Floods Leave Southeast Asia More Vulnerable to Food Price Shocks

Farmers in Indonesia sitting in front of processed rice that is ready to be sold. Economists say rice farmers living below the poverty line could be the most vulnerable to the impact of floods in Southeast Asia.

Massive flooding in Thailand and elsewhere has destroyed large parcels of rice farmland, opening the possibility of higher rice prices and leaving Southeast Asia at greater risk of a food price shock.

Heavy rains and massive flooding have destroyed crop land in Thailand, Cambodia, Vietnam and the Philippines.

The United Nations says it is closely monitoring the potential for “serious food shortages” in several parts of Southeast Asia after floods affected agricultural activities and aid deliveries.

Rice farmers in Cambodia tend to their crops. Some 12% of the country's paddy fields are believed to have been destroyed due to the flooding in Southeast Asia.

The U.N. Food and Agriculture Organization's (FAO) Global Information and Early Warning System, in a report released on Oct 21, says although no precise figures are available, continuous rain and flooding is estimated to have damaged at least 1.6 million hectares of standing crop in Thailand, representing more than 12 percent of total national cropped area. Another 12 percent of the total area under paddy in Cambodia is also believed to have been damaged.

About six percent of rice farmland is damaged in the Philippines, while in Vietnam it is reported that as much as 7.5 percent of the farmland is destroyed.

Yang Razali Kassim, a senior fellow and analyst at the S. Rajaratnam School of International Studies of Nanyang Technological University in Singapore, says food security in Southeast Asia will certainly be affected by the floods in the region.

“The scale of the floods is unprecedented, and therefore, the threat on regional food security is also unprecedented. Rice supplies to the region is bound to be affected, adding to the pressure on food prices that have already seen rises in recent times due to shortages caused by erratic weather,” he said.

Before the floods, said to be Thailand’s worst in the last 50 years, the Bangkok government forecast rice production to stand at 25.8 million tons. But, the government predicts it may lose some six million tons of rough-rice from flooding. Analysts say Thailand, which accounts for 30 percent of global rice exports, has already lost three million tons of rice due to floods.

The price of rice is hovering at about $650 per ton currently, but rice traders are expecting the price to increase to $750 per ton, inching closer to its record-high level of $1,000 per ton in 2008.

However, many Asian countries control rice prices via government subsidies, making it unlikely that price hikes will hit most consumers in the near term.

Kamal Malhotra, U.N. Resident Representative for Malaysia, Singapore and Brunei Darussalam, said rice farmers living below the poverty line are among the most vulnerable to the impact of the floods, as they are likely to have the least bargaining power, least resources to organize themselves collectively and are more likely to sit at the lowest end of the production chain.

“Whether price increase[s] will result in income increase[s] for the majority of those involved in rice production varies, subject to how the production chain is structured and the relative bargaining powers between farmers, distributors and retailers,” he said.

Malhotra said that while floods and other climatic conditions may cause price increases, the current prices of rice and other food commodities are also partly cost-pushed due to a fuel price hike and also the ongoing policy to replace food crops with cash crops.

“Without reversing some of these policies, food prices will be extremely volatile to short-term ‘shocks’ such as floods, subsequently affecting food security,” he said.

He added that shortages in food supplies are exacerbated by the possibility of panic-driven protectionism that may also push up prices.

In 2008, a global food price shock mainly driven by rising oil prices caused political and social unrest in several poor and developed countries. A World Bank report released on February 15 said continuously rising food prices have pushed another 44 million people into extreme poverty and exposed them more to hunger.

The floods that hit Southeast Asia have not only destroyed crops and livestock, but also claimed hundreds of lives and displaced thousands of people.

Development Helps Fuel Southeast Asian Flooding

In some parts of Southeast Asia the floodwater just keep coming, inundating fields and towns, and leaving behind death and destruction. But, the problems could have been worse.

It is a scene that has become all too common in Bangkok - residents slogging through knee-deep water. In some parts of the Thai capital, tensions boil over.

Even as Bangkok residents try to carry on, there is the realization things could be much worse.

Mark Bartolini, a disaster expert with the U.S. Agency for International Development, says the slow-moving floodwaters in Thailand gave people time to prepare and reduce the damage. That is not always the case.

“The fact is that development gains can be lost overnight," he said. "Years and years of billions of dollars being spent on countries and governments as well, in terms of their investments.”

Bartolini says Thailand and other countries have proven to be resilient, but there are still concerns.

“Whenever you are in low-lying, flood-prone areas and the populations grow and grow, you’re bound to have problems periodically," he said. "And again with climate change we’re seeing more and more of this.”

“The U.S. is giving more than $2.7 million in aid to help Southeast Asia recover from the floods. But it is also trying to share something more - lessons from its own catastrophe.”

In 2005, Hurricane Katrina slammed the U.S. Gulf Coast, flooding New Orleans, sending desperate residents to their rooftops to await rescue.

U.S. officials are working with officials from across Southeast Asia to improve disaster preparation and communication.

MIT urban planning expert Balakrishnan Rajagopal says that is not enough.

“Cities have to think very hard about how they grow, the kind of technology that they use when they grow and they in which they anticipate problems and take measures to prevent those problems from becoming a crisis,” he said.

For instance, Rajagopal says, the use of concrete to in growing cities like Bangkok contributes to floods by paving over natural drainage systems.

For now, many Thais are just trying to hang on, waiting for the water to recede.