Out­look for Rice Un­cer­tain

Cambodian Business Review - - Front Page -

The Asian De­vel­op­ment Bank has stated that re­spond­ing pos­i­tively to eco­nomic re­forms, the economies of Cam­bo­dia, the Lao Peo­ple’s Demo­cratic Re­pub­lic, Myan­mar, and Viet Nam (CLMV) have shown tremen­dous growth since the mid - 1980s, in­clud­ing in their re­spec­tive agri­cul­ture sec­tors.

Re­cent de­vel­op­ments, how­ever, have brought into ques­tion the CLMV coun­tries’ abil­ity to sus­tain fur­ther in­creases in agri­cul­tural pro­duc­tiv­ity given the slow pace of re­forms and emerg­ing chal­lenges.

Go­ing for­ward, the re­form agenda must go be­yond the tra­di­tional view of ex­pand­ing yields and sup­ply of agri­cul­tural prod­ucts for de­vel­op­ment gains in the sec­tor to con­trib­ute to in­clu­sive growth, poverty al­le­vi­a­tion, and food se­cu­rity.

The key in­puts to pro­duc­tion, land and wa­ter, have been in­creas­ingly con­strained with ad­verse im­pacts on pro­duc­tiv­ity and, hence, on pro­duc­tion.

Not only have they be­come scarcer, but their qual­ity and that of the ecosys­tem ser­vices have de­te­ri­o­rated also.

The ob­served yield growth rate has been on the de­cline. More­over, yield has been in­creas­ing at dif­fer­en­tial rates re­sult­ing in the widen­ing gaps across the coun­tries.

Th­ese ob­served trends are hap­pen­ing not only with rice and wheat, the key food sta­ples, but also among other agri­cul­tural com­modi­ties.

In Cam­bo­dia how­ever, the pro­longed dry weather from April to mid-July has al­ready re­sulted in se­vere de­lays in sow­ings of the 2015 main sea­son food crops and un­der­mined yields of ear­lier planted crops, in­clud­ing maize, soy­beans and pota­toes.

For the main sta­ple rice, the bulk of the main (wet) sea­son paddy crop is nor­mally planted be­tween May and Au­gust.

Fol­low­ing the poor rains so far, farm­ers were re­ported to have re­sorted to

broad­cast­ing the rice crop, which is less wa­ter in­ten­sive than trans­plant­ing, al­low­ing for faster progress in dry con­di­tions but which, gen­er­ally pro­duce lower yields.

As a re­sult, de­spite the dry weather, as of 8 July, some 1.1 mil­lion hectares have been placed un­der rice crop, 12 per­cent above the area planted at the same time in 2014.

How­ever, yields are ex­pected to be neg­a­tively af­fected in large parts, in­clud­ing main rice-pro­duc­ing provinces of Prey Veng, Takeo, Kam­pong Cham, Svay Rieng, Bat­tam­bang, Kam­pot and Kam­pong Thom, which all to­gether ac­count for more than 60 per­cent of the an­nual rice out­put.

More pre­cip­i­ta­tion is re­quired to avoid a re­duced rice pro­duc­tion this sea­son. If rains do not im­prove in the com­ing weeks, the Govern­ment plans to en­cour­age farm­ers to plant short term rice va­ri­eties.

A loom­ing ques­tion now is whether the sec­tor will con­tinue to sus­tain its growth to fur­ther sup­port eco­nomic de­vel­op­ment, im­prove food se­cu­rity, and en­hance the liv­ing con­di­tions of the peo­ple, par­tic­u­larly those in the ru­ral ar­eas.

The cur­rent un­cer­tain global en­vi­ron­ment, with prob­lems of soar­ing food and fuel prices, volatile mar­kets, and cli­mate change, also presents new chal­lenges to the CLMV coun­tries.

Con­sid­er­ing that re­forms have tra­di­tion­ally played a crit­i­cal role in the de­vel­op­ment of the agri­cul­ture sec­tor in the CLMV coun­tries, it was ar­gued that the re­form process should be stepped up to at­tain sus­tained pro­duc­tiv­ity gains and to sup­port the struc­tural trans­for­ma­tion of the agri­cul­ture sec­tor.

How­ever, how th­ese re­forms should evolve to en­hance the sec­tor’s per­for­mance not only to sus­tain fur­ther im­prove­ment in food se­cu­rity and en­hance­ment of wel­fare but also to take ad­van­tage of the op­por­tu­ni­ties that come along with the glob­al­iza­tion of mar­kets re­mains a chal­lenge to the CLMV coun­tries.

Erad­i­cat­ing hunger and mal­nu­tri­tion should be within reach of most Asian coun­tries go­ing by the im­pres­sive eco­nomic growth trends in re­cent years - but this is not quite the case. Asia is still home to the high­est num­ber hun­gry peo­ple on the planet, with 512 mil­lion un­der­nour­ished peo­ple in 2014– 2016, or two thirds of the world’s to­tal. This means that 1 in 8 Asians is un­der­nour­ished de­spite sig­nif­i­cant progress to­ward meet­ing the Mil­len­nium De­vel­op­ment Goal (MDG) tar­get to re­duce by nearly half the pro­por­tion of un­der­nour­ished peo­ple in Asia since 1990. An­other in­di­ca­tor of hunger is the pro­por­tion of un­der­weight chil­dren un­der the age of five, which reached 18.4% in 20142016, a sharp re­duc­tion from 31.4% in 1990 but short of the MDG tar­get of 15.7%. High lev­els of mi­cronu­tri­ent de­fi­cien­cies or “hid­den hunger” thus per­sist in Asia, threat­en­ing sus­tain­able growth as it af­fects the next gen­er­a­tion’s abil­ity to learn and work.

As global at­ten­tion shifts to the jus­ta­dopted Sus­tain­able De­vel­op­ment Goals, ef­forts to ad­dress the food se­cu­rity is­sue will be ush­ered into its most chal­leng­ing phase yet, with food pro­duc­tion re­quired to in­crease by 70% to meet the calo­rie re­quire­ments of Asia, where the pop­u­la­tion is ex­pected to reach 5.2 bil­lion peo­ple by 2050.

On the de­mand side, grow­ing economies are ex­pand­ing the middle class in cities, where 64% of the re­gion’s pop­u­la­tion will live by 2050. Higher in­comes in ur­ban ar­eas re­sult in a grow­ing de­mand for re­source-in­ten­sive food such as meat, dairy and pro­cessed food. On the sup­ply side, land, soil, and the nat­u­ral re­sources needed to grow food are be­ing de­graded, used for things other than food pro­duc­tion, and threat­ened by the im­pacts of cli­mate change. In ad­di­tion, post-har­vest losses in South and South­east Asia ac­count for onethird of re­gional food pro­duc­tion, with most of the waste oc­cur­ring dur­ing the han­dling and stor­age phase of the value chain.

A child sit on cracked earth. meta­phoric for cli­mate change and global warm­ing.

Go­ing for­ward, ADB’s new Op­er­a­tional Plan for Food Se­cu­rity 2015-2020 fo­cused on the fol­low­ing crit­i­cal ar­eas to ad­dress the re­gion’s food se­cu­rity chal­lenges:

1. In­creas­ing the ef­fi­ciency of the food sys­tem to re­duce use of en­ergy and wa­ter through cli­mate- smart agri­cul­ture; adopt­ing mod­ern tech­nol­ogy to grow more food per unit of in­put; and mech­a­niza­tion.

2. Re­duc­ing pre- and post-har­vest losses through im­proved lo­gis­tics and mod­ern­iz­ing value chains. This will also al­low small­holder farm­ers to di­ver­sify into higher value crops, and meet en­hanced food safety stan­dards.

3. Im­prov­ing value chains in­fra­struc­ture to bet­ter meet con­sumer needs with more in­vest­ment in pro­cess­ing, stor­age and dis­tri­bu­tion. An up­graded food trans­porta­tion net­work will help in­te­grate frag­mented mar­kets, re­duce trans­ac­tion costs, and en­able wide dis­sem­i­na­tion of so­phis­ti­cated farm in­puts, fi­nan­cial ser­vices and mod­ern tech­nol­ogy.

4. Part­ner­ing with the pri­vate sec­tor on in­clu­sive busi­ness op­por­tu­ni­ties that con­nect farm­ers, small pro­duc­ers and pro­ces­sors to in­vestors and mar­kets, and help achieve scale for in­stance via risk shar­ing agree­ments.

5. Sup­port­ing pub­lic poli­cies that cre­ate an en­abling en­vi­ron­ment for agribusi­ness and set higher stan­dards for green busi­ness, food safety, and qual­ity.

6. Pro­mot­ing in­no­va­tive fi­nanc­ing tools to give agri­cul­tural small and medi­um­sized en­ter­prises ac­cess to credit so they can par­tic­i­pate in global value chains, in­clud­ing clus­ter lend­ing and fi­nan­cial lit­er­acy train­ing.

En­sur­ing safe, nu­tri­tious and af­ford­able ac­cess to food for all calls for struc­tural shifts in pro­duc­tion or­ga­ni­za­tion and dis­tri­bu­tion. Sup­ply- side in­ter­ven­tions to en­hance pro­duc­tiv­ity on the farm and im­prove liveli­hood of small­holder farm­ers will work only when we also in­vest in mar­ket link­ages, value chains, and lo­gis­tics to achieve a more pro­duc­tive, in­te­grated and ef­fi­cient food sys­tem.

Strong syn­er­gies with in­vest­ment in other sec­tors— wa­ter, en­ergy, trans­port, and fi­nance— as well as more ac­tive pur­suit of South- South and re­gional co­op­er­a­tion and in­te­gra­tion on cross-bor­der so­lu­tions will re­sult in win-win out­comes.

The 2015 El Niño cur­rent sta­tus and fore­casts

In early March 2015, the main me­te­o­ro­log­i­cal and oceanic in­sti­tu­tions col­lec­tively stated that weak to mod­er­ate El Niño con­di­tions1 were in­di­cated by above av­er­age equa­to­rial Sea Sur­face Tem­per­a­tures (SST) across the equa­to­rial Pa­cific and by the cor­rob­o­rat­ing trop­i­cal at­mo­spheric re­sponse.

Af­ter a slight de­cline in April, a steady in­crease of the SSTs over the cen­tral part of the Pa­cific Ocean dur­ing May, re­flect an on­go­ing and strength­en­ing El Niño.

El Niño fore­cast for 2015/16 May is one of the most crit­i­cal months in the as­sess­ment of the de­vel­op­ment of El Niño, as the state of the Pa­cific Ocean dur­ing this time is very dy­namic and fluid, mean­ing that winds, tem­per­a­tures and other at­mo­spheric fea­tures can change rel­a­tively quickly, thus mak­ing the fore­cast more com­pli­cated.

For ex­am­ple, this was wit­nessed last year when the fore­cast of the on­set of El Niño had been re­leased in May 2014 and only con­cretized in March 2015.

How­ever, this year the con­di­tions of El Niño are al­ready present in the Pa­cific Ocean. The con­sen­sus of ENSO pre­dic­tion mod­els pro­ject to con­tinue through­out 2015, with many pre­dict­ing SST anom­alies to strengthen dur­ing the last quar­ter of the year and pos­si­bly in­ten­sify from a mod­er­ate to a strong El Niño through 2015/16 win­ter.

De­for­esta­tion at Viet­nam coun­try­side, stump soli­tary, jun­gle dam­aged, make change cli­mate, liv­ing en­vi­ron­ment is nar­row, this is global prob­lem, des­o­late land­scape on day with dry tree.

The Aus­tralia’s Bureau of Me­te­o­rol­ogy has warned, in early June, that cur­rent lev­els of warmth across the Pa­cific Ocean are higher than nor­mal and sim­i­lar to those achieved dur­ing the 1997 event, the most se­vere on record.

How­ever, no pre­cise quan­ti­ta­tive cor­re­la­tion be­tween El Niño’s in­ten­sity and its im­pact on agri­cul­ture has been probed. Its im­pact on crops de­pends on tim­ing and du­ra­tion, as well as cli­matic cod­i­fi­ca­tions pro­duced by El Niño to­gether with the sen­si­tiv­ity of the phe­no­log­i­cal phase of crops dur­ing the peak pe­riod of in­flu­ence of the event.

Flow­er­ing and grain fill­ing phases of ce­real crops are more sen­si­tive to wa­ter stress. Such an anom­aly is known to oc­cur ev­ery 2 to 7 years, with vary­ing de­grees of in­ten­sity and du­ra­tion. The phe­nom­e­non usu­ally peaks around late De­cem­ber.

The di­rect im­pact of El Niño is ex­pected to be felt over the next few months.

The cur­rent dry weather may be at­trib­uted to the cur­rent global El Niño event, which is of­ten as­so­ci­ated with dry weather in the re­gion, al­though no pre­cise quan­ti­ta­tive as­so­ci­a­tion be­tween the oc­cur­rence of El Niño and its im­pact on agri­cul­tural pro­duc­tion can be de­duced.

Its im­pact on crops very much de­pends on the tim­ing and in­ten­sity of the phe­nom­e­non. Cur­rently, re­ports from the main me­te­o­ro­log­i­cal and oceanic in­sti­tu­tions stip­u­late that El Niño con­di­tions would strengthen in the com­ing months and per­sist through 2015/16 win­ter.

FAO’s Global In­for­ma­tion and Early Warn­ing Sys­tem is closely mon­i­tor­ing all weather anom­alies and as­sess­ing pos­si­ble ef­fects on crop pro­duc­tion and food se­cu­rity.

Asia and the Pa­cific faces a food ‘storm’ in the com­ing decades un­less it takes de­ci­sive steps to re­spond to a host of pres­sures on its food sup­plies – in­clud­ing from cli­mate change.

“This will re­quire a com­bi­na­tion of con­serv­ing and man­ag­ing ex­ist­ing re­sources more ef­fec­tively, tap­ping sci­ence to grow food from less land, and draw­ing in in­vest­ment to meet grow­ing food de­mand,” said Mah­fuz Ahmed, Asian De­vel­op­ment Bank ( ADB) Tech­ni­cal Ad­viser for Ru­ral De­vel­op­ment and Food Se­cu­rity.

Cli­mate change is a ma­jor food se­cu­rity chal­lenge in Asia with more than 60% of the pop­u­la­tion, or 2.2 bil­lion peo­ple, re­ly­ing on agri­cul­ture and food pro­duc­tion for in­come.

“De­vel­op­ing Asia’s farms are ex­pected to be hit hard by cli­mate change, with pro­duc­tion losses es­ti­mated at 2-18% for ir­ri­gated rice and 2- 45% for ir­ri­gated wheat by 2050,” said Michiko Katagami, ADB nat­u­ral re­sources and agri­cul­ture spe­cial­ist. “Cli­mate change adap­ta­tion and mit­i­ga­tion must be cen­tral to the food and nutri­tion se­cu­rity agenda for the re­gion.”

The num­bers are stark. By 2030, 65% of Asians will live in cities. With an ad­di­tional 3 bil­lion con­sumers ex­pected to join the middle class by 2030, food de­mand will rise by up to 70%. Avail­able wa­ter sup­plies are shrink­ing in the face of in­creas­ing de­mand from con­sumers and com­pe­ti­tion from the agri­cul­ture and en­ergy sec­tors. Around 70% of Asia’s sur­face wa­ter is used for agri­cul­ture, but much of it is used in­ef­fi­ciently. Many wa­ter- stressed coun­tries lose large vol­umes of treated wa­ter through leak­age in wa­ter sup­ply sys­tems. Asia is run­ning out of wa­ter for the fu­ture.

Now ris­ing tem­per­a­tures, in­creas­ing droughts and floods and other weather ex­tremes are more wor­ry­ing threats to food se­cu­rity.

By 2050, ex­pected crop yield re­duc­tion for ir­ri­gated paddy is 14–20%; for ir­ri­gated wheat, 32- 44%; ir­ri­gated maize, 2–5%; and ir­ri­gated soy­bean, 9–18%.

Rice prices are pro­jected to be 29–37% higher in 2050 com­pared to a no- cli­mate change case; wheat prices will be 81–102% higher, maize prices will rise 58–97%, and soy­bean prices are set to in­crease 14–49%.

Multi-sec­tor en­gage­ment

ADB’s mult i sec­tor ap­proach to sus­tain­able food se­cu­rity in de­vel­op­ing Asia has re­sulted in im­proved wa­ter pro­duc­tiv­ity such as ir­ri­ga­tion, drainage, and wa­ter stor­age; in­creased re­silience against nat­u­ral dis­as­ters with f lood­prone, drought-prone rice va­ri­eties; and en­hanced re­gional food se­cu­rity through an emer­gency food re­serve sys­tem.

In In­dia and Bangladesh, more than 5 mil­lion hectares of rice fields are flooded dur­ing most of the plant­ing sea­sons. With the In­ter­na­tional Rice Re­search In­sti­tute (IRRI), rice va­ri­eties with­stand­ing floods were de­vel­oped.

Work was done on the de­vel­op­ment and dis­sem­i­na­tion of rice va­ri­eties for wa­ter­short ar­eas in In­dia, Nepal, Bangladesh, Laos, Cam­bo­dia, and the Philip­pines. Rice va­ri­eties with re­sis­tance to salt wa­ter in­tru­sion, pests and dis­eases are also be­ing de­vel­oped.

As a re­sult, gov­ern­ments have re­quested ADB sup­port for large- scale seed mul­ti­pli­ca­tion and eval­u­a­tion of cli­mate- adapted wa­ter- sav­ing rice va­ri­eties. Also, ADB as­sisted the As­so­ci­a­tion of South­east Asian Na­tions ( ASEAN) to es­tab­lish an emer­gency rice re­serve as part of the ASEAN food se­cu­rity frame­work.

The an­nual burn­ing pro­ce­dure of rice pad­dies for the next crop sea­son. Cam­bo­dia

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