May 7, 2008 - Rising food prices are now topping policymakers’ agenda in most developing countries in East Asia.  They are contributing to higher inflation, slowing the pace of poverty reduction, and raising concerns about civil unrest.

A key reason for higher food prices are the advanced country biofuel policies.  They aim to promote a more climate-friendly source of energy, but have also induced a sharp increase in world demand for grains and in grain prices.

There is an urgent need for more international dialogue to decide whether the benefits from current biofuel policies justify the costs, or whether a new global deal can be struck, allowing continued progress towards environment-friendly energy sources as well as a more stable global market in food.

Upward pressures on food prices from first generation biofuel policies have been exacerbated by recent export restrictions by rice exporting countries concerned about food security.

An agreement between the main participants in the international rice market to reduce or remove major trade restrictions could play an important role in lowering prices to sustainable levels. Following their historical leadership in addressing food security in the region, ASEAN and ASEAN+3 could take the lead. This is in the interest of exporters who wish to maintain their export markets and of importers, for whom high prices are inflicting hardship on consumers, particularly the poor.

Ensuring household food security by strengthening targeted safety nets is most urgent. Targeted cash transfers to vulnerable groups provide direct protection without reducing incentives to local farmers, though food-for-work, public works programs and emergency food aid distribution can also help. 

Domestic food prices could also be reduced through reductions in import tariffs and domestic taxes on staples.  These measures have a quasi immediate impact, and are easy to implement. Attention has to be paid to the fiscal viability.

In the medium term, there is much scope for a substantial rice supply response through better agronomics, reduction in post-harvest losses, and more efficient water management.   A regional partnership between countries, the International Rice Research Institute and funding agencies could foster the adoption of better, off-the-shelf, agronomic technologies.

To sustain growth in rice yields further in the future, public investment in agricultural R&D must be increased - in 2000 it was only 0.4 percent of agricultural GDP in Asia compared with 2.36 percent in developed countries, with no significant change since.