ASEAN’s approach to stabilising rice markets and averting crises has focused on having sufficient rice stocks as a buffer. Insights from stabilisation in currency markets show that reserve size is not as important as the way it is used to reduce overall risk exposure.

Stabliziing ASEAN rice markets is a crucial concern for averting crises such as the 2007-08 global rice crisis. The current strategy towards this is by growing the size of rice reserves in the ASEAN-Plus-Three Emergency Rice Reserve (APTERR), although the APTERR has been critiqued for its small size relative to total demand and low utilisation.

A look into the stabilisation policies in currency markets shows that more important than size is the way the reserves are used to incentivise actors towards behaviours that reduce risk exposure. As such, the limited reserves in APTERR can be used for encouraging behaviours such as increasing transparency/reporting, increasing partner diversification, and addressing structural imbalances in agricultural production and consumption within countries.

…Jose Ma. Luis P. Montesclaros is an Associate Research Fellow at the Centre for Non-Traditional Security (NTS) Studies, S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University in Singapore.