Southeast Asian leaders must take more care with food policy

Nikkei Asia ^

[FarCenter]

Tightening food supplies and soaring prices have put food security high on the agenda of Southeast Asian nations, as reflected in discussions at their leaders' summit last month in Phnom Penh.

In Laos, inflation reached a 22-year high of 34% in September, largely due to higher food costs. Prices for rice, the staple of Lao diets, were 45.3% higher than a year before. In the Philippines, food prices jumped 9.8% in October, up from a 7.7% rise in September.

These developments have complex implications for the agri-food industry across the region. Higher commodity prices may provide a short-term windfall for some agricultural producers. But they also translate into higher input costs for businesses further down the value chain, such as food and beverage manufacturers.

For consumers, faster food price rises can quickly lead to financial and food insecurity, given that in Southeast Asian countries, food typically accounts for between a third and a half of household spending. Spikes in the cost of food production can quickly turn into broad-based inflation and create a cost of living crisis.

These crosscutting pressures, complicated further by climate change and shifting demographics, are posing a challenge for Southeast Asia's agri-food sector, which accounts for 127 million jobs, or between a third and a half of total employment in Indonesia, Malaysia, the Philippines, Thailand and Vietnam, according to an analysis by Oxford Economics on behalf of trade association Food Industry Asia.

Encompassing agricultural production and food manufacturing and distribution, the sector contributed almost $810 billion to the five Southeast Asian economies, representing a quarter to a third of the gross domestic product of each.

[EEGator]

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