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RP Rice Crisis

April 14, 2008

rice.jpgPinoys are told to eat ‘kamote’
MANILA When Philippine Agriculture Secretary Arthur Yap held a press conference at the Philippine embassy in Washington D.C. last month, he assured Filipino Americans that there will be no food shortage in the Philippines, only higher prices.

Now in Manila, Secretary Yap was quoted by newspapers March 17 as asking fast food outlets to offer half portions of rice to discourage wastage as government scrambles to look abroad for rice supplies. Other officials said it was time for Filipinos to get ready to eat cassava, kamote and other root crops.
Acknowledging the crisis, President Arroyo said in La Union March 23 that the food shortage and high prices of basic commodities the country is experiencing today is a global problem that needs divine intervention. She told a crowd in Ilocano that a food and energy crisis of global proportions needs a miracle to be solved.

Ket tatta adda problema, (At this time we have a problem), a global problem, prices of oil products and rice are now very high and so therefore food become more expensive. We need the help of Our Lady of Namacpacan,” Arroyo said, referring to the Blessed Virgin Marys shrine here known as the miracle lady feeding hungry people.

The governments rice program director, Frisco Malabanan, says Filipinos should be ready to eat white corn, cassava (kamote), root crops and yam as their staple food in case of a severe shortage of rice. Malabanan added that in parts of the Visayas, the staple food is no longer rice but white corn.
Malabanang said cassava and kamote (sweet potato) are included in the Department of Agricultures list of high-value commercial crops, which are being pushed for propagation by farmers nationwide.
This is a wake-up call, Robert Zeigler, director general of the Philippines-based International Rice Research Institute (IRRI), told Reuters. We have a crisis brewing in terms of rice supply. Because of the expected shortfall, the IRRI has pushed for a repeat of the Green Revolution - a 13-year Philippine government program which introduced high yield varieties of rice to increase yearly output by 42 percent.
The President has earmarked more than P1 billion to import more rice to avert a crisis.

While Philippine officials discount any threat of a food shortage this year, the United Nations World Food Program sees it in a different light. More Filipinos could go hungry this year as the market price of rice soars out of reach of ordinary households, a country director of the United Nations World Food Program revealed recently. Valerie Guarnieri, WFP Country Director for the Philippines, said the Philippine government could end up spending more to subsidize prices of rice as world food prices go up.
Rice sales in the Philippines are traditionally subsidized. The question will be whether the government will be able to maintain the current levels the lowest grade rice is sold at and/or increase it only marginally and at what cost because that would mean incurring further debt in order to maintain those low prices, she told ABS-CBN News Channel.

I think its a very difficult situation but one which the government is looking at and has the means, if it can control the prices, of addressing at least in the short to medium term. If the prices continue to rise then all bets are off, she added.

The National Foods Authority (NFA) is eyeing the importation of rice from the United States under the Export Credit Guarantee Program (GSM-102) of that country.
GSM-102 provides credit terms for the purchase of US agriculture products by foreign buyers, in this case, the Philippines.

NFA Administrator Jessup Navarro said about $65 million worth of grains is being eyed by his agency from the US under GSM 102, of which the tenders will be done in American soil.

Guarnieri said food prices globally have risen by at least 40 percent, which translates to a $500 million increase in WFP costs to support an average of 90 million people around the world per year. The UN agency now provides food aid to about 1.1 million of the Philippines 90 million people.

Guarnieri warned that the increase in food prices could lead to more hunger incidence in the country, particularly in Mindanao island where some of the countrys poorest provinces are located.

She said that according to WFP research, 70 percent of total expenditures of a poor household in Mindanao goes to food. When you think of being poor and spending 70 percent of your money on food, youre really not in the position to accommodate any price increase and that is something that has to be watched very carefully,” she added.

Guarnieri said the UN was unlikely to ramp up its food aid to the Philippines immediately since it is considered a middle-income country with lower priority.

She said rising oil prices and climate change are contributing to food scarcity and a rise in prices of basic commodities globally. Other factors that affect food prices are increased food demand from nations such as China and India and a trend towards biofuel production, which affects crops normally used for food.
Earlier this year, President Arroyo went outside normal commercial channels to ask Vietnamese Prime Minister Nguyen Tan Dung about securing rice, an exceptional move that highlighted growing global anxiety over how nations will feed their people as commodity prices climb.

The Vietnamese government, however, said it will ship only one million tons of rice to the Philippines this year, which is more than a quarter less than last year.

IRRIs Ziegler said that because of the expected shortfall, the IRRI has pushed for a repeat of the Green Revolution - a 13-year Philippine government program which introduced high yield varieties of rice to increase yearly output by 42 percent.

Nearly half the planets 6.6 billion people depend on rice to survive but rising populations and economic growth mean that the world is already eating more of the grain than is harvested.

World stocks of the grain are currently around 72 million tons, their lowest levels since the early- to mid-1970s when food shortages triggered a devastating famine in Bangladesh.

Zeigler said other importing nations in sub-Saharan Africa and Asia could also be at risk and as soon as this year.

When you have a president calling a prime minister asking them to guarantee rice supplies its a possibility, thats for sure,” said Zeigler.

The government has assured that prices of basic commodities would remain at their current levels as costs of rice, cooking oil and pork increased over the past weeks.

What consumers can expect within the coming weeks is to see the prices at its levels today. After what Ive heard from the very sector, for instance supply-wise, there should be no problem. Sa rice, the harvest will start next month. Between now and April, we dont see any reason why the prices will further move up. We will watch it very, very closely with the Department of Agriculture,” said Trade and Industry Secretary Peter Favila.

NFA Administrator Jessup Navarro said about $65 million worth of grains is being eyed by his agency from the US under GSM 102, of which the tenders will be done in American soil.

Based on the projections of the Department of Agriculture, the country can attain a 95-percent self-sufficiency in rice by 2009 or 2010, which will make necessary the importation of the grains. But this is based on zero population growth in the next 2 years.

We have a growing population and I think we already have 90 million [people] now. So it would be hard to achieve a 100 percent self sufficiency in [domestic] rice production,” said Malabanan, Director of the Agriculture Department?s GMA (Ginintuang Masaganang Ani) Rice Program.

The country is not among the nine countries in Asia that will be hit by rising food prices and shortages,” Yap said. But he added the government is still concerned over the situation where international food prices are rising.

It is for this reason that the government will be holding a National Food Security summit in the early part of April this year.

The summit will gather stakeholders of the countrys agriculture sector, like businessmen, farmers and various government agencies supporting food production.

Im asking fast-food restaurants to give their customers an option to order half a cup of rice because right now, if you do a survey of all the fast-food joints, you will notice a fraction of them always have excess rice. People dont really finish their rice,” Yap added.

The Philippines, one of the worlds biggest importers of rice, is struggling to source supplies of up to 1.8 million tons this year as prices sky rocket due to rising demand and tight inventories around the globe.
Yap repeated that the Philippines, where rising harvests cannot keep pace with population growth, was not facing a rice shortage but people should be prepared. The DA said if Filipinos could be more prudent in rice consumption, imports could go down by 37 percent to 1.17 million tons compared to last years import requirement of 1.87 million tons.

Manila has failed in three consecutive auctions to secure the full volume of rice it needs and is hoping to tap an emergency regional rice fund to help with a potential shortfall.

Thailand has committed to set aside 15,000 tons of rice for the Philippines under the East Asia Emergency Rice Reserve and officials have also contacted Indonesia, Malaysia, Japan and South Korea.

Results for last weeks auction for 550,000 tons of rice, which only attracted 355,500 tons of bids, are expected this week.

Manila is also looking to re-tender to buy up to 100,000 tons of rice from the United States after receiving only one bid last week. It is buying the US rice using $65 million in credit guarantees from the US Agriculture Department.

Last month, President Arroyo went outside normal commercial channels to ask Vietnamese Prime Minister Nguyen Tan Dung to guarantee a supply of up to 1.5 million tons of rice, signalling rising nervousness about tight supply.

Hanoi, however, said it could only guarantee 1 million tons of rice, which already includes a volume of around 700,000 tons, which Vietnamese traders had already agreed to supply in auctions in December and January.

Vietnam sold nearly 1.4 million tons of rice to the Philippines last year.
A non-government organization said Yap should focus his attention more on the price spikes of the staple instead of turning to imports.

Jessica Reyes Cantos, lead convenor of Rice Watch and Action Network (R1), said Yap should instead investigate the abnormal increase in the local rice prices when the harvest season started last January although the lean months are usually in July to September.

Yap should really start to learn the ropes of running an agriculture portfolio with a coherent food policy based on food self-sufficiency. We challenge him to sit down for an honest-to-goodness discussion on the rice master plan instead of resorting to knee-jerk reactions,” Cantos said.

Sen. Manuel Roxas II raised the alarm on a looming rice crisis as global supply tightens.

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