Agriculture remains a key driver of ASEAN economic development. As of 2018, it accounts for more than a quarter of total exports of Cambodia and Myanmar, whereas imports range from only 3% in Singapore to 15% in Brunei, suggesting that this sector is relatively self-sufficient, profitable, and with a large export market. Agriculture is also the biggest source of employment in most ASEAN Member States (AMS), from 29% of the labour force in the Philippines to 72% in Laos. However, agriculture makes up a disproportionately low 10% of the entire ASEAN economy, necessitating a concerted effort from AMS to prioritise its development.
Total agricultural production and consumption have been increasing as corroborated by the drastic increase in total agricultural trade reported by the ASEAN Statistics Data Portal. There is a remarkable increase since the first ASEAN Free Trade Agreement with an extramural partner, ASEAN-China FTA, which took effect in 2005. According to ASEAN Food Security Information System, the stable rise in rice, maize, sugar, soybean, and cassava production and trade is due to improving productivity, better crop varieties, and supportive government policy. This growth is slightly offset by unfavourable weather, disasters, and decrease in planted areas; the latter due to decreasing demand and prices.
Although agricultural imports increase consistently, exports dipped in specific time periods — years 2009, 2012, and 2015-2016; exports have also been lagging behind imports. Moreover, using the Arkansas Global Rice Model, rice supply is predicted to grow by a mere 1.37% annually, threatening staple food consumption in ASEAN coupled with a growing population. This shows that although significant strides have been made, several barriers remain. For instance, although tariffs have been completely eliminated among ASEAN-6, and close to zero among CLMV, there remain sensitive list exceptions. Non-tariff measures are increasing especially in the more developed AMS. Although not necessarily trade-reducing, these measures increase compliance costs and may act as trade barriers if not implemented effectively.
Nevertheless, there are notable efforts towards further liberalisation. The Philippines enforced the Rice Tariffication Law which effectively removes rice from the list of exceptions, allowing importation without quota, but instead with tariffs. This is a significant move towards an integrated and cohesive economy and sectoral cooperation in ASEAN. However, this was immediately met with opposition from farmers, NGOs, and urban poor who cite the negative social impact and lack of economic safety nets for those affected. This polarisation is a grim reminder of the disconnected regionalism in ASEAN led only by state leaders. Nevertheless, the active participation of non-state stakeholders by lending their voices should be a welcome development for an integrated ASEAN community.
Challenges in Agriculture
However, there are more fundamental challenges that threaten not just stakeholder participation but the very goals of the ASEAN Economic Community. Firstly, although total agriculture volume is expanding, its share in ASEAN GDP is fast shrinking. This is mostly due to the increasing shares of the manufacturing and services sectors. This shift is inevitable, given a number of AMS such as Indonesia, Vietnam, and the Philippines are rapidly industrialising. However, ASEAN must ensure that the gains in agriculture must be seamlessly transferred to the agriculture economies. For instance, engendering inclusive and equitable growth for Myanmar means translating the dynamic shifts in comparative advantage of agricultural production from AMS into the rice fields of Myanmar. This is indeed happening in the increasing share of Myanmar in ASEAN agriculture trade, but Laos and Cambodia have yet to realise substantial growth.
Factors that promote de-globalisation and protectionism also dampen regional agricultural development. ASEAN-led RCEP has been delayed due to failure of India to commit in an attempt to protect its vulnerable agriculture sector. Thus, ASEAN’s organisational maturity in accommodating flexibilities, potentially through ASEAN Minus X, will be critical to salvage the multilateral arrangement. More importantly, protectionism still exists especially in the lesser developed economies of ASEAN, a remnant of ASEAN’s competing agricultural economies as well as a consequence of opening up to cheaper products outside. However, the established macroeconomic model for the international flow of capital and goods presents the most compelling case against protectionism as it ultimately leads to decreased overall trade, without having any long-term impact on trade balance or net exports; the loss of export demand means lower production, thus lower revenues.
Competitive Agriculture Sector
The good news is in the proactive vision of ASEAN to push for the agriculture sector, as enshrined in the ASEAN Economic Community agenda. To this end, there have been many initiatives undertaken by different ASEAN organisations. The Initiative for ASEAN Integration is funded by ASEAN-6 to aid the development of CLMV states through infrastructure, human resource development and regional integration projects aimed at narrowing the development gap. Similarly, the ASEAN Development Fund finances short-term projects especially in poorer regions to alleviate income disparity. Both these are utilised in the agriculture sector of CLMV to expedite their economic development.
Furthermore, ASEAN has implemented initiatives around sustainability and increasing the overall competitiveness of the agriculture sector including the ASEAN Public-Private Partnership Regional Framework for Technology in Food, Agriculture and Forestry Sectors and the ASEAN Roadmap for Enhancing the Role of Agricultural Cooperatives in Global Agricultural Chains. The latter, in particular, will further integrate ASEAN agricultural products in global value chains and establish forward and backward linkages in domestic production lines. Aside from ensuring equitable growth and enhancing access to global markets, these initiatives also aim to eradicate poverty, deepen regional integration, improve sustainability, nutrition, and food security. The work plan around these covers standardisation of product quality and quantity,
resource sustainability, trade facilitation, economic integration and market access within and outside ASEAN. Best practices and SOPs in animal husbandry, agriculture, aquaculture, and sanitation have likewise been finalised. All these will hasten the growth of the agriculture sector while mitigating the impact of adverse events such as disasters and economic shocks such as Malaysia’s oil and rubber trade decline.
Moving towards the ASEAN Economic Community
The fate of ASEAN’s agriculture sector lies in the prudent implementation of the vision for an integrated, competitive, and equitable ASEAN Economic Community. Without a strong commitment, ASEAN development will be relegated to persistent delays, as seen in the current development gap, thwarted liberalisation, and trade protectionism rampant among AMS economies. Nevertheless, ASEAN’s proactive initiatives have served to hasten the realisation of an economic community, which will in turn, further strengthen ASEAN’s primary sector.