ADB: Declining farm output threatens Asian growth

October 31, 2013 8:19 pm

The Philippines may be the fastest-growing economy in Asia side-by-side with China, but the country’s “agricultural productivity and extreme weather” changes threatens the country’s opportunity to rise further, according to an Asian Development Bank (ADB) study.

In the study titled Food Security Challenges in Asia, ADB Independent Evaluation Department Vinod Thomas said that the slowing of rice production not only in the country, but also in Asia, as well as the effects of climate change puts pressure on food prices, but in a steady pace for the coming years.

But these are “not grounds for complacency” as investment in agriculture is falling and that further climate change risk may threaten Asia’s goal to be a growth leader worldwide.

“Further high volatility in food prices is likely unless there is a significant response from governments, development institutions and the private sector to markedly increase agricultural productivity across Asia,” Thomas said.

According to ADB, Asia has “coped fairly well” during the 2007 to 2012 food crisis, but the more frequent disasters and climate change destructions would be the “biggest threat” to food security for the coming years.

“But climate change may well prove to be the biggest threat to food security in the next 10 to 20 years; indeed, it’s already having measurable adverse impacts in Asia,” he added.

The study’s main author, Andrew Brubaker, said that factors such as food, energy, financial markets, fuel and fertilizers are linked to the contribution of higher food prices over the past 30 years.

“What is changing are the much tighter links between food, energy and financial markets. Fuel and fertilizer costs are driving food prices more than ever, and speculative investment on commodity markets is an increasing source of potential price volatility,” he said.

The study emphasized the use of technology to “raise productivity in land and water,” which are essentials for agricultural production. They noted that majority of the farmers in Asia only get less than 80 percent of their total crop investments, as the other 20 percent will eventually be destroyed by pests, droughts, economic constraints as well as the low basic pricing for other crops.

The study further cited that in 2006, 2008 and 2012, prices for basic food commodities like rice, corn and wheat were boosted. In late 2012, rice prices have gone up, but have since decreased slowly by about 10 percent at the start of 2013.

Brubaker said that though efforts for agricultural research and international funding for agriculture increased, the main concern is that if the investment would reach targets or be sustainable.

“Asia faces a witch’s brew of supply and demand factors in food security. On the supply side are overexploited natural resources, including growing water scarcity, and the increasingly tangible impacts of climate change. On the demand side, Asia is becoming more urban and prosperous, which bring more diversified food requirements,” Brubaker said.

The study stated that measures to adapt to climate change will benefit food security in the long run, both for national and household levels.

Despite rapid the region’s economic growth, ADB said that Asia still has 67 percent share of the world’s hungry, which would be equal to more or less 552 million to 900 million people who live with less than $1.25 (P53.75) a day.

“This raises the question of whether government food policies need rethinking in a less secure world facing the dilemma of high food prices hurting consumers in the short run, but low prices not providing an incentive for farmers to increase productivity,” Thomas said.

“At the end of the day, while recognizing the merits of open trade at the global level, the study recommends getting country policy choices right. These include incentives for raising productivity, safety nets for the poor, and predictable trade policies to ensure food security,” he added.







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