The East Asia and Pacific (EAP) region has been less exposed to the food price shock arising from Russia’s invasion of Ukraine than other world regions. East Asia and Pacific economies have not imported much directly from the war-affected countries and have consumed less wheat (prices for which spiked) and more rice (prices for which remained stable). But the region has still imported inflation because of its dependence on imports of non-rice food and fertilizers. This dependence arises, first, because policy support to rice production through trade restrictions and subsidies discourages diversified domestic production and creates a mismatch with increasingly diversified domestic consumption. Second, input subsidies have encouraged input-intensive production, which magnifies the need for fertilizer and petroleum imports. Because these subsidies also encourage the excessive use of water, they worsen the environment. Governments need to shift their focus from rice-centric food security to nutrition security, reduce subsidies and trade barriers that favor the production of rice, and shift support from input subsidies to encourage higher agricultural productivity, production diversity, and greater sustainability.
[2]