Sustainability of rice in the global food system - IRRI books

important implications for the strategy for sustaining food security through trade for
affluent Asian nations.
An important element of uncertainty in depending on trade to ensure an adequate
supply of rice is the thinness of the world market, where only 4% of the rice is traded
compared with 20% for wheat and 11% for coarse grains. Variable natural conditions
such as floods, droughts, and typhoons cause shortages and surpluses to occur from
year to year, which produce wide fluctuations in marketable surpluses and import
needs, and make the world rice market highly volatile.
Another factor to consider is the influence of the giant economies of Asia—
China, India, and Indonesia—on the world rice market. The size of the international
rice market is equivalent to only 13% of the rice needs in China, and 8% of the combined
consumption of India and China. If these countries decide to meet only 10% of
their rice needs through imports, the additional demand could destabilize the world
market. The volatility of the world market for rice is demonstrated by the surge in
prices of high-quality rice from October 1993 to April 1994 in response to a 25%
reduction in production in Japan caused by abnormal weather.
With an adequate increase in rice prices, rice area could expand in the humid
tropics of Africa and Latin America (Alexandratos 1995). It is estimated that western
and southern Africa have 20 million ha of potentially suitable rice land in river valleys,
of which only 15% is currently cultivated. In tropical South America, rice cultivation
could be extended to an additional 20 million ha. The exploitation of this potential,
however, will require a substantial increase in prices and in the capacity of the
countries to invest in land reclamation and in developing a marketing infrastructure.
The unit cost of production and the marketing margin are many times higher in
Africa and Latin America than in Asia (Ahmed and Rustagi 1987, FAO 1991). Also,
the demand for rice has been growing faster on other continents than in Asia. So, the
exportable surplus available for Asia from other continents could be quite small. In
Asia, eastern India has considerable excess capacity in rice production. With the alleviation
of poverty and the high growth of population, eastern India may need to exploit
its excess capacity to meet its growing internal demand. Only Myanmar and
Cambodia could generate additional exportable surpluses to partially overcome potential
shortages in other Asian countries (Hossain and Oo 1996). The exploitation of
this potential, however, would require substantial investment in land reclamation, an
expansion of irrigation, technologies for improvement in rice quality, and developing
a marketing infrastructure. These countries do not have the economic capacity to
make such investments, and they may not be able to mobilize international support
because of political instability. Also, the additional exports from Myanmar and Cambodia
may not add much to the world rice market because exports from Thailand and
Vietnam are likely to decline over the long run. Thailand’s comparative advantage in
generating an exportable surplus is its favorable land endowment. But this advantage
is being gradually eroded by the rapid increase in farm wages and the opportunity
cost of family labor, a process that Japan, Taiwan, and South Korea have experienced
38 Hossain