On September 2012, the Asia-Pacific Economic Cooperation (Apec) will hold its meeting in Vladivostok, Russia. The group’s Apec chair-manship this year may yet prove significant. Russia, or Russian Federation, a country of 143 million people is revving up its economic machinery to craft a thoroughgoing blueprint that could enhance, if not fully guarantee, food security in Asia Pacific.

The Russian-proposed project tagged as “Improving Access to World Markets for Russian Grain Export” seeks to develop a “Far East Grain Corridor.”

This project aims to move 10 million tons of grain by 2020 into Asia. The objective is to improve market access for Russian grain, loosen administrative costs and restrictions and augment infrastructure capabilities.

Experts believe that it is a first of many efforts by Russia to take steps toward improvement of trade and investment liberalization and regional economic integration, key goals of the Apec meeting in Vladivostok. Russia knows that in order to get a foothold in Asia, its proposal should zoom in on the following issues: easy access to food products, international standards of quality as regard food production, development of agricultural technology and sustained identification and prevention of threats to agriculture, particularly climate change.

Clearly. this is Russia’s way of “rising to soft power” in the region, leaping from the militarization of the former Soviet Union to addressing at present global issues such as hunger.

The idea came on the heels of a global outcry for food security, particularly from Asia where food is relatively expensive to many poor families. As early as 2008, food insecurity in the Asia-Pacific region had forced developing economies to search for ways to enlarge appropriate responses to this growing problem. Hunger and scarcity of food had compelled governments to look into public-private partnership if only to secure the needed supply of food.

This is where Russia comes in with its public-private Policy Partnership on Food Security (PPFS). In line with this partneship  is the strategy of the new chairman of the Apec  Business Advisory Council (Abac),  Ziyavudin Magomedov of Russia. He said, “Central to our agenda this year is the goal of bringing economies closer together by tackling remaining barriers to the free flow of goods, services and investment and in developing collective responses to the shared challenge of the sustainability of economic growth.”

As a giant leap toward sustainable development, Abac said that Asia-Pacific leaders must guard against “protectionist responses” to global challenges. This can only be accomplished through initiatives “aimed at achieving open trade and investment.”

“Business leaders from the Asia-Pacific region urge the Asia-Pacific Economic Cooperation [Apec] to give priority to accelerating regional economic integration, developing stronger infrastructure and supply chains, strengthening food security and fostering innovative growth as it begins its work this year under the chairmanship of Russia of taking further steps toward realizing the goal of an integrated Asia-Pacific economy,” Magomedov said.

Too, the Abac chairman recognizes the development of small- and medium-scale enterprises (SMEs) as a significant contributing factor to the region’s growth potential. “And since strong financial markets underpin the region’s growth prospect, we will also be developing recommendations to Apec  Finance Ministers including on such issues as the stability and integration of financial markets, improving financial access for micro, small and medium enterprises and addressing the implications of current financial systems reform in the G20,” he said.

For the short term, the PPFS is set to define policies that could spur food production growth, particularly Russian grain. As a long-term goal, it seeks to draft a food system structure by 2020 that would “further define the elements of a food structure as part of its objectives.”

In an interview, Segfredo R. Serrano, Ph.D., undersecretary for policy, planning, research and development and regulations of the Philippine Department of Agriculture, said part of the success of Russia’s proposal in Apec  would hinge on lower cost of trade and potentials for price stability.

“The Russian proposal,” he explained, “will have a greater probability of success if it can facilitate and lower the cost of trade, make grains available in sufficient quantities and ensure physical accessibility and affordability of the commodities for all people at all times. It should likewise be able to contribute to price stability in the global market and should not cause market distortions.”

Serrano said “other economies will be able to benefit from the proposal if the stock availability is reliable and timely vis-à-vis the demand, grain quality conforms to international standards, prices are competitive and the trading rules and procedures are transparent and facilitative.”

Success in this endeavor will not come easy, however. As most Asian countries are rice consumers, Russia’s grain exports, which are largely made up of wheat, barley and rye, might only interest those countries where bread is the staple. He nonetheless believes that there could be a possibility of food substitution “to a certain extent” if and when grain of this kind would be made more affordable to Filipinos.

The Food and Agricultural Organization of the United Nations, as cited by the World Food Program, said that “well over half of the world’s hungry people—some 578 million people—live in Asia and the Pacific region.”

A recent report by Social Weather Stations (SWS) on self-rated hunger in the Philippines still pegged the number at 4.8 million families. With the minimum of five each family, that figure translates to nearly a third of the population of more or less 100 million. According to the International Food Policy Research Institute, despite the seeming decline in trend, hunger still remains a “serious issue” among Filipinos.

Would Russia’s grain initiative succeed in Asia where the Philippines and its neighbors consume rice? Serrano was a bit skeptical in light of the country’s staple being rice and corn. With faster and more efficient means of transport and production of these Russian grains, however, who knows? Filipinos living in most Philippine cities prefer bread over corn. To prove this, the Philippines imported wheat from the United States to the tune of $705 million in 2011, nearly a third of the total cost of US agricultural export to the country, of which corn came only second.

The Philippines could use low-cost but high-quality Russian wheat to stabilize prices of bread in the open market.

A serious drought that recently hit the US Midwest—farmlands in Iowa, in particular—could affect American corn and soybean production. As of this writing, reports said that most economic indicators of corn and soybean production are dropping like rocks. This could force Americans to double the production of wheat to even out the losses in corn. This could be accomplished by shifting Midwest domestic consumption toward wheat, thus a pullback of wheat exports for this possible shift in local staple. Americans also fear that reduction in supply could spur a hike in corn and soybean prices, forcing target markets to consider other sources. This might just put the US in a serious quandary, and wheat-exporter Russia at a very competitive advantage by bringing its affordable wheat into Asia.

Russia itself is said to be suffering from drought, but has moved intentionally to further exports of wheat. According to a Reuter’s report, Russia has exported 2 million tons in July alone, pegging “near-record export volumes” despite a serious dry spell. This August, Russia has “up to 2.5 million tons under contract for export… [topped with] an exportable surplus at 10 to 12 million tons.”

The bottom line in this seeming grain battle royale between Russia and the United States is vision, affordability and faster transport of goods. But more to this effort is Russia’s movement toward the easing of global hunger. If the United States chooses to fold up due to consequences of climate change, Russia will surely take this as its cue: It will rally Russian grain on the dining tables of Southeast Asia. And for what it is  worth, it might just change the way grain is traded and enjoyed in this part of the world—the Philippines included. Joel Pablo Salud is the editor in chief of the Philippines Graphic

Business Mirror