Asean+3 to adopt rice reserve scheme on a permanent basis

Farm ministers of the Association of Southeast Asian Nations (Asean) + 3 (Japan, South Korea, China) will make the revived East Asia emergency rice reserve (EAERR) a permanent scheme to ensure food security during natural disasters and quickly temper sharp price fluctuations resulting from volatile supply.

In the recent 27th senior officials meeting of the ASEAN Ministers on Agriculture and Forestry (SOM-AMAF), the agriculture ministers, along with their counterparts from China, South Korea and Japan, agreed to indefinitely extend the implementation of the current EAERR three year-pilot project when it expires in 2007.

"The pilot project has proven to be an effective quick response system during calamities and emergency situations especially in the tsunami disaster that hit the Indian ocean rim last year and ASEAN is moving toward making this a more permanent mechanism," said Gregorio Tan Jr., administrator of the National Food Authority, and the Philippines‚ chief representative to the EAER steering committee.

Tan explained that several mechanisms are being tested under the existing pilot project to determine the most effective means of shipping rice to member countries that need the commodity.

Currently, the EAERR volume is about 87,000 metric tons (MT). Japan however, committed to beef up the stock with 250,000 MT to bring total rice reserves in the region at 337,000 MT.

"At least four member countries of the ASEAN have completed their internal processes that will allow them to contribute of dispatch stocks when it is required," noted Tan.

The earmarked reserves, operated under forwarding contracts by pledging countries, would serve as a regional rice pool to cope with price fluctuations resulting from unusual market conditions, such as when natural calamities like flooding or drought result in an upsurge in rice prices.

The rice stocks, if unused for emergencies, will be used for poverty alleviation programs of its member-countries.

The volume of 87,000 MT of rice reserve was set up in 1979 when ASEAN had only five members. The reserve was used only once in 1980 by the Philippines.

Tan said the Philippines already has a standing commitment of 12,000 MT under the ASEAN emergency rice reserve and also offered to put in an additional stockpile of 25,000 MT for the EARR of ASEAN + 3.

Previously, Pinit Korsieporn, deputy secretary general of the steering committee of EAERR said that eventually the rice reserve’s function will have to evolve and include using it as an effective tool to stabilize rice prices in the region.

"In the long run, this arrangement should have a significant effect in keeping rice prices at stable levels, although the primary intent is to ensure food security among member countries and distribute it to countries where supply becomes critical," said Korsieporn.

The plan to make the EAERR scheme permanent was mostly a result of the recommendations of the steering committee which met in Manila last July to review the emergency rice reserve structure.

Tan said that at present, the availment is minimal, in fact, it was only the Philippines that availed of it so far, and it was from its own stockpile. The review was also supposed to determine problem areas that could be a factor in the low availment.

Sources said that some member countries had reservations about making the EAERR scheme permanent.

"There were apprehensions, especially among the major rice exporters that they would not be able to take advantage of situations that would enable them to increase their prices," noted a member of the steering committee.

The ASEAN + 3 earlier held meetings to explore options on how to come up with a viable rice reserve system for the region.

Previously, the countries agreed that there should be both earmark and physical reserves to ensure food security.

ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.