Price and subsidies cast a shadow over rice policy

Economy October 16, 2018 01:00

By PHUWIT LIMVIPHUWAT
THE NATION, SINGAPORE

2,212 Viewed

PRICE STABILITY and government subsidies are two key challenges facing international rice trade, experts say.



“On the issue of how much countries can rely on imports of rice alone to sustain their population, I would say that large countries like India need to achieve self-sufficiency,” said Ashok Gulati, former chairman of the Commission for Agricultural Costs and Price, at the 5th International Rice Congress yesterday during a panel discussion.

The Congress is the biggest gathering of leaders, scientists, policymakers, agriculture experts and technology providers in the rice sector. It is organised by the International Rice Research Institute and the Agri-Food and Veterinary Authority of Singapore. It provides panel discussions and a venue for all players in the rice industry to meet, share and learn about the latest policies and technological innovations shaping the future of the world’s most important staple crop. The congress is held once every four years.

Despite continuous growth in the volume of international rice trade, reliance on rice imports is still questionable for large countries like India, Gulati said.

“There can be tectonic shifts in the price of rice, as seen from the 2007-8 crisis when the price of rice in India more than doubled. Despite these crises, India is still the largest exporter of rice in the world. Last year, India’s rice exports were valued at $7.7 billion,” he said.

However, when the price of rice spikes, large countries will struggle to feed their populations if they rely only on rice imports. Hence, instead of relying heavily on rice imports, large countries also have to achieve self-sufficiency in rice production and strike a correct balance on the volume of buffer stocks they hold, he suggested. 

The second challenge to international rice trade is government subsidies to local smallholdings farmers. Subsidies not only hinder international trade, but also discourage efficiency, leading to slower adoption of new agricultural technology, according to Gulati. 

Instead of giving free subsidies, governments need to change their policy in order to incentivise farmers to use new technology and save energy. This is equivalent to rewarding farmers who adopt new agricultural technology to improve production efficiency, he says. 

From January to August, Thailand exported a total of Bt115.71 billion worth of rice globally, growing by 5.05 per cent compared to the same period last year. Despite the growing export value, the growth rate has fallen. 

From January to August 2017, the total value of rice exports from the Kingdom were worth Bt110.15 billion, up 14.15 per cent compared to the same period in 2016, according to the Information and Communication Technology Centre with cooperation from the Customs Department.