Asian Rice Futures Market - Expert Working Group Meeting

Date: 22-23 March 2012 (Thursday and Friday)
Venue: Nanyang Executive Centre (NEC), NTU
Organised by: RSIS Centre for NTS Studies

High-level stakeholders representing the public and private sector in rice travelled from throughout the region to attend to the Asian Rice Futures Market – Expert Working Group Meeting.

On 22–23 March 2012, the RSIS Centre for NTS Studies hosted a closed Expert Working Group Meeting to discuss the ongoing call for Singapore to consider hosting an international rice futures market. Key points for discussion were the feasibility of such a market in current international rice market conditions, the suitability of Singapore as potential host, and the potential impact of an international rice futures market on regional food security.

With support from Singapore’s National Security Coordination Secretariat, the Meeting brought together 40 high-level rice sector stakeholders from Singapore, Thailand, Vietnam, the Philippines, Japan, India, Indonesia and the US. Speakers and participants included major rice traders, heads of exchanges, economists, researchers, and representatives of governments and international institutions.

The proposal for Singapore to consider hosting an international rice futures market first arose in September 2010 in a report produced by the International Rice Research Institute (IRRI) and the Asia Society. The authorship suggested that such an exchange would contribute to rice price discovery and stability. Key criticisms of an international market included concern that increased participation of outsider speculators (those not interested in the physical commodity of rice) would expose the price of rice to increased volatility, and that farmers would be disadvantaged by the trading system and would not have sufficient access to the market.

Khun Korbsook Iamsuri, President of the Thai Rice Exporters Association, addressing the Meeting with Mr V. Subramanian, Vice President Asia, Africa and Europe, The Rice Trader.

Participants discussed these and many other aspects of this multi-dimensional issue during one-and-a-half days of dialogue, which blended academic rigour with the applied experience of practitioners in the trade. A key challenge that emerged was the issue of the distribution of benefits, given that the few large traders and governments would likely benefit most from the market as a platform for trade. The diversity of rice varieties was seen to make the design of a single contract a challenge, and heavy-handed government intervention in the rice trade was seen as a major impediment to the efficient functioning of an international exchange. Some market practitioners suggested that these issues were not insurmountable and could be overcome through regulatory and governance measures.    

Given the cross-sectoral challenges and complexity of issues uncovered, there was no collective conclusion drawn on the overall feasibility of a rice futures market and participants generally took positions in the middle ground. Many argued that incremental steps could be taken to explore feasibility further in the form of research, sample contract design for surveys, or experimentation with a futures exchange on a small scale with a secure variety of rice. If an international rice futures market was to be launched, Singapore was widely seen as a legitimate and feasible host by participants.

The Centre has produced an evaluation report for internal distribution amongst participants and will build on the findings for upcoming research publications.

A report on the outcomes of this meeting is now available online.

Click here for the programme of the meeting.

Posted on: 22/3/2012 12:24:00 PM  |  Topic: Food Security