High food prices to stay but RP has enough rice supply to feed 90M

By Amy R. Remo
Philippine Daily Inquirer, April 7, 2008


MANILA, Philippines--The days of cheap food are gone.


While the country has enough rice to feed 90 million Filipinos this year, “we just have to start paying for higher prices” of goods and basic commodities, said Rolando T. Dy, who heads the agribusiness unit at the University of Asia and the Pacific.


The higher prices are due partly to increases in the cost of oil, fertilizer, transport, as well as the high demand for biofuel feedstock, Dy said.

“Prices also have a speculative component with the current reports on constriction in the global rice supply pushing the panic button among some countries,” he said.


Globally, the skyrocketing prices have been blamed on a worldwide crunch in rice stocks, rapid population growth, increasing fuel and transport costs, the emerging biofuels market and climate change.


The United Nations Food and Agriculture Organization (FAO) said in a recent report that commodity prices rose sharply in 2006 and continued to rise last year, partly due to a gradual reduction in global stocks of about 3.4 percent on the average annually.


In the medium term, food prices are likely to remain high, it added.


Dairy leads surge


The surge in prices, the FAO said, was led by the dairy sector, which increased by nearly 80 percent, while grains rose by 42 percent, last year.


Global cost of imported foodstuffs in 2007 was estimated at $745 billion, 21 percent more than the previous year’s $615 billion, a record high.


The FAO added that developing countries were most vulnerable and could face a year of increase of about 25 percent in aggregate food import bills, including cereals, vegetable oils, dairy, meat and sugar.


Rice still RP staple


Locally, what is deemed as a “looming” rice crisis may be rooted in something more than just the global phenomenon.


Dy explained that normally, when the income of a population increases, the consumer shifts from rice to other carbohydrates such as noodles and bread. This has not happened in the Philippines.


Rice remains the country’s basic staple. National daily consumption is 33,000 metric tons, up from 29,000 MT recorded two years ago.


More than the increasing population, Dy pointed out that Philippine per capita consumption had been growing at unprecedented levels.


In 1990, per capita consumption of rice was at 92.53 kilos a year; in 2000, 103.16 kilos; in 2007, 118.70 kilos. A 15-kilo increase in per capita consumption meant an additional 1.275 million MT in consumption.


More imports


Dy said per capita consumption of rice could reach 134 kilos this year, partly because the anticipated diet shift did not materialize, forcing the government to import more.


This year, the National Food Authority (NFA) is importing 2.1 million MT of rice, of which 1.2 million MT had been procured.


But with rice hitting as much as $747 per MT as of March and the global stockpile at its lowest in 32 years, the Philippines, one of the world’s biggest importer, is concerned.


The Philippines accounts for about 7 percent of total world rice imports, estimated at 35 million MT.


According to Jessica Reyes-Cantos, lead convenor of Rice Watch and Action Network (R1), as a country progresses and the growth is distributed equitably, its people’s reliance on its staple, such as rice, diminishes as it shifts to bread and pasta.


Poverty rate


“But a strong demand for the staple still reflects a population that is still mired in poverty,” Cantos said. “Poverty rate in the country has risen to 33 percent.”


She said the Philippines’ population growth, one of the highest in Asia, was also a factor. In 1990, the Philippines’ population was 60.7 million; 76.3 million in 2000; 82.6 million in 2004; 86.2 million in 2006; 88.7 million in 2007; and 90.4 million in 2008.


“In fairness to the Department of Agriculture, rice production has consistently been growing in the past few years. In fact, supply-wise, rough rice production has started to grow faster than the country’s population growth,” Dy said.


In 1990, local rice production reached 9.32 million MT, 12.39 million MT in 2000, 14.5 million MT in 2004, 15.3 million MT in 2006, 16.2 million in 2007, and 17.3 million MT in 2008.


Several farm organizations and nongovernment groups have pointed out that “bankrupt laws” and defective policies are partly responsible for the rice situation.


Liberalization hurts


Independent think tank Ibon Foundation said liberalization policies, such as the Agriculture and Fisheries Modernization Act (AFMA), only promoted the entry of foreign investments instead of supporting and subsidizing Filipino farmers.


Rice imports have consistently increased since the AFMA was signed into law in 1997. From 722,000 MT in 1997, rice imports in 2006 hit 1.7 million MT and 1.8 million in 2007. This year, the country is estimated to import 2.1 million MT.


“The country can never achieve food security and self-sufficiency under liberalization policies. What is needed is for the government to address age-old problems through government support for agriculture and a genuine land reform program,” it said.


Crazy policy


Jaime Tadeo, president of the National Rice Farmers Council, described President Gloria Macapagal-Arroyo’s rice policy as “crazy.”


“What good would it do even if we have enough money for rice imports if there is nothing left to buy? May we remind the President that government’s reliance on rice imports instead of self-sufficiency is one of the reasons we are facing an impending rice shortage,” he said.


Tadeo stressed that rice traded on the global market was only 6 percent of total production and was likely to go down to 4 percent with Vietnam, India, Egypt and Cambodia imposing limits on their exports.


Centro Saka’s executive director Romeo Royandoyan said the government “should prioritize self-sufficiency in rice production.”


During the national food summit on Friday, the President pledged that P43.7 billion would be allocated to ensure an “abundant, affordable and accessible” food supply.


Cantos, however, said the government’s agriculture development program had a strong bias for big commercial farms and agribusinesses, which profit from the inputs peddled to small farmers.

Anchor on small farmers.


Anchor on small farmers


“[The government] has failed to come up with a coherent food security policy that is anchored on improving the livelihood of small rice farmers and encourage them to continuously plant rice, go into value adding activities and rely on their own farms to feed the people,” she noted.


Cantos slammed trade liberalization. “We are strongly pushing for self-sufficiency in the rice sector and its continuous protection until we have a coherent rice master plan designed to make small rice farmers viable and agriculture farms ecologically sustainable,” she said.


In the global arena, Cantos said R1 was pushing that the rice sector, among other critical commodities produced by small farmers, be subjected to less pressures to liberalize under international rules. Rice, for one, should be categorized as a special product safeguarded during price surges of imports.


Cantos also lamented that “rice farming alone is not really a viable venture for our farmers.”


Many rice farmers, she said, had given up rice farming for “high-value crops with the promise of more cash in return or sold their land to developers of recreation facilities, such as golf courses, tourist destinations, residential and subdivision areas.”


“There is limited access to credit; irrigation is hard to come by, and like any traditional agricultural crop, rice production is subject to the vagaries of the weather. And, let’s face it, our crop insurance system is very limited in scope,” Cantos said.


Lack of support


Some farmers have been forced to give up their land to pay off debts. Traders, meanwhile, used the rice lands to build their rice warehouses and rice milling facilities.


“The government failed to provide farmers ample support, based on their real needs for capital, technological know-how to liberate them from the cycle of dependence on chemical fertilizers and pesticides that also bound them on loans to purchase these farm inputs,” Cantos said.


Last week, the NFA increased palay price to P17 from P12 a kilo. “For the first time in a long time, Filipino farmers are starting to make a profit. They deserve these higher prices for their palay, and we just have to pay for it,” Dy said.


What RP needs to do


Various groups, decrying “band aid solutions,” are clamoring for the government to provide more and better incentives for farmers and impose a moratorium on land conversion.


Ibon Foundation wants the NFA to fight rice cartels. The agency “should intensify its procurement of local palay rather than importing more rice from abroad in order to address the rice crisis,” it said.


Ibon disclosed that in 2006 when rough rice production reached 15.3 million MT, NFA procured only 73,078 MT from local farmers, while contracting 1.6 million MT of imported rice from Thailand, Vietnam and Pakistan.


Increase NFA procurement


“Increased NFA procurement would prevent rice traders and cartels from taking advantage of local farmers. It would also increase farmers’ incomes,” it said.


Alyansa Agrikultura, a coalition of agricultural stakeholders, called for a moratorium on land conversions for the next five years. Real estate developers often target prime agricultural lands due to their flat terrain and ready access to roads.


Further, the group said funding for irrigation expansion should be increased through the repair of non-operational irrigation facilities since it would be more cost-efficient than building new, large-scale facilities.


Unless urgent measures are implemented, Filipinos will have to pay more for what they eat.




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