march 2010 asia pacific food situation … 2010 asia pacific food situation update 2 fao regional...

Wheat (US No. 2 Hard Red Winter)

Maize (US No. 2 Yellow)

Rice (Thai 100% B)

Rice (Thai A1 Super)

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FOOD AND AGRICULTURE ORGANIZATION OF THEUNITED NATIONS

REGIONAL OFFICE FOR ASIA AND THE PACIFIC

MARCH 2010

FAO support to address socio-economicroots of conflict in Philippines’province

FAO and the International Labour

Organization (ILO) have launched the

“Inter-agency Programme to Nurture

Peace, Security and Decent Work

through Local Development in Conflict

Areas of the Philippines” aimed at

improving farming and fishing liveli-

hoods in the conflict-affected and

natural disaster-prone Bondoc Peninsula

in Quezon Province in the Philippines.

Funded by the Government of Japan

through the United Nations Trust Fund for

Human Security, the US$2.5-mill ion

initiative will support the Government’s

peace building and agrarian reform

efforts. Implemented in collaboration

with the Office of the Presidential

Adviser on the Peace Process (OPAPP),

Source: FAO Regional Office for Asia and the Pacific

Figure 1: Selected international cereal prices

the activities will address the root

causes of social unrest and armed

conflict in the region where 80�percent

of the people depend on farming and

fishing, earning no more than US$1

a day. “Restoring, rehabilitating and

further improving farming and fishing

activities in the affected communities

are prerequisites for a lasting peace

and long term economic development

in the province,” said Kazuyuki Tsurumi,

FAO Representative in the Philippines.

The three-year project will improve

agricultural production and fisheries,

promote alternative livelihood and

entrepreneurial skills, and strengthen

community-based disaster risk man-

agement. It will also improve mother

and child health care facilities in

Mulanay, San Narciso, Unisan and

Catanauan municipalities in Bondoc

Peninsula.

Table of contents

FAO support to address

socio-economic roots of

conflict in Philippines’ province

1

New FAO regional chief

3

International rice prices remain

flat on low demand

3

A new livestock revolution for

food and livelihood security

4

List of boxes

1: Poultry production and rural

livelihoods in China

5

2: The dairy sector and rural

livelihoods in India

6

List of figures

1: Selected international

cereal prices

1

2: Trends in domestic prices for

key commodities in selected

countries

2

3: Increase in output of

livestock products

(1980-2007)

4

4: Growth in per capita

consumption of livestock

products (1980-2005)

5

5: Feed-to-food-conversion

efficiency

6

MARCH 2010 ASIA PACIFIC FOOD SITUATION UPDATE

2 FAO Regional Office for Asia and the Pacific

Figure 2: Trends in domestic prices for key commodities in selected countries


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China domestic wholesale rice prices

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Hubei, Rice (Indica first quality) Hunan, Rice (Indica first quality)Heilongjiang, Rice (Japonica second quality)

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ASIA PACIFIC FOOD SITUATION UPDATE MARCH 2010

FAO Regional Office for Asia and the Pacific 3

New FAO regional chief

Hiroyuki Konuma has been appointed

as Assistant Director-General and

FAO Regional Representative for Asia

and the Pacific effective 1 March

2010. Mr Konuma is the first national

from Japan to head the Bangkok-

based FAO Regional Office for Asia

and the Pacific (RAP) since its

establishment 62 years ago. One

of five FAO regional offices, RAP

covers 43 member countries which

are home to almost two-thirds of

the world’s farm households. During

2001 and 2002, Mr�Konuma was Chief

of the RAP Policy Assistance Branch.

From January 2003 to February 2010,

he served as FAO Deputy Regional

Representative for Asia and the

Pacific.

International rice prices remain flaton low demand

International rice prices remained

stable in March with the world’s

biggest rice importer, the Philippines

holding back on purchases after

building up stocks from large imports

late last year. Higher rice production

in Africa also allowed buyers there to

wait for further drops in international

prices. The benchmark Thai 100%B

rice traded at an average of US$543

per tonne in the first three weeks of

March, US$33 less than in February

while Thai A1 Super was quoted at

an average of US$390 per tonne,

US$21 below its February price (see

Figure 1).

In Thailand, the Government’s direct

purchase programme helped slow

the decline in paddy prices with

about 1l500 tonnes of white rice

bought til l mid-March. The pro-

gramme allows for purchase of up to

nearly 2�million tonnes this year.

The Thai Government’s price guaran-

tee scheme pays paddy farmers the

difference between the guarantee

price, set at 10�000 Baht per tonne

for white rice, and the reference

price which reflects market prices.

The guarantee price is based on

average production costs with a

30 to 40 percent profit margin

for farmers. Reference prices are

announced twice a month. Market

prices of rice paddy were reported

lower than the government-set

reference prices. Thailand’s second

rice crop estimated at about 6�million

tonnes, which began entering the

market in March, pulled prices down.

Thailand also put on hold sales of

its large rice stocks through the

futures market and auctions. The

Government aimed to sell at least

1 million tonnes of its nearly 6 million

tonnes of rice stocks this year through

government sector trade to be

promoted through road shows in

several countries. Meanwhile, a

worsening drought was expected

to reduce Thailand’s paddy harvest

by 10 percent this year.

Viet�Nam awaited another bumper

harvest in the Mekong Delta which

produces the bulk of the country’s

rice exports. Government estimates

put the Mekong region’s 2010 winter-

spring crop due in mid-April at nearly

10 million tonnes, some 1.2 percent

over last year’s due to a slightly

higher yield reported in some cases

at over 6 tonnes per hectare. Low

demand reduced Viet Nam’s rice

exports in the first three months of the

year by nearly one-third compared

to the same period in 2009. To arrest

the decline in Mekong Delta paddy

prices, local exporters were instructed

by the Vietnam Food Association to

buy for stockpiling with a mid-year

target of 1.5 mill ion tonnes. The

Association capped the price of

5�percent broken rice at between

US$420 to US$440 per tonne f.o.b

and at US$400 to US$420 a tonne for

25 percent broken rice.

El Niño-induced dry conditions were

estimated to reduce the paddy

harvest for the first half of the year by

3.4 percent to about 7 million tonnes

in the Philippines. The Bureau of

Agricultural Statistics estimated the

first quarter 2010 paddy crop to be

nearly 8 percent below that of last

year, with declines in both planted

area and yields. Manila was

reportedly taking a “wait-and-see”

approach to further rice imports with

the National Food Authority having

stocked 2.2 million tonnes of rice

through imports recently. Elsewhere in

Southeast Asia, Cambodia’s 2010 rice

exports were forecast at 1.6 million

tonnes supported by a 2009-10

harvest estimated at 7.15 mill ion

tonnes.1

State agencies in India had pur-

chased over 25 million tonnes from

the 2009-10 paddy harvest for the

subsidized Public Distribution System

(PDS) against the Government target

of 28 million tonnes this year. This

was about 1 million tonnes over the

annual PDS requirement in view of

the shortfall in paddy production

in the drought and flood-affected

2009-10 season. India’s wheat harvest

was estimated at a record high of

about 83 million tonnes. However,

despite bulging stocks, the govern-

ment ruled out wheat exports and,

instead, increased the PDS foodgrain

entitlement of above poverty line

(APL) families. The landmark food

security legislation drafted by the

government would also entitle poor

households to 25 kg of subsidized

foodgrain purchases from PDS ‘fair

price’ shops. Wholesale rice and

wheat prices in the Indian capital

were little changed in March but

were 65 percent and 27 percent,

respectively higher than in January

2007 (see Figure 2). Meanwhile, New

1 Price Monitoring and Analysis Country Brief

Cambodia, February 2010, FAO http://www.

foodsec.org/pubs_cb_cam.html

0%

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Meat Milk Eggs

Developing Countries China India



Delhi partially lifted its two year-old

ban on non-basmati rice exports,

allowing limited sales to Nepal and

Sri Lanka. Exports of Indian basmati

and superior quality rice during

2009-10 were expected to be over

3 million tonnes against 2.3 million

tonnes in the preceding year.

While increasing in recent months,

retail rice prices in Bangladesh were

23 percent below their peak level in

April 2008 (see Figure 2). However,

high food prices threatened the

food security of vulnerable groups

including more than 3.9 mill ion

people affected by cyclone Aila

in May 2009. FAO estimated the

country’s 2009-10 cereal import

requirement at 2.3 million tonnes.2 In

Nepal’s capital city, rice prices

remained high and over 2 million

rural people were estimated needing

food assistance with the late mon-

soon reducing the 2009 paddy

harvest.3 Sri Lanka expected to

harvest 2.6 million tonnes from the

October-March Maha paddy crop

and was giving priority to restoring

agricultural production in the north

including cultivation of 18 000 ha of

abandoned paddy farms. Rice retail

prices in Colombo have remained

high but stable over the past two

years with the country avoiding the

spikes of the 2008 food price crisis

due to imports and subsidized

sales (see Figure 2). However, food

insecurity persisted in the northern

and eastern regions and FAO

estimated Sri Lanka’s 2009-10 rice

import need at about 1 mill ion

tonnes.4

Afghanistan’s bumper 2009 wheat

crop kept wheat and flour prices

stable with the mid-March national

average price of wheat at 15 Afs per

kg compared to 15.2 Afs in February.

However, food insecurity persisted

due to the continuing conflict.

The Afghanistan Reconstruction

Trust Fund (ARTF) was to provide

about US$2.6 billion for the 2010-13

period to support development

of the agriculture, irrigation and

infrastructure sectors in the country.5

In Pakistan, over 2 million people

displaced by the fighting between

state security forces and militants in

the Federally Administered Tribal

Areas (FATA) and the North West

Frontier Province (NWFP) were esti-

mated in need of food assistance.6

Rice and wheat prices in the country

have remained stable in recent

months (see Figure 2). Pakistan’s rice

exports were growing with Malaysia’s

imports of Pakistani rice expected to

increase four-fold in 2010.

A new livestock revolution for foodand livelihood security

Livestock and livestock products

are an important source of food,

nutrition and livelihood security

in Asia and the Pacific where

production of animal-based foods

has grown dramatically over the past

two decades. The greatest increase

in the production and consumption

of animal-origin foods, as a result

of rising incomes and dietary

diversification away from staple

cereals, has taken place in East and

Southeast Asia, in particular China

(see Figures 3 & 4).

Meat production in China grew more

than six-fold to over 88 million tonnes

from 1980 to 2007, while milk and

egg production increased over

twelve-fold and ten-fold, respectively,

to 37 and 30 million tonnes over this

period (see Figure 3). Meat and egg

production in India in 2007 was

about 2.5 and 4.5 times the 1980

level while milk production trebled

(see Figure 3). Cultural dietary factors

explain the relatively slower growth

in meat and egg production in South

Asia.

2 Price Monitoring and Analysis Country

Brief Bangladesh, February 2010, FAO http://

www.foodsec.org/pubs_cb_ban.html3 Price Monitoring and Analysis Country

Brief Nepal, February 2010, FAO http://

www.foodsec.org/count rybr ie f/Feb10/

Nepal_February%202010.pdf4 Price Monitoring and Analysis Country

Brief Sri Lanka, February 2010 , FAO http://

www.foodsec.org/pubs_cb_sri.html

5 Price Monitoring and Analysis Country

Brief, Afghanistan, February 2010, FAO http://

www.foodsec.org/pubs_cb_afg.html6 Price Monitoring and Analysis Country

Brief Pakistan, February 2010, FAO http://

www.foodsec.org/pubs_cb_pak.html


Figure 3: Increase in output of livestock products (1980-2007)

Developing Countries China India

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Meat Milk Eggs

ASIA PACIFIC FOOD SITUATION UPDATE MARCH 2010

FAO Regional Office for Asia and the Pacific 5

Livestock and food and nutrition

security

Animal-origin foods are an important

source of high quality protein and

micronutrients compared to cereals

and plant-based foods.7 These

include vitamin A, vitamin B12,

riboflavin, calcium, iron and zinc

which are vital for nutritional security.

A deficiency of these nutrients in

the diet leads to health problems,

including increased risk of infectious

disease morbidity and mortality,

particularly in infants and children.8

Meat, milk and egg consumption has

grown rapidly in East and Southeast

Asia over the past 20 years. Between

1980 and 2005, daily per capita

meat, milk and egg consumption in

China grew over four-fold, ten-fold

and eight-fold to 59.5, 23.2 and

20.2 kg/capita/year respectively

(see Figure 4). According to FAO

projections, meat consumption in

Asia and the Pacific will nearly

double to 51 kg/capita/year by the

year 2050 compared to the turn of

the century.9

In contrast, meat and eggs remain

a relatively insignificant part of the

South Asian diet with meat con-

sumption growing modestly from

about 4 to 6 kg/capita/year and egg

consumption from nearly 1�to about

2�kg/capita/year, between 1980 and

2005.10 Growth of milk consumption

has been slower than production

in India, increasing from about 38 to

65 kg/capita/year over this period.

Livestock and rural livelihoods

Livestock rearing is a key livelihood

and risk mitigation strategy for small/

7 The State of Food and Agriculture 2009, FAO

http://www.fao.org/publications/sofa/en/8 Ibid9 Ibid

BOX 1: Poultry production and rural livelihoods in China

Although more than 34 million rural households in China depend

significantly on backyard poultry production for food and livelihood

security, they account for less than 14 percent of all farm households,

compared to 44 percent a quarter century ago.13 In the nine years

between 1996 and 2005, an estimated 70 million Chinese small-scale

farmers had given up poultry production, by when, large industrial-scale

producers accounted for nearly 50 percent of production. Large

integrated poultry production enterprises are estimated providing 800�000

jobs. Twenty-five years ago, large-scale commercial poultry production

was almost non-existent and over 150 million small poultry farmers

accounted for the bulk of output. The rapid emergence of non-farm rural

livelihood options in the country has played a big role in the declining

importance of the poultry and livestock sector for the rural poor.

marginal farmers and landless in the

region, in particular South Asia. FAO

assessments in Bangladesh, Nepal

and Pakistan show that between

47 percent (Pakistan) and 88 percent

(Nepal) rural households in these

countries own livestock.11 Livestock

accounts for 7 percent of rural

household income in Bangladesh,

18 percent in Nepal and 11 percent

in Pakistan.

However, the rapid growth of the

sector and the market demand

for high quality, safety and low cost

has tended to favour large-scale

intensive production. Enabling small-

scale producers to integrate with

such systems involve a major policy

challenge while ensuring environ-

mental sustainability and gender

equity as women play a key role in

rural household livestock rearing.12

The poultry and dairy industries in

China and India are examples of

divergent growth patterns in terms of

their implication for rural livelihoods

(see Boxes 1 & 2).

Commercial livestock

production and food security

Large-scale commercial livestock

production has been driven by

10 Ibid

13 The State of Food and Agriculture 2009, FAO http://www.fao.org/publications/sofa/en/

11 Ibid12 The State of Food and Agriculture 2009, FAO

Figure 4: Growth in per capita consumption of livestock products (1980-2005)




Economic and Social Department Group (RAPE)FAO Regional Office for Asia and the Pacific39 Phra Atit Road, Bangkok 10200, THAILAND

Phone: +66-2-697-4250E-mail: [email protected]

To subscribe, please e-mail [email protected], leave the subject blankand type subscribe Food-Asia-L

16 Ibid

technology-based improvements in

breeding and feeding. Low grain

prices in the past also played a role

in increase use of grain-based feed

causing concern about reduced

food availability for humans. The

conversion of feed into a livestock

food product is most efficient in

the dairy and poultry sectors (see

Figure 5). While it takes less than

1 kg of feed to produce 1 kg of milk,

over 4 kg of feed is needed to

produce 1 kg of eggs and 1 kg of

chicken meat by edible weight. Beef

production is the most feed-intensive

with 25 kg of feed being converted

to 1 kg of beef by edible weight.

However, animal origin food provides

higher quality proteins for human

nutrition than that contained in

animal feed. The feed demand and

food security relationship is complex

and there is need to balance the

economic trade-off between feed

and food production.16

According to FAO, the livestock

sector can play a significant role in

promoting rural poverty reduction as

well as food and nutritional security in

the region.

However, there is need for sup-

portive policies that would enable

small livestock producers to take

advantage of the fast growing

market for livestock products. At the

same time, the development of the

sector must address its environmental

and public health implications.

BOX 2: The dairy sector and rurallivelihoods in India

The dairy industry has been a

major rural employment creator

in India – the world’s largest milk

producer – accounting for an

estimated 5.5�percent of all

workers in the country in 1999-

2000, over 90 percent of them in

rural areas, 58 percent being

women and 69 percent being

socially marginalized groups.14

Small dairy farms generate

far more jobs per unit of milk

produced compared to large-

scale commercial dairy pro-

duction. Thus 230 jobs were

created for every 1 000 litres of

milk production on a small farm,

compared to 18 work oppor-

tunities on a large-scale dairy

enterprise.15 Small rural milk

producers in the country have

benefited from political and

government support. “Opera-

tion Flood” which laid the basis

for India’s self-sufficiency in milk

production was centred on rural

cooperative development for

milk production, procurement,

processing and marketing.

14 Ibid15 Ibid

Figure 5: Feed-to-food-conversion efficiency

Source: FAO Regional Office for Asia and the Pacific (Amount of feed needed to

produce 1 kg milk, eggs, carp, chicken, pork and beef by edible weight)

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march 2010 asia pacific food situation … 2010 asia pacific food situation update 2 fao regional...

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