Euston Quah suggests investing in agricultural R&D to cut food prices

Channel NewsAsia 9 Apr 08;

SINGAPORE: One way to ensure that there is no short supply of staple food like rice in the future is to invest more funds into research and development (R&D) into the agricultural sector. This is what governments should do, according to an environment analyst.

The analyst added that there should not be any price control of food staples like rice in Singapore as importers may be discouraged from boosting its supply.

Prices of food staples like rice and soya bean have been going up because of different reasons, such as climate change which affects crops and thus reduces supplies. Higher oil prices have also resulted in higher transport costs.

So to alleviate the situation and ensure that there is no supply shortage in the future, an environment economist said governments must look at conducting more R&D in the agricultural sector now.

Associate Professor Euston Quah, Head of Economics Division at Nanyang Technological University, said: "It has been quite some time now, as far as I'm aware of new technologies into production of food crops. So that's one way where governments can help, especially the richer countries in terms of this type of funding."

Professor Quah explained that an agricultural revolution between the 18th century and the end of the 19th century saw a massive and rapid increase in agricultural productivity and vast improvements in farm technology.

This had resulted in super yields for farmers. He said this is something that might benefit an increasing global population.

For now, he said governments can also look at allocation of land for cultivation of necessary food crops and enforce guidelines to ensure sufficient crops. There should also be a co-ordinated effort globally to look into alternatives for biofuels.

Professor Quah continued: "As you know, the problem with biofuels is that notion that somehow it's cleaner than the fossil fuels. That has resulted in the demand for crops such as sugar cane, soya bean and so on and that in turn affects the price of these crops."

In view of increasing rice prices in Singapore, Professor Quah said consumers can learn to switch to other alternatives such as potatoes or other tubers. He added that the government must also ensure there are no hoarders of rice as this will create unnecessary demand.

Professor Quah, who is also against price controls, said: "I don't think that is the solution. I think that is something that will distort the market and would create a disincentive for our importers of rice..."

Higher food prices are expected to continue for most of this year. So while consumers can expect to pay more for commodities like rice, they can at least be assured that the supply will not be affected any time soon.

According to Professor Quah, this is because the bans imposed by some countries on their rice exports only apply to low-grade rice and Singapore imports only high-grade rice. - CNA/vm