Many global food supply chains have been significantly impacted by labour shortages, lockdowns, and transport disruptions during the COVID-19 pandemic, leading to worldwide price rises for some staple crops. But one commodity – rice – has bucked the trend, with S&P Global reporting that rice prices have largely fallen since 2020. Better-than-expected harvests in China and India have saturated rice markets, and the UN Food and Agriculture Organisation (FAO) forecasts global rice production to grow by one percent in 2021/22.
Rice is the world’s second most important cereal crop after maize. According to the International Rice Research Institute (IRRI), more than 2.7 billion people – most of them low-income – rely on rice as their major source of food, with that number predicted to rise to 3.9 billion by 2025. The total volume of milled rice produced worldwide reached nearly half a billion metric tonnes in 2019/2020, with China (146.7 million metric tonnes) and India (118.9 million metric tonnes) the biggest producers. One estimate puts the value of the global rice market at US$ 274 billion by 2027.
Behind these staggering statistics, however, the picture for millions of small-scale rice farmers and workers is far from rosy. Many are extremely poor, living in highly climate-vulnerable countries with the constant risk of having their crops wiped out by extreme weather. According to Oxfam, “a combination of worsening inequality in food value chains and the crippling impacts of climate change is leaving rice farming systems at a critical juncture…rice farmers in some countries can receive as little as 4% of the price paid by consumers. The burden is particularly bad for women farming and working in the Asian rice sector: they receive lower wages and often suffer discrimination.”
Efforts to modernise and mechanise Asia’s rice sector could enable rice farmers to increase their share of the value chain by opening up new markets and building sustainable and climate-resilient production systems. According to the IRRI, “rice yields in Asia can be increased by applying scientific principles and new technologies.” However, says Oxfam, the evidence indicates that so far, small-scale producers and workers are being further squeezed by these changes, especially with the rise of supermarkets changing retail.
Risks and challenges differ widely between countries. One recent study in Myanmar, for example, points out that compared to neighbouring countries, Myanmar is “characterised by less efficient input supply systems, lower farm productivity and profitability, higher milling and export costs, and lower quality of exported rice.” Research in the Philippines suggests competitiveness could be increased by increasing yields, reducing post-harvest losses, and investing in more efficient technology. Rice farmers in the Indonesian province of Bali – where pests and crop disease add to the challenges of climate change – told researchers that while they valued agricultural insurance as a risk management tool, they couldn’t afford it without significant government subsidy.
With average returns of between US$ 2 and US$ 6 a day per farm across South-east Asia, it is little wonder that most of the efforts supporting rice value chains have focused on the 144 million small-scale farmers in the region, who often own less than two hectares. But equally important are the farm labourers – many of them women – who are among the poorest of the poor. Oxfam’s research, for example, found that eight out of ten women workers and farmers growing rice in Pakistan were severely food-insecure: “their work often goes unrecognised and unpaid, leaving women struggling to feed themselves and their families.”
Barriers to land ownership – and hence access to financial services including credit and insurance – are a significant challenge for women in many emerging economies. The IFC has found that women are more likely to be self-employed, working in the informal economy, with fluctuating cash flows and fewer assets – “problems that are compounded by inheritance customs, restrictions on land and asset ownership.” In Pakistan, women working on farms earn about half of what men earn, and younger women earn even less. Additionally, Oxfam says women employed in the rice value chain have been sidelined by advances in agricultural technology. Pakistan’s modernisation programme, for example, “does not include training for women on using the machinery, so as mechanisation reduces the need for labour, it reduces employment opportunities for landless women.”
While new technologies and farm efficiencies threaten the role of traditional agricultural labourers, the ‘Rural Pathways Model’, developed by ISF Advisors, does offer some hope. For example, by consolidating small-scale farming activities into a formal enterprise that is fully integrated into the value chain, production will rely primarily on hired labour and mechanisation – potentially increasing job opportunities. On the other hand, a small-scale farmer may choose to remain in the local rural area (as opposed to migrating to the city in search of work) but shift away from self-production or entrepreneurship to become a wage labourer.
Overall, however, the outlook for wage workers in the rice sector is bleak. One study in Bangladesh found that the share of hired labour in rice farming decreased from 19.4% to 15.5% in the decade from 2000 to 2010. More recently, the COVID-19 pandemic forced many migrant workers – most notably in India – to return home, leaving a shortfall of labour which, according to researchers, disrupted rice production and threatened the country’s food security. The likelihood of these migrant labourers having any form of income protection is vanishingly small – with potentially disastrous consequences both for themselves and the families who rely on their remittances.
Risk management strategies for small-scale rice farmers are increasingly urgent, given the challenges of climate change, extreme weather, pests, disease, and labour shortages. In Vietnam, for example, Swiss Re has partnered with the Vietnam National Reinsurer (VINARE) to offer a national insurance scheme aimed at paddy rice farmers which uses satellites to monitor rice-planted areas, rice growth, damaged areas, and estimated yields. Similarly, the Philippines Rice Information System (PRiSM) uses remote sensing to identify rice areas at risk or affected by droughts and floods, and to generate crop growth information needed for rice yield estimation. Both projects are part of RIICE (Remote sensing based Information and Insurance for Crops in Emerging economies) which has so far monitored around 12 million hectares of rice-cultivated land in the Philippines, Vietnam, Cambodia, India and Thailand.
Crop insurance is only one piece of the jigsaw, however, and despite these advances much more needs to be done to enable small-scale farmers and agricultural workers to achieve a fair share of the rice value chain. As Oxfam points out, “smarter government regulation to protect workers’ rights and empower small-scale producers can support better returns for farmers; and responsible private sector investment can support small-scale producers to benefit from rapidly modernising rice markets.”