Rice crises involve sharp changes in prices that cause substantial adjustment costs in the economy, including financial losses and hunger. In this paper, University of the Philippines School of Economics Dean Ramon Clarete assesses the capacity of member countries of the Association of Southeast Asian Nations (ASEAN) to avoid or mitigate the risk of extreme swings in rice prices. Using the Riceflow model, the impact on ASEAN countries of a possible decline of rice outputs in the People’s Republic of China and India is simulated. He posits that the ASEAN region is less vulnerable to extreme rice price volatility if it pursues a deeper trade strategy. From several proposals put forward, a framework is suggested that comprises rice trade, rice stocks, and market information and intelligence. The key is building confidence in trade to enhance the region’s resiliency to volatile rice prices and thereby help ensure food security.
Enhancing ASEAN’s Resiliency to Extreme Rice Price Volatility is one of four working papers presented at the ASEAN Rice Trade Forum in Cambodia in June 2012. The Forum, organized by the ASEAN Food Security Reserve Board, the ASEAN Secretariat and ADB, brought together various stakeholders to share and analyze market information as well as to coordinate policy responses to help avoid the repeat of the rice price crisis of 2007–2008. The crisis, triggered partly by the export restrictions of key rice exporting countries and the panic-buying of major rice importers, plunged close to a billion people worldwide into greater hunger and poverty.