Enhancing ASEAN Resiliency to Extreme Rice Price Volatility

Abstract

Rice crises involve sharp changes of 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.