summary Verification Rice Commodities 2015. Jakarta (ID): PT. Superintending Company of Indonesia.

Syafrudin. 2009. Shifting patterns of residential space based on local culture in the Hu`u village, Dompu district, NTB [thesis]. Semarang (ID): Universitas Diponegoro Semarang.

Overview of Food StockpilingIn Malaysia, rice is currently the sole stockpiled commodity as it is a staple part of the local diet. Rice stockpiles are mostly public, and are currently being managed by Padiberas Nasional Berhad or BERNAS, a government-linked private company, at its own cost. These reserves are kept to ensure that there is enough food supply for the people during natural disasters, as well as declines in domestic and international production. Under the National Agro-food Policy (2012–2020), the rice stockpiles must be able to cover a 45-day food requirement during times of emergencies. However, since there has not been any major calamity experienced in Malaysia, these public stockpiles are often used as a tool to stabilize prices and ensure the psychological security of its population.

The country has been strengthening its rice self-sufficiency efforts, and therefore most of its rice stockpiles are sourced from local procurement, particularly the rice mills. This initiative is being supported by the government through the provision of irrigation and drainage infrastructure, input incentives and guaranteed minimum price of paddy. At present, Malaysia’s domestic production is able to cover for about 70 percent of the country’s local rice requirement, while the remaining 30 percent are being sourced from imports (Table 26).

MalaysiaAmin Mahir Abdullah

Universiti Putra Malaysia (UPM)

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Analysis of Food Reserve EstimatesDuring the 2008 food crisis, the government through a Special Cabinet Meeting on inflation control in June, decided to increase the rice stockpile level to 292,000 MT from 92,000 MT owing to soaring world rice prices and export restrictions. The computation of this revised stockpile level was based on the existing rice per capita consumption, which was 78 kg. Then, in 2015, the required stockpile level was again revised and rationalized at 150,000 MT through a Ministerial Council Meeting dated 18 September 2015. Lower world rice price, high storing costs, and inventory management are among the reasons for this stockpile rationalization.

In 2016, Malaysia’s rice storage level was pegged at 298,665 MT. This is 50 percent higher than the existing requirement of 150,000 MT owing to the presence of the so-called matured stocks, or those which have been kept for more than six to eight months.

Figure 34 presents the historical paddy and rice production volumes for the period 2005–2014.

Initiatives on Food Reserve ManagementThe Malaysian rice stockpile is categorized as public. It was previously managed by the National Paddy and Rice Authority (NPRA), established in 1971. In 1994, the NPRA was dissolved and corporatize to become BERNAS, which was later on privatized in 1996. The original agreement ran from 1996 to 2011, but was then extended in 2012 up to January 2021. BERNAS took over stockpile management, as well as the other social responsibilities of the former NPRA.

Table 26. Rice self-sufficiency performance of Malaysia, 2005–2014

Year % Rice Self-Sufficiency2005 80.62006 68.82007 72.72008 70.22009 70.42010 71.42011 72.12012 71.82013 71.12014 71.6

Source: MOA (2017)

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Paddy and Rice Control Act (1994)Under the Paddy and Rice Control Act, the Paddy and Rice Regulatory Division of the Ministry of Agriculture and Agro-based Industry (MOA) was tasked to store and manage an adequate supply of paddy/rice for emergency purposes. In case of supply shortages, the Director General has the power to invoke traders to sell the rice to the government with appropriate compensation.

National Agri-food Policy (2012)The National Agri-food Policy 2012–2020 was created as a strategy for paddy and rice industry development through the consolidation and strengthening of rice stockpile management in Malaysia. The goal is to ensure sufficient supply of rice buy setting up a stockpile of 292,000 MT, which is equivalent to a 45-day rice requirement.

The current partnership between the government and BERNAS seems to be going well. In exchange for its agreement to manage the country’s rice reserves, BERNAS is granted the right to be sole importer of rice in Malaysia and to regulate the inflow of rice into the country. Moreover, they set an import quota based on the supply deficit needed to complete the reserve requirement.

Figure 34. Paddy and rice production volumes in Malaysia, 2005-2014

Source: Ministry of Agriculture (2017)

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This is done to protect and maintain the country’s rice self-sufficiency level that is stipulated under Malaysia’s food security policy.

As previously mentioned, the rice stockpiles are stored in BERNAS warehouses located all across the country. The stockpiled rice are distributed among Peninsular Malaysia at 46 percent with four warehouses, Sabah at 33 percent with four warehouses and Sarawak at 21 percent with three warehouses. BERNAS monitors the quantity and quality of the stored rice, and replenishes the supply every six to eight months.

Key Issues and Challenges in Food Stockpiling The biggest challenge for rice stockpiling in Malaysia is the high budgetary requirement. Stockpiling rice usually incurs costs related to procurement, storage, management, and pest control. Another issue is quality. Since rice stock rotation is normally done every six to eight months only, maintaining rice quality has been difficult and costly to BERNAS. In addition, rice is a price controlled commodity, thus, profit-making may not be possible for BERNAS. On the contrary, it may even incur losses due to storage loss and quality deterioration.

In Malaysia, researches are more dedicated to food security issues rather than stockpiling per se. The focus is to identify other agri-food commodities that can be used as a diversification strategy to food security in order to not be solely dependent on rice. The commodities under consideration are livestock, aquaculture, fruits, and vegetables, where self-sufficiency is also targeted. Since research grants are rather limited, this also imposes another challenge to the country.

Proposed Actions and RecommendationsRice stockpiling is expected to continue as a food security strategy in Malaysia. To determine the optimal volume of rice to stockpile, studies must be conducted. This will likewise reduce the costs to government significantly. Some important factors that should be considered are the changes in the domestic supply owing to land conversion and climate change, as well as in demand due to population increase and foreign immigration (both legal and illegal) in the country. Researchers from universities such as UPM and related research institutions such as Malaysian Agricultural Research and Development Institute (MARDI), could collaborate to undertake scientific and economic studies toward sustainable and efficient stockpiling.

Resiliency to climate change is another important strategy. Malaysia has been suffering from the effects of the El Niño phenomenon since February 2016, and

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it has significantly reduced the water supply of rice granaries. The low water levels in several dams resulted to delays in rice planting. Hence, climate change mitigation is an important factor that needs to be considered in stockpiling and food safety policy research.

Lastly, the establishment of a regional stockpile such as APTERR has proven effective in facing food shortages among member countries such as during emergencies. Thus, it is also important to monitor stockpile-related statistics including rice production, prices, inventories, trade and climate, which are currently very limited. A complete and updated database with such parameters should be established and can be patterned from the FAO’s statistical database. These information can be used for various analyses and researches, as well as for forecasting potential rice requirement in cases of emergencies or natural disasters. Since there are countries that produce excess rice, and some are more import-dependent, studies on stockpiling efficiency can be conducted to formulate an optimum stockpiling model for the ASEAN region.

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References

Government of Malaysia. Paddy and Rice Control Act 1996.

_____. National Agri-food Policy (2012–2020).

Muhammad, Salman. 2013. “Role of BERNAS as Government Linked Company (GLC)–Supporting and Complementing National (Malaysia) Food Security Food Policies.” Journal of Tropical Resources and Sustainable Science. 1(2): 35–41.

Tey, Y.S. 2010. “Review Article Malaysia’s strategic food security approach.” International Food Research Journal 17: 501–507.

Vengedasalam, D., M. Harris, and G. MacAulay. 2011. Malaysian Rice Trade and Government Interventions. Paper presented during the 55th Annual Conference of the Australian Agricultural and Resource Economics Society, Melbourne, 8–11 February 2011.

Overview of Food StockpilingAs in most Southeast Asian countries, rice is also a staple food in Lao PDR, and a key element of the country’s food security. The country’s rice sector has displayed impressive growth in recent years. However, the sector has reached the crossroads, wherein further progress would require changes to the current policy mix in order to sustain its growth. Moreover, there is a need to support the ongoing transition from rice subsistence to rice commercialization in order to achieve the government’s policy targets.

As part of current food security policies in the country, the government of Lao PDR has piloted a national rice reserve program. At present, the country is able to produce an average of four million MT of rice per annum. This translates to a 500-kg allocation per person, which is more than twice the actual average per capita consumption in the country. This leaves a surplus of approximately 200 kg per person, which can be sold for additional income.

Despite focus on rice, the government is also encouraging farmers to grow other types of cash crops, as well as livestock, and fisheries. This is in the effort to improve the living condition of the rural population, especially the farmers. Production of meat, fish, and egg have also increased, at approximately 50 to 60 kg per person per year (Vientiane Times 2014), which is sufficient for the domestic market.

Lao PDRPhoutthasone Sibounnavong

National University of Laos (NUoL)

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Initiative on Food Reserve ManagementLao PDR currently stockpiles two types of rice, regular and sticky varieties. Primary institution that handles these stocks is the Ministry of Finance (MOF), particularly the Department of Accumulative Stock. In the Cumulative Stock Degree issued on May 2013 by the Prime Minister, the principles, rules and tools for implementation, administration, monitoring and inspection of the country’s public accumulative stocks were laid out. However, owing to the lack of budget, this decree has not been fully implemented.

On the other hand, the Accumulative Stock Implementation Agreement enacted by the Prime Minister in December 2014, specified the roles of various ministries in the management of public stockpiles. The proportion of monetary and in-kind goods, as well as the target volumes were also indicated in this agreement.

The rice reserves in Lao PDR are mainly sourced from local procurement and through the private sector. The sticky rice reserves are managed in partnership with the private sector and are being replenished every six months. The regular rice reserves, on the other hand, are for the country’s earmarked stocks under the APTERR.

Since 2009, the government of Lao PDR, through the Ministry of Industry and Commerce (MOIC), has been providing loans to selected private companies to set up rice reserves to control market prices. These companies are allowed to keep 40 percent of their total stocks as reserves, and the remaining 60 percent are sold to the market. This, however, depends on the prevailing market prices because the government would want to ensure that these companies gain high profits in order to pay their loans.

When price fluctuations occur in the rice market, these private companies are required to sell their reserves to stabilize prices. However, these seldom happen as prices of rice in Lao PDR are usually stable. Therefore, this practice has not been efficient for the government. Poor infrastructure for milling and drying rice is also a major issue. There are even cases when the companies breech their contracts and are unable to pay the loans.

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Key Issues and Challenges in Food StockpilingSome of the issues and challenges faced by Lao PDR in relation to food stockpiling are:

• Low funding;

• Weak implementation;

• Limited research and knowledge;

• High costs of stockpiling;

• Politicization of public stocks;

• Lack or inadequacy of statistical data on food stocks; and

• Lack of technologies for quality control and preservation of rice stock.

Proposed Actions and RecommendationsTo address these constraints, the following solutions are recommended:

1. Study existing policies and practices on food reserve management in other ASEAN countries;

2. Further analyze the current problems/constraints on food reserve management in Lao PDR;

3. Strengthen knowledge on food security, agriculture and human resource development through research, by the academe and other research institutions;

4. Improve efficiency and effectiveness of public investments; and

5. Establish the foundation for the development of the rice seed sector.

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References

Fukai, Shu, P. Sittisuang, and M. Chanphengsay. 1998. “Increasing production of rainfed lowland rice in drought prone environments: a case study in Thailand and Laos.” Plant Prod. Sci., 1(1):75–82.

Schiller, J.M., Hatsadong, and K. Doungsila. 2006. “A history of rice in Laos.” In Rice in Laos, edited by J.M. Schiller, M.B. Chanphengxay, B. Linquist, and S. A. Rao. Los Baños, Philippines: International Rice Research Institute. pp. 9–28.

Shrestha, Samjhana, T. Boupha, and K. Khamphoukeo. 2006. Sowing Seeds in Lab and Field: Socioeconomic Impact of the Lao-IRRI Rice Research and Training Project. Los Baños, Philippines: International Rice Research Institute. 69 pp.

Vientiane Times. 2014. Agricultural expansion needed for food security and commerce. Retrieved from http://www.laolandinfo.org/2014/12/12/a g r i c u l t u r a l - e x p a n s i o n - n e e d e d - f o r - f o o d - s e c u r i t y - a n d -commerce/?lang_filter=la

Overview of Food StockpilingIn most of the Southeast Asian countries, rice remains to be the most publicly stockpiled food commodity. However, countries such as Thailand, Vietnam, Cambodia, and the Philippines have also established other forms of food reserves. Among them, Thailand currently stores the most number of food commodities including fruits, vegetables, and meat products. This is a testament of the country’s strong agricultural production capacity and self-sufficiency. Vietnam, on the other hand, maintains a more diverse public reserve, covering both food and non-food products for specific purposes.

The rationale behind food stockpiling in these countries showed very little variation. Price stabilization and food availability are usually on top of the list. Other reasons cited include exports, national security, and contribution to regional reserves, such as APTERR. For Thailand and Myanmar, stockpiling is mainly for trade and market control as both countries are known to be surplus producers of rice. Thus, there is no pressure to formulate specific policies on food reserves. In the case of the other countries, ensuring that there is available food during emergency situations (e.g., natural disasters) is a top priority, especially for the rice-importing countries.

Stocks are mainly procured domestically, if not entirely. This indicates a certain level of self-sufficiency among Southeast Asian countries. Other procurement methods employed include G2G trade and G2P schemes or importation.

Cross-country Analysis

A Comparative Analysis of Southeast Asia’s Existing Food Stockpiling Mechanisms


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Analysis of Food Reserve EstimatesFigure 35 shows a comparison of milled rice production volumes of selected Southeast Asian countries for the period 2007–2016.

Figure 35. Historical milled rice production volumes of selected SEA countries, 2012–2016

Source: IRRI World Rice Statistics

Indonesia recorded the highest volume of rice production among the eight countries over the period 2007–2016, averaging 36.5 million MT, followed by Vietnam and Thailand at 26.7 and 19.4 million MT, respectively (Figure 35). Yet despite its burgeoning rice production volumes, Indonesia continues to import rice to feed its growing population. As of 2016, Indonesia had the 4th largest population in the world with more the 260 million people. For the rest of the countries studied, volumes were relatively stable, ranging from one (1) to 12 million MT on the average, with Malaysia and Lao PDR producing below two million MT each. Meanwhile, the sudden drop in volume in Thailand in 2015 may be attributed to lower than expected harvested area caused by drought (Prasertsri 2016).

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For ending rice stock volumes, Figure 36 presents the 10-year data for all countries.

Figure 36. Historical rice ending stock volumes of selected SEA countries, 2012–2016

Source: IRRI World Rice Statistics

It can be observed that stocks of the CLMV countries are consistently within the two-million-ton mark with limited variance in volumes. In the case of Thailand, a sudden uptick in rice stocks was recorded during the 2011–2013 period. This was due to the implementation of the Paddy Pledging Program, which created a huge rice surplus for the country. To date, Thailand is still offloading its excess supply of rice into the market. On the contrary, Indonesia’s rice stocks were seen to be declining continuously in the five years before 2016 despite increasing production owing to unfavorable weather conditions (Wright and Meylinah 2016). The Philippines likewise displayed a significant reduction in its rice stocks starting in 2009 to present as a result of the country’s continued efforts to achieve self-sufficiency in rice. In 2017, the government has set the limit of rice imports to only 250,000 MT, and procurement is coursed through the private sector in an effort to reduce or prevent corruption.

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In terms of stock monitoring, the Philippines appears to be ahead of the pack, with its comprehensive rice and corn stock inventory system. The NFA and the PSA conduct monthly surveys of public, commercial and household stocks. According to an NFA official, the agency strives to further improve its inventory monitoring through a web-based integrated electronic information system. For the other countries, the process of creating or improving existing monitoring schemes is still ongoing. In Vietnam, for instance, the Prime Minister has mandated the collection of data on storage and release of stocks from the National Reserve for monitoring purposes. Indonesia, on the other hand, taps the services of the private sector to conduct surveys and collect data.

Initiatives on Food Reserve ManagementNot all countries have their own specific food reserves policies. It appears that the large rice-importing countries, the Philippines, Indonesia, and Malaysia, have more defined food stockpiling initiatives and strategies, primarily for rice. Moreover, the overall management of their stocks is under specific agencies created or tapped by the government for this sole purpose. These are NFA for the Philippines, BULOG for Indonesia, and BERNAS for Malaysia. For Cambodia and Lao PDR, food stockpiling initiatives are still in the early, development phase.

Majority of the laws on food reserves for these countries were enacted by the national government with the exception of Malaysia, where the agriculture ministry was the entity to formulate the policy. Table 27 presents a summary of major food stockpiling policies in Southeast Asia.

Table 27. Major legislation on food reserves in selected SEA countries

Country Legislation Proponent YearVietnam Law on National Reserve National Assembly 2012

Cambodia Sub-Decree on the Establishment of Cambodia Food Reserve System

Royal Government of Cambodia

2012

Philippines Presidential Decree No. 4 President of the Philippines 1972

Indonesia Republic Bill No. 18 on Food President of Indonesia 2012

Malaysia National Agri-food Policy Ministry of Agriculture and Agro-based Industry

2012

Lao PDR Accumulative Stock Implementation Agreement

Prime Minister of Lao PDR 2014

Source: Country reports (various years)

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Moving on to the actual practice of food stockpiling, the mechanisms and modalities on which rice is being stored varies widely among these countries. Some required fixed volumes while others based their quotas on previous experiences. Vietnam, Malaysia, and Lao PDR have set fixed levels of rice reserve requirements at 500,000, 150,000, and 5,000 MT, respectively. For Cambodia, the reserve must be equivalent to one-month rice consumption requirement of 10 percent of the country’s population. As for Indonesia, the Cadangan Beras Pemerintah must be 10 percent of the total national reserves. In the case of the Philippines, there are two types of rice stockpiles, one is the Strategic Rice Reserve, which is equivalent to 15 days consumption, and the other is the Government Rice Buffer Stock, which is a 30-day buffer stock inclusive of the SRR. For Thailand, it has been suggested that the optimal amount of rice stocks to be kept is two million MT.

For infrastructure, Vietnam, the Philippines, and Indonesia are reported to have large numbers of facilities for rice and other food commodity storage and distribution. The Philippines and Indonesia currently have more than 400 warehouses each, under NFA and BULOG, respectively. Vietnam, on the other hand, has a total capacity of four million tons spread across its provinces.

To ensure effective stockpiling practices, countries have been intensifying their R&D initiatives, as well as technological advancements to modernize the process. A major concern is the preservation of food quality during long storage, and Vietnam seems to be taking the lead on this. The country is already strengthening its R&D programs in relation to food stockpiling, as well as on the use of advanced technologies and sciences. In Indonesia, the so-called Controlled Atmosphere Storage is being explored for a technological advance. For Thailand, the focus is on rice research. A number of government and non-government agencies engage in data collection, knowledge sharing, and information dissemination through the conduct of the biennial National Rice Conference.

These countries have likewise employed several good practices in relation to food reserve management and stockpiling. Thailand and Indonesia are more concerned about market activities. Thailand schedules release of stocks based on the prevailing domestic and international demands. An example would be delaying sales to Muslim countries during the Ramadan. Indonesia, on the other hand, came up with the so-called Toko Tani Indonesia or the Indonesian Farmers’ Store, which aims to cut short the current agricultural trading system, which usually involves seven to nine agents to as low as three. The main purpose of this initiative is to lower the prices of commodities by allowing direct shipments of products from manufacturers to the market.

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Vietnam, the Philippines, and Malaysia are more focused on storage and distribution of public reserves. In Vietnam, the government is considering converting 10–20 percent of the National Reserve into cash to reduce the costs incurred in quality preservation of the goods stored. The Philippines, through NFA, strategically locates its warehouses for even distribution of stocks across the country and for ease of access during times of emergencies. Malaysia, performs regular restocking every six to eight months to ensure that the quality of the rice stored is maintained. The principle of rolling stock is applied and stocks that were stored beyond the six to eight months are considered matured.

Yet despite efforts to efficiently manage food stockpiles, the issue of climate change has proven to be a major barrier, especially as reflected in the frequency of unexpected severe weather events. These not only affect production, but also postharvest activities such as storage. Countries such as Thailand, Vietnam, and Indonesia have been implementing risk mitigation strategies to reduce the impact of climate change. For Thailand, a seed program is being implemented as a support scheme to farmers. Vietnam, on the other hand, is focused on modernizing its food preservation technologies. For Indonesia, a policy was formulated in 2011 to respond to the impacts of climate change on agriculture. Presidential Instruction (PI) No. 5 otherwise known as The Safeguarding of National Rice Production in the Face of Extreme Climate was enacted by the government to protect national rice production and prepare countermeasures to anticipated impacts.

Another major factor to consider in relation to food reserve management and policies is the changing regional trade regime. According to the General Manager of the APTERR Secretariat, the ASEAN Trade in Goods Agreement (ATIGA) has its implications for the region’s food reserves, more specifically to APTERR. He explained that despite its goal of promoting trade liberalization in ASEAN, not all countries are exempted from tariff and non-tariff barriers when it comes to trading rice under ATIGA. This could make ASEAN countries vulnerable to rice price volatility and could undermine food security. However, he clarified that ATIGA allows stockpiling of rice given that the stocks are to be used for emergency purposes. Thus, the implementation of the ATIGA does not directly affect food stockpiling as long as APTERR continues to operate as an emergency reserve, and that national reserves operate at market prices.

In addition to these, Malaysia emphasized the need for regional stockpiles to complement existing policies in order to avoid duplication of work. It was also cited that there should be a mechanism where domestic producers are protected as the region moves toward a freer market. Vietnam, on the other hand, called for greater collaboration between the rice surplus countries and the rice deficit countries in creating a more effective trade regime among

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them. A good start would be through information-sharing among the ASEAN members. In addition, the Philippines encouraged its neighboring rice-exporting countries, such as Myanmar and Cambodia, to grant the country more access to their rice supply. This is to enable the Philippines to maintain a reasonable price of importing rice.

Key Issues and Challenges in Food StockpilingThe following are common issues and challenges faced by Southeast Asian countries in relation to food stockpiling:

1. Fiscal burden. Food stockpiling is a costly practice. From procurement to storage and distribution to stock rotation/replenishment, maintaining food reserves requires a huge budget.

To illustrate, a 2011 study by Action Aid cited that the cost of holding grain stocks can be as high as 15–20 percent of the value of the stock per year. This varies among countries depending on the size of operations. For instance, in 2006, between the Philippines, a major rice-importing country, and Thailand, a top rice exporter, storage costs accounted for 27 percent and eight percent of total marketing costs, respectively. A total of PHP 0.34/kg of rice would have been saved by the Philippines if the country has the same modality of stockpiling as Thailand. Among the major marketing cost components, transportation captures the bulk of expenses, accounting for more than 40 percent for both the Philippines and Thailand. (Table 28).

Table 28. Comparison of rice marketing costs in Thailand and Philippines, 2006

Activity Philippines (PHP/kg)

Thailand(PHP/kg)

Differential(PHP/kg)

Transport costs 0.70 0.40 0.30Drying costs 0.14 0.15 -0.01Storage costs 0.42 0.07 0.34Milling costs 0.32 0.23 0.09Total marketing costs 1.58 0.85 0.72

Source: Dawe et al. (2006)

Furthermore, the cost of stockpiling was found to be the same or even higher than expenses on agricultural research and other agricultural programs (World Bank 2012). This concern is clearly depicted in the status of public spending on stocks among selected countries in Asia as

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presented in Table 29. With regard to the Philippines, spending on public stock programs was found to account for about 0.4–1.0 percent of the GDP as compared to other agricultural programs (0.8%) and agricultural R&D (0.05%) within the 2005–2009 period. These results reveal the high opportunity cost associated with stockpiling in the country and only pointed out the need for the government to look into the current stockpiling system and more importantly, the necessity to put long-term investment in improving agricultural productivity and the marketing system. For Indonesia, although public stock spending was seen to be higher than the Philippines, it is just the same as expenditures on agricultural R&D and lower than spending on agricultural programs.

Table 29. Comparison of public spending on stocks in selected countries

Country Spending on Public Stock Programs

(% of GDP)

Spending on Agriculture

(% of GDP Excluding [A])

Spending on Agricultural Research and

Development (R&D)

(% of GDP)[A] [B] [C]

India 1.0 (2004/05) to 1.5 (2008/09)

1.2 (2008/09) 0.06 (2008/09)

Indonesia 0.5 (2008-10) 0.8 (2008) 0.05 (2003)Philippines 0.4 (2005/06) to 1.0

(2009)0.8 (2005) 0.06 (2002)

Source: The World Bank (2012)

Note: Data on public expenditure on public stocks [A] for India are from Rhee (2011), Dawe et al. (2011), and government statistics; for Indonesia from Rhee (2011); for the Philippines from the World Bank (2007) and Rhee (2011); and for Zambia from IMF and Nkonde et al. (2011). Spending on agriculture [B] is from World Bank country reports and government statistics. Spending on agricultural research and development [C] is from Pardey et al. (2006) and World Bank country reports.

2. Weak stock monitoring and information systems. To properly account for, and monitor food stocks, there has to be an effective monitoring system. However, almost all countries, with the exception of the Philippines, share the same issue of weak inventory monitoring. In order to effectively monitor the supply and usage of food stocks, countries have to establish a system for data collection. Since this would require additional budget, manpower, and updated technologies, most countries are having difficulty creating such systems. For countries without existing policies on food stockpiling, formulation of such policies is needed.

3. Low storage capacity or inadequate infrastructure. For large rice producers, lack of storage facilities is a huge problem. Countries such as Thailand, Vietnam, and Cambodia are some of the examples.

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Building such facilities will require a huge chunk of government budget. Hence, some countries are forced to tap the support of the private sector. On the contrary, some of the rice-importing countries are underutilizing their storage facilities owing to supply shortages.

4. Mismanagement and lack of cooperation among stakeholders. Some countries cited improper management of publicly-provided equipment. Others pointed out the presence of red tape, too much government intervention, as well as politicization of commodities especially rice, which is prone to corruption. There is also a need to build the capacities of the people assigned to manage and monitor stocks. This is to ensure proper handling of commodities and reduce wastage.

5. Lack of research and innovation. There is limited research done on food reserves. Proper preservation of food commodities to maintain quality requires technological advancements and research. Failure to invest in such technologies may result to high levels of food wastage. This would likely reduce the country’s competitiveness in the marketplace owing to failure in meeting certain quality standards.

Proposed Actions and RecommendationsGiven the major issues discussed above, the following are some recommended courses of action:

1. Establish or upgrade data and monitoring systems. Governments need to allocate budget to create or improve the existing stock monitoring systems to assist them in formulating evidence-based policies and ensuring proper management of food reserves. Countries could also form a regional food (rice) reserve or stockpile data bank to encourage transparency and build trust among members. This could also allow governments to forecast the demand and supply of goods, determine the level to produce, and be able to propose the optimal volume of food reserves to keep.

2. Revisit and evaluate existing policies. For countries that already have existing policies on food reserves, there is a need to revisit and evaluate these in order to determine the appropriate level of government intervention needed to properly manage stocks and market shocks.

3. Strengthen management practices. The government should invest in strengthening the capacities of the people involved in food reserve management. Cooperation among all relevant stakeholders must also be encouraged. There is also a need to shorten the administrative process for

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the movement and release of food stocks especially during emergencies. For instance, the members could increase the discretionary authority of the APTERR General Manager in relation to the release of the rice stocks in times of emergencies and other unforeseen events.

4. Encourage investments in infrastructure. This is particularly true for the huge rice-producing countries. The government must invest in building or upgrading infrastructure facilities for storage and preservation of food stocks. This would significantly reduce wastage and inefficiencies in storage. The government could consider engaging in public-private partnerships (PPPs).

5. Modernize processes and technologies. There is a need for countries to modernize their processes and adopt new technologies in food stockpiling mainly with regard to food preservation. This will also be a way to increase the competitiveness of exporting countries in the regional and global markets by meeting standards on food quality.

6. Create other forms of stockpiles. Countries should consider the creation of other stockpiles for food items beside rice. With all the complexities involved in rice stockpiling, the feasibility of establishing other types of reserves is currently being considered. Some countries have already begun this practice, but most initiatives are still in the early stages.

Researchers from selected Southeast Asian countries came up with a set of criteria for the selection of other commodities that can be stockpiled in the ASEAN region. These are:

• Strong domestic demand;

• Regularly consumed/staple food;

• No substitutes in terms of preference and affordability;

• Easy to store and process;

• Land availability;

• Has high yield/production volumes; and

• Can be planted in majority of the country areas.

Given these criteria, the following food commodities were identified as potential sources of stockpiles: maize, sugar, soybean, wheat, cassava, taro, and palm oil.

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Table 30 presents the top three priority commodities with their corresponding ASEAN producers and the possible type of public stockpile that can be established based on the deliberation of the workshop participants.

7. Provide support to the agriculture sector. Food stockpiling will not be viable without a functioning and productive agriculture sector. Therefore, it is must for governments to provide support to agriculture. This could be in the form of subsidies, loans, or policy reforms that would enable producers to operate effectively and competitively.

Community Food Stockpiling in Southeast AsiaAmong the Southeast Asian countries, there is still existing community-level stockpiling, which only varies in scale and practice. Countries such as Thailand, Vietnam, Cambodia, the Philippines, and Indonesia have been engaging in community-based stockpiling for years. This is particularly true in the rural and hard to reach areas of these countries. The practice of keeping food stockpiles is considered a part of their culture and tradition. In Indonesia, having their own rice storage is considered a symbol of wealth and societal status. However, this form of food stockpiling has been weakening over time. For instance, in Thailand, the number of rice silos in communities was seen to have significantly declined owing to high maintenance costs and lack of land. Others only exist in small or ethnic villages such as in Vietnam, the Philippines, and Cambodia.

Table 31 presents a comparative summary of food reserves in selected Southeast Asian countries.

Table 30. Priority commodities for public stockpiling in the ASEAN

Food Items Local Producers Type of Public StockpileMaize Vietnam, the Philippines, Thailand,

Lao PDR, Cambodia, and IndonesiaBuffer stock (price stability) Safety net

Sugar Vietnam, the Philippines, Thailand, Lao PDR, Cambodia, and Indonesia

Buffer stock (price stability) Safety net (country’s decision)

Soybean The Philippines, Cambodia, Thailand, Vietnam, and Indonesia

Buffer stock (price stability) Safety net

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Table 31. Cross-country comparison of food reserves in selected SEA countries

Thailand Myanmar Vietnam CambodiaPrimary Commodity Stockpiled

Rice Rice Rice Rice

Target Quantity of Public Stockpile

Two million tons (Proposed amount)

500,000 tonnes 2013 Actual: 19,215.7 metric tons 14,000 metric tons(for APTERR)

One month equivalent food requirement of 10% of the population during emergencies

Lead Agency/ Institution

Ministry of Agriculture and Co-operatives

General Department of National Reserves

Rice Reserve Supervisory Committee

Food Reserve System Management Committee

Public Stockpile(s) Export; emergency/humanitarian; food security; safety net

National Reserve rice buffer stocks (2011-2013 only)

Cambodia Food Reserve System

Sources of Stocks local procurement; government-to-government trade; private sector

public bidding; direct procurement; competitive offering; appointment of contractors; direct public purchase

local procurement local procurement

Storage Facilities/ Capacity

1,174 rice store houses as of 2016 (Community-level)

silos: 500 tons/silo; warehouses: 3.14 million tons

warehouses of the Ministry of Commerce, as well as rice traders

No data

Other Food Commodities Stockpiled

soybeans, corn, cassava, longan, garlic, sugar, palm oil, eggs, meat

white salt; Seeds (rice, maize, vegetables)

No data vegetables, seeds

Primary Commodity Stockpiled

Rice Rice Rice Rice

Target Quantity of Public Stockpile

Based on the National Rice Consumption Requirement (NRCR) for the yearNRCR 2016: 32,150 MT

350,000 - 400,000 metric tons

150,000 metric tons; 45-day food requirement

3,000 tons white rice (for APTERR)

Lead Agency/ Institution

National Food Authority

BULOG BERNAS Department of Accumulative Stock

Existing Public Stockpile(s)

15-day Strategic Rice Reserve (SRR); 30-day Government Rice Buffer Stock (GRBS) inclusive of the SRR

Cadangan Beras Pemerintah

food security National Rice Reserve Program

Sources of Stocks Local procurement;Procure through the private sector;Government-to-government tradeimports

local procurement; imports

local procurement; imports

local procurement; private sector

Storage Facilities/ Capacity

436 NFA-owned and leased warehouses (as of January 2017)

463 BULOG warehouses

No data No data

Other Food Commodities Stockpiled

corn, sugar, meat No data No data No data

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References

Prasertsri, Ponnarong. 2016. Thailand Grain and Feed Annual 2016. GAIN Report Number TH6029 dated 18 March 2016. https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Grain%20and%20Feed%20Annual_Bangkok_Thailand_3-18-2016.pdf. USA: US Department of Agriculture

World Bank. 2012. Using Public Foodgrain Stocks to Enhance Food Security. https://openknowledge.worldbank.org/bitstream/handle/10986/11878/712800ESW0P1130Foodgrain0Stocks0web.pdf?sequence=1&isAllowed=y

Wright, Thom, and Sugiarti Meylinah. 2016. “Indonesia Grain and Feed Update November 2016.” GAIN Report Number ID1636 dated 9 December 2016. Retrieved from https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Grain%20and%20Feed%20Update_Jakarta_Indonesia_12-9-2016.pdf. USA: US Department of Agriculture

Empirical evidence showed that across Southeast Asia the primary food commodity being stockpiled in the region is rice, given that it is a staple food for the majority of the population. This was validated in eight out

of the 11 Southeast Asian countries, namely, Thailand, Vietnam, Myanmar, Cambodia, the Philippines, Indonesia, Malaysia, and Lao PDR using a mixed methods survey-interview approach in each country.

Minimal variation was observed with regard to why these countries engage in food stockpiling. Specifically, for Southeast Asia, the most commonly cited rationale is to ensure food availability during emergencies. It is well-known that the region is highly susceptible to various forms of natural calamities such as floods, droughts, and earthquakes. Thus, making food available to the people in times such as these is of great importance. Another important reason for food reserves is price stabilization. Food price shocks, such as during the 2007–2008 crisis, could result in supply shortages, and consequently economic and social concerns. For a region housing a significant number of poor people (estimated at about 800 million in 2016), ensuring food affordability is crucial.

The mechanism by which food is being stockpiled differs from country to country. The study focused on public stockpiles, which are directly owned, monitored, and administered by governments. Public stockpiles can be classified as emergency/humanitarian, stocks for food security, safety net stocks or stocks for trade.

Synthesis

Food Reserves in Southeast Asia: A Common Ground for Regional Food Security


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Southeast Asian countries mainly source their food stocks from domestic production. Some engage in G2G trade, and importation. Another scheme currently being employed by countries is G2P trade. Increasing the involvement of the private sector with the procurement of public food stocks is a way for governments to avoid corruption and red tape. This is particularly applicable to rice, which is a highly politicized commodity in the region.

At present, the region’s strong economic growth, increasing urbanization and diversifying diets, has raised the need to establish other forms of food stockpiles besides rice. Countries such as Thailand, Vietnam, Cambodia, and the Philippines have already created non-rice reserves in the form of corn, sugar, meat, fruits, and vegetables.

Yet despite the numerous benefits that food stockpiling provides, not all countries in Southeast Asia have existing policies or programs specific to food reserves. One reason is the financial burden. From procurement to storage and maintenance to distribution and stock rotation, food stockpiling incurs steep costs. This explains why governments are tapping the private sector and engaging them in stockpiling activities. Given the private sector’s relatively higher and liquid assets, the sector could support the governments’ initiatives like improving infrastructure and introducing new technologies.

In the case of rice-exporting countries, there seems to be no immediate pressure to establish food reserves since most of them are already rice self-sufficient. One example is Thailand, which claimed to have the capacity to supply most of its food requirements. In fact, the country has so much rice that it is still offloading excess supply into the market. On the downside, the existence of such huge surpluses has been challenging exporting countries in terms of storage, monitoring, and quality preservation. Thus, initiatives on rice research, data collection and inventory, and modernization of technologies are being strengthened in most of these countries, such as in Thailand and Vietnam.

As for the rice-importing countries, results indicated that most of them are intensifying efforts to achieve rice self-sufficiency. This is particularly true for the Philippines, Indonesia, and Malaysia. However, for most of these countries, the high costs involved in achieving rice self-sufficiency is a major constraint. For Lao PDR, although efforts to be self-sufficient seems to be going well for the country, the challenge is in its existing policies, which cannot seem to allow the country to cope with the fast-paced growth of its rice industry.

Another pressing concern for Southeast Asia is climate change. Natural disasters seem to have become more frequent in the region, and these

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Synthesis

have often brought about significant damage to the agricultural sector. This risk and disaster vulnerability of Southeast Asia is a major concern for countries outside the region. Since most of the world’s rice supply is produced in Asia, the international market for rice is also under threat. If Southeast Asian countries suffer from continued flooding, droughts, and other catastrophes, they would most probably resort to hoarding to ensure availability of food for domestic consumption. This would significantly reduce the amount of rice available in the international market and those who are dependent on imports could suffer from price fluctuations and even food crises.

With ASEAN’s move towards building a common, competitive market, Southeast Asian countries could support each other in terms of ensuring food availability across the region through stronger intra-ASEAN trade. For instance, rice surplus countries can offload their excess supply into neighboring deficit countries and reduce storage and preservation costs. Deficit countries, on the other hand, can focus more on achieving food security rather than aiming for food self-sufficiency, which is an obviously harder, and more expensive “fish to catch.”

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Research and Development Department (RDD)

and Knowledge Resources Unit (KRU)

SEARCACollege, Los Baños, Laguna 4031 Philippines

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Fax: (63-49) 536-2283 (Attn: KRU)Email: [email protected]

or visit www.searca.org

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