Ladies and Gentlemen,
Good morning to all of you.
It is my pleasure to welcome all the participants who have travelled from different parts of the world to attend this International workshop on Rice Policies. We are especially grateful for your taking the time to attend this meeting even though you have such busy schedules.
Even in normal times, rice is an extraordinarily important crop. To a large extent, both food and agriculture in Asia are equated with rice, so rice is of particular interest to the Food and Agriculture Organization. Approximately 3 billion people are involved in the rice sector as producers, traders or consumers. It is the main source of dietary energy intake for the poor in most of Asia, and it can account for 40% of expenditures in the poorest households. Millions of small farmers around the region, while they are diversifying their income sources, still depend on rice as a crucial part of their income. And traders perform essential functions of transportation, storage and processing that allow this food to make the journey from the paddies to the plate, even if the plate is on the other side of the world.
But these times are far from normal. In 2007 and early 2008, soaring food prices gathered the attention of the news media and people all over the globe. Prices of a wide range of commodities increased sharply. In 2007, an additional 75 million people worldwide were pushed into hunger. And then, in 2008, FAO’s preliminary estimates are that the total number of undernourished reached 963 million, nearly one billion people, shaking an unjustified complacency induced by years of low commodity prices. After all, even when world food prices were low, there were still 848 million undernourished people around the globe, with a majority of them in Asia.
Soaring food prices made an already bad situation even worse, and they hurt the poorest of the poor the most. These households were forced to eat less and lower the quality of their diets, or to cut back on health and education expenditures. All of these coping strategies reduce the human capital of the poor, harming their chances to pull out of poverty even after prices decline. Sudden and sharp increases in food prices, even when temporary, can therefore have long term impacts.
In the case of rice, world prices tripled in the span of a just a few months. This created opportunities for many farmers, at least temporarily, but it also made life difficult for many poor consumers and created headaches for governments trying to maintain stability because changes in rice prices can have very large impacts on income distribution and political economy. Indeed, in some cases, changes in food prices can lead to changes in government.
World rice prices have come down substantially from their peak in 2008, bringing some relief to poor consumers. But now we are confronted with financial crisis and an economic recession that has already caused many people to lose their jobs around the world. The Asia and Pacific region, having contributed to and benefited from growth elsewhere in the world, is not decoupled from this slowdown, and economic growth here will be substantially slower in 2009 than it has been in many years. Export growth, both agricultural and non-agricultural has dropped, remittances are declining, and foreign direct investment is being curtailed. As a result, millions of people in China, Thailand, the Philippines and elsewhere are already returning to rural areas, looking to the agricultural sector as a source of employment. The rice sector will have to bear much of this burden.
You can see that, despite many years of rapid growth in many countries, rice is still a crucial part of the economy in Asia even if its contribution to GDP is declining. And a healthy rice economy is absolutely essential to enhancing the livelihoods of the poor and achieving the first Millennium Development Goal of halving the proportion of undernourished by 2015. Thus, it is essential that wise policies be enacted, and FAO is looking to all of you gathered here for this workshop to help us elaborate a sound course of action.
The main objective of this workshop is to gather and exchange information about the experiences and lessons learned in different countries from the rice price surge last year. You have the detailed programme so I will not go into the details of the presentations. Suffice it to say that we have gathered here many of the key thinkers and experts on this topic. Some of the questions we hope to answer in the course of our discussions are:
- Why did the world rice market break down in the first half of 2008, and can a similar breakdown be avoided in the future? How important was speculative behaviour in creating and/or fueling the crisis?
- Why did domestic rice prices increase substantially in some countries but not in others?
- How did different countries respond to the crisis in terms of rice policies, input subsidies and safety nets?
- How large was the supply response across different countries? If it was positive, did it come about through reduced area to other crops, increased cropping intensity, or higher yields per hectare?
- Did higher rice prices lead to higher prices for non-tradable inputs such as labour and land?
- How quickly were safety net programs to defend household food security put in place or scaled up, and how effective were they?
With the insights provided by your papers and the comments from the participants we hope we can recommend ways to make the world rice market function better in the future in order to safeguard the interests of the very poor people in the region.
Without further ado I would like to ask David to proceed with the main programme.
Thank you. I wish you a productive and fruitful workshop.