1. INTRODUCTION
The two-day Mini Roundtable Meeting of Asian experts in the area of agricultural marketing and food security was organized by the Regional Office for Asia and the Pacific (RAP) of FAO in Bangkok during 1-2 November, 2001. The objective of the meeting was to establish priorities for FAO’s programme of work in marketing for the next few years in the region.
A theme paper entitled Agricultural marketing in Asia and the Pacific: issues and priorities, prepared by S. S. Acharya (FAO Consultant), was sent to all the invitees/participants six weeks before the Meeting to enable them to prepare for their participation. All participants were requested to send in advance, or bring with them, a bulleted list of areas that they considered to be worthwhile priorities.
The meeting was structured in six sessions, including the opening session and the closing session.
2. OPENING SESSION
The opening session began with words of welcome by Ralph Houtman, Marketing and Rural Finance Officer, RAP. This was followed by the participants introducing themselves. Apart from the invited participants, the opening session was also attended by the Deputy Regional Representative and several officers and consultants of FAO at RAP, Bangkok. R.B.Singh, in his opening address, underlined the importance of marketing system improvement in reducing poverty and food insecurity in Asia and the Pacific. After welcoming the participants, he said that he wanted the group to address both domestic issues and the new challenges arising from the changing international trade and economic environment to help FAO prioritize its activities and initiatives in the area of agricultural marketing for improving the food security of the people in this region. He said that the green revolution, which increased the output of food several times, reduced staple food prices and helped to increase the economic access of the masses to food, is now waning. He asked the participants to consider whether this was because of market failure or policy failure. The greatest challenge today, he said, is to make the green revolution an evergreen revolution. This region is home to two-thirds of the hungry and poor people of the World. Despite a comfortable supply situation and stocks of food grains, several million people continue to suffer from hunger. In addition, the new international trade agreement under the World Trade Organization (WTO) puts many challenges before developing countries. These challenges can be converted to opportunities if a level playing field can be created for the developing countries. It will require greater awareness of the implications of multilateral agreements and more cooperation among developing countries at the forthcoming negotiations. He recalled that the countries attending the World Food Summit of 1996 had made a committment to reduce the number of undernourished people by half by the year 2015. However, given the existing pace of reducing food insecurity, unless some new initiatives are taken, the target set for the year 2015 might not be achieved even by the year 2060. In this connection, he wanted the group to address whether the market can hasten the process of reducing poverty. He dealt at length with the reasons for government intervention in agricultural marketing in Asian countries. In recent years several countries have initiated economic liberalization programmes, but many of them are grappling with the problem of sequencing of reforms of their agricultural marketing policies. It is in this context that Mr Singh attached great importance to this Meeting and asked the participants to pool their minds and experiences together to help FAO define its priorities in agricultural marketing in Asia. He suggested that the priorities must be guided by the aims of reducing food insecurity and alleviating poverty. The ultimate objective, he stated, was be to help the countries of the region to improve the efficiency of their marketing systems, although this may require redefining the role of public institutions and allowing greater participation of the private sector in agricultural marketing.
After the opening address, the theme paper entitled Agricultural marketing in Asia and the Pacific: issues and priorities was presented by S. S. Acharya. He suggested several areas of action for FAO. These included maintenance of a cross country information network on key elements of agricultural marketing systems in Asian countries, and undertaking a comprehensive review of current marketing policies and their impact on poverty and household food security with a view to sharing the lessons with all the countries of the region. He suggested that FAO’s support to the countries of the region could be in the areas of reduction of farmers’ price risks, planning for a hierarchy of agricultural produce market yards, technology assessment and development, particularly in evolving and popularizing food varieties suitable for processing, methods of packaging of agricultural commodities, assessment and investment in marketing infrastructure, developing alternative marketing channels, and providing cost-effective safety nets for the food insecure. Dr Acharya also suggested that FAO could play a significant role in capacity building for marketing research and training in agricultural marketing and agribusiness research, and in evolving a framework of regional cooperation in buffer stocking of foodgrains.
3. SECOND SESSION
The second session was chaired by Bruce Tolentino. In this session, presentations were made by C. Y. Lee (Korea), P. R. Mathema (Nepal) and Arayan Trangarn (Thailand). Dr Lee presented a development paradigm linking improvement in the efficiency of the marketing system, reduction in price and yield risks for the farmers, efficiency of the input distribution system, technical and financial support, importance of group marketing, stable supplies at lower prices, and efforts toward increasing the demand for food. He identified several areas in marketing development where FAO can play a significant role. FAO’s role, he noted, would be advisory in nature, as institutional, financial and technical support has to come from the governments in these countries. The areas in which FAO’s advice would be increasingly important are: (a) planning for the development of market yards; (b) developing markets for fruits and vegetables; (c) training in agribusiness management; (d) improving grading and packaging systems; (e) improving market information system to make it business friendly; and (f) evolving institutional mechanisms for agricultural insurance. Dr Lee also suggested that FAO may initiate a study of marketing costs and margins across selected countries and disseminate the results. This, hopefully, would induce some countries where the costs are high to devise measures to reduce these. He also suggested that FAO should encourage AFMA to organize trade fairs in member countries to provide an opportunity for the countries to share their experiences in the field of agricultural marketing.
In his presentation, P. R. Mathema pointed out that there have been very few studies on the food marketing system in the least developed countries and wanted FAO to place more emphasis on the improvement of marketing systems in countries, such as Nepal, which are mountainous, and where marketing infrastructure is inadequate and physical and economic access to food is difficult. Looking to the important role of women in agricultural marketing, he suggested that the gender issue in agricultural marketing should be properly addressed. Other suggestions made by Dr Mathema included improving marketing extension services and training of farmers, increasing the agricultural marketing component in the curricula of agricultural universities, and carrying out a comprehensive review of rules and regulations that prevent greater participation of the private sector in agricultural marketing.
In his presentation, Dr Arayan mentioned that FAO should concentrate on the prevailing asymmetry of information between the rich and poor countries. In this context, he emphasized that more information on the provisions of agreement under WTO and the impact of globalization on different economies should be carefully studied and the results widely disseminated. He argued that maintenance of self-sufficiency has some distinct advantages, citing that Thailand could survive the economic crises of the late 1990s because it was self-sufficient in many respects. He suggested that FAO should help the countries of the region by supporting research and studies in the area of value addition, processing, and supply chain management. Dr Arayan felt that FAO could play a significant role in helping the countries to redefine the role of the public sector in agricultural marketing. He cited several cases where the private sector has been successful in agricultural marketing and in protecting the interests of the farmers. Another area where FAO could play an important role is training in food safety issues both for domestic marketing and for exports. This is important because several countries are using sanitary and phytosanitary measures as non-tariff barriers to block the entry of agricultural products from developing countries.
Following these presentations, there was considerable discussion, cross questioning and interaction among the participants. Edward Seidler observed that Agricultural Services and Marketing (AGSM) of FAO has brought out several manuals to guide member countries in making better decisions in the area of marketing system improvement. He noted that the issues relating to WTO, post-harvest losses and processing, and food safety are dealt with by other FAO divisions and services, viz. the Commodity and Trade Division, the Agro-industries and Post-harvest Management Service and the Nutrition Division. AGSM concentrates mainly on normative initiatives aimed at improving the conduct and performance of the marketing system. If the marketing system is made more efficient, he opined, both physical and economic access to food can be improved. During the discussions, it was pointed out that the issue of buffer stocking is very important, but while looking at the possibilities of regional cooperation, there is a need to distinguish between price-stabilization stocks and emergency food security reserves. Further, the possibilities of maintaining food security reserves in the form of money or multilateral agreements should also be explored.
4. SESSION THREE
The third session was chaired by C.Y. Lee. In this session presentations were made by Xi Yinsheng (China) and M.R. Satyal, the Association of Food and Agricultural Marketing Agencies (AFMA). Mr Xi presented an overview of Chinese agriculture policies and reviewed the performance of the agriculture sector in recent years. He said that Chinese agriculture is currently characterized by oversupply and stagnant farm incomes. There has been a distinct shift in agriculture policy from quantity to quality improvement, and towards increasing farm incomes. Regional specialization in agricultural production is being promoted and the grain produced by farmers is being purchased at protective prices. In Western China, farmers are being given incentives to divert areas away from grains to forestry and pastures. As a consequence of these incentives, Mr Yinsheng explained, the area under grains is declining whereas the area under fruits and other uses is increasing. The cotton market has been liberalized since 1999 and the grain markets in the eastern coastal provinces were liberalized this year. Discussing the challenges and opportunities associated with China’s entry into the WTO, Mr Yenshing mentioned that while land intensive agricultural production will face challenges, labour intensive agricultural production will benefit.
M. R. Satyal explained the genesis of AFMA and its role in the improvement of agricultural marketing systems in Asian countries. In recent years, AFMA members have started giving more attention to trade related issues, he stated. AFMA has been working very closely with FAO in the area of agricultural marketing development, and this has been of mutual advantage to both organizations.
During the discussions that followed these presentations, several important points emerged. The General Chamber of Commerce of China is a member of AFMA. The protective price in China varies from province to province. The membership of AFMA is open to the private sector but they can enrol only as associate members. A need to increase the interface of FAO with the private sector was felt and it was suggested that the AFMA forum could be used effectively by FAO in its interaction with the private sector. It was also suggested that FAO should launch a comprehensive study of the agricultural marketing system in China and share the lessons and experience with other countries.
5. SESSION FOUR
The fourth session of the Roundtable Meeting (morning session on 2 November) was presided over by Sakol Ooraikul of Thailand. In this session presentations were made by Bruce Tolentino (Philippines) and Suphat Wibulseth (Thailand). Dr Tolentino mentioned that given the increasing trend towards globalization, self-sufficiency at the country level is no longer an option for national governments. Food security at the household level is, however, assuming increasing importance. Households are concerned with the availability of food at lower prices - no matter from where it is produced and made available. As regards government intervention in the markets, the question, he stated, is not whether governments should intervene but where and how they should intervene. There is nothing sacrosanct about the private sector, he stated. Within the same policy environment, one can observe good performing private companies and companies with very poor performance. Dr Tolentino mentioned that there is now a general agreement that government interventions and initiatives are needed in the area of extension education, improvement of physical infrastructure for marketing, especially transport, and liberalization of trade in agricultural commodities. Removal of marketing restrictions will help to reduce marketing costs. He further suggested that food security is tied to the expenditure of governments on public goods. He suggested that FAO should help the countries of the region to build their capacity in trade policy analysis and devise strategies for sustainable market competitiveness. The linkage between domestic and international prices should be made more explicit for assessing the degree of competitiveness and the cost of government interventions.
Mr Suphat stated that the main issue in reducing food insecurity is whether to emphasise management or marketing. Transfer of surplus grains or other agricultural commodities from surplus regions to deficit areas, for example, involves management rather than simple marketing. During the discussion that followed these presentations it was suggested that FAO should help countries to acquire competence in agricultural marketing policy analysis and in infrastructure development planning.
6. SESSION FIVE
The fifth session was chaired by P. R. Mathema (Nepal). Ning Pribadi (Indonesia) and Sakol Ooraikul (Thailand) made presentations in this session. Ms Pribadi stated that poverty in Indonesia is more pronounced among rural and agricultural families. Moreover, it is more pronounced among families growing food crops. She suggested several areas where FAO initiatives could help member countries to improve the performance of their agricultural marketing systems. She requested FAO to help improve the capabilities of government functionaries in policy analysis and to disseminate the lessons from well functioning private and public sector markets and the use of safety nets for food insecure people in different countries of this region. Other areas identified by Ms Pribadi where FAO could play a significant role included the following: evolving institutional mechanisms for covering farmers’ price risks with minimal distorting effects; building of research capacity, including public-private partnerships in research; skills development in rural areas; and buffer stocking at decentralized levels. Mr Sakol presented an overview of the performance of the agricultural sector in Thailand during the 1990s.
Fatimah Mohamed Arshad (Malaysia) was unable to participate in the meeting, therefore Ralph Houtman presented the paper on her behalf in the fifth session. The main highlights of the paper included the current status of the rice industry and food security in Malaysia, policy instruments being used by the government, and priority issues in agricultural marketing in Malaysia. She mentioned that Malaysia is maintaining a self-sufficiency level of 65 percent in rice. The policy instruments currently being used are a subsidy on fertilizers, a subsidy on water for irrigation and credit, a minimum guaranteed price for paddy, a cash subsidy for the paddy farmers, a ceiling price on rice for the poor, a floating price for quality rice, a monopoly status to the private sector National Paddy and Rice Corporation (BERNAS) for imports of rice, licensing of paddy millers and traders, inter-state movement restrictions on the movement of paddy, and maintenance of a rice stock of 300 000 tonnes for food security. As a consequence of this package of policies, paddy farmers are enjoying protection, but the processing sector is not progressing and the farm sector is not growing despite government support. There is no encouragement to increase the production of quality rice. She further mentioned that paddy cultivation in Malaysia has no comparative advantage over Thailand and Viet Nam. However, owing to a ‘thin’ world market for rice, food security continues to be an important policy objective. She suggested separating the policies that address poverty from those which encourage inefficiency in farming.
7. CLOSING SESSION
R.B. Singh chaired the sixth and closing session. In this session, S. S. Acharya, FAO Consultant, presented a summary of discussions held in various sessions of the Roundtable Meeting. Dr Acharya mentioned that no disagreement on the priority areas suggested in the theme paper was evident. However, during the discussions, some aspects were emphasized and priority directions within the identified areas were suggested by the participants. Dr Acharya summarized the main points that emerged from the various presentations and interactions among the participants as follows:
a) Institutional mechanisms to reduce price and yield risks for farmers are becoming increasingly important. Questions were raised concerning whether the opening up of the insurance sector to the private sector will be sufficient, and the type of partnership between the public and private sector that is most likely to benefit farmers.
b) There is a need for long-term and medium-term market development plans and their implementation.
c) Existing course curricula in agricultural universities need to be strengthened before they can produce appropriately trained human resources for agricultural marketing and agro-processing.
d) Grading and packaging should be promoted by demonstrating the advantages of selling and handling graded and well-packaged products.
e) There is a need to develop special markets for fruits and vegetables.
f) Studies of marketing costs and margins in different countries should be conducted and the results shared so that countries can reflect on the reasons for their higher marketing costs and margins.
g) Market information systems need to be strengthened and geared to meet the requirements of farmers, businesses and market functionaries.
h) Studies on agricultural marketing in the least developed countries and in those with hilly and difficult terrain are needed, as is more attention to the development of markets in these areas.
i) The role of women in agricultural marketing needs to be enhanced.
j) There is a need to strengthen marketing extension services that are still weak in several countries.
k) Rules and regulations that hinder greater participation of the private sector in agricultural marketing should be amended.
l) The issue of asymmetry of information available to different countries needs to be addressed. The provisions of international trade agreements and their implications should be identified and disseminated widely.
m) Some degree of self-sufficiency in food is necessary, but will vary from country to country, depending on the structure of the economy.
n) It is important to support training in the area of food safety both for domestic marketing and international trade.
o) There is a need to support research in the area of value addition and supply chain management.
p) The roles of the public and private sectors in agricultural marketing should be reconsidered.
q) A comprehensive review of buffer stocking policies of various countries should be carried out and the possibilities of regional cooperation in this area examined.
r) Marketing policies and the framework of agricultural marketing in some countries, e.g. China, should be reviewed and the lessons learned disseminated to other countries.
s) It is important to encourage countries to focus on public investment in marketing infrastructure such as roads, bridges and ports to improve the performance of the marketing systems.
t) There is a need to review land and labour markets with a focus on improved food security in the region.
u) There is a need to sponsor policy analysis studies and build capacities in policy analysis at lower levels of government.
v) It is important to maintain a cross country information network on agricultural marketing related activities and share it with member countries. This can best be done by involving and strengthening the AFMA forum.
During the discussions it was mentioned that within FAO, WTO and trade related issues are dealt with by the Commodities and Trade Division, issues relating to processing and post-harvest losses are handled by the Agro-industries and Post-Harvest Management Service, and food safety issues are dealt with by the Nutrition Division. AGSM should therefore concentrate on issues related to improving physical access and achieving more efficient and competitive food marketing systems
During the interaction that followed the presentation of the summary of group discussions, it was pointed out that FAO should concentrate on improving physical access to the commercial marketing system and its functioning. Human resource development through training and extension was another area identified for FAO. FAO should also initiate cross country studies with the aim of exchanging analysis based information and the lessons and experiences gained among member countries. Participatory rapid market appraisal techniques can be used to generate cross country information on marketing policy instruments and their impact as suggested in the theme paper and identified during the discussions. It was recommended that the entire system of food stocking policies (buffer stocks for price support and strategic food reserves) being pursued by different countries should be analysed in the light of WTO provisions and their impact on food security. FAO may commission a study of food stocking schemes and practices of selected countries such as India, Korea, Thailand and China, with a view to highlighting the lessons for other countries. The study may also examine the possibility of increasing the involvement of the private sector in food stocking operations.
Edward Seidler pointed out that AGSM will continue to support marketing related activities in this region. He noted that the issue of urban food marketing did not figure prominently in the participants’ discussions. Market information improvement is another priority area for this region. FAO has already brought out the software FAO AGRIMARKET 2 with a view to helping the countries in the region improve their Market Information Systems (MIS). The main problem related to MIS in this region is that the information is not available to those farmers who need it the most. Moreover, the type of information made available to farmers is not relevant. For example, farmers need information on the prices in nearby or accessible markets rather than on the prices in international markets. Mr Seidler added that although comparative information on marketing costs and margins is very important, it is difficult and expensive to collect and the information soon becomes outdated. With reference to marketing extension and marketing and agribusiness training programmes, he said that FAO has already brought out several relevant publications and the member countries should make greater use of these. He reminded participants that a new bulletin on contract farming was available. He assured the participants that he would give his full support to marketing activities in the Asia and the Pacific region.
In his closing remarks, R. B. Singh expressed his appreciation for the keen interest shown by all the participants in the formulation of the priority areas of action for the Regional Office in the important field of agricultural marketing. He suggested that the study relating to food buffer stocks be initiated as soon as possible. He thanked all the participants individually and collectively for their important inputs to this Roundtable Meeting. He conveyed his special thanks to Edward Seidler, Senior Officer, Marketing and Farm Supply Group, FAO, Rome for his active participation in the Meeting.
The Meeting ended with a vote of thanks by Ralph Houtman.
