Vietnam commits 1.5-M tons of rice


Thursday, March 27, 2008


http://www.philstar .com/index. php?Headlines&p=49&type=2&sec=24&aid=20080326119


CLARK FREEPORT, Pampanga – Vietnam officially committed yesterday to supply up to 1.5 million metric tons of rice to the Philippines.


The commitment is contained in a memorandum of agreement signed by Agriculture Secretary Arthur Yap and Vietnamese Trade Minister Yu Huy Hoang.


President Arroyo later witnessed the exchange of notes between Yap and Vietnamese Ambassador Xu Xuan Truong on the sidelines of the Philippine Development Forum at the Fontana Leisure Resort here.


But Ambassador Xu emphasized that his country's rice export to the Philippines would still be subject to bidding and that the agreement sets no timetable for the supply or volume of the deliveries.


Cambodia, meanwhile, announced its decision to halt rice exports to arrest the spiraling of prices. The announcement by Cambodia Prime Minister Hun Sen came on the heels of a Philippine government assurance of additional rice supply from Cambodia.


Yap said the Philippines hopes to bring in the additional rice by July in time for the lean season.


Vietnam's rice commitment, once delivered, Yap said, would increase the government's buffer stock to 30 days or even more including the 100,000 metric tons of rice from the US to be secured under a special procurement arrangement.


Moreover, Yap said rice production this year is projected to increase to 17 million metric tons (MMT) from only 16.3 MMT last year.


The agriculture department, he added, has already earmarked 2.54 million hectares for immediate planting during the wet season.


Yap said he is more worried about rice supply next year and is pushing for the frontloading of the agriculture budget. The DA, he said, is eyeing one million hectares for rice production for the dry season next year.


In a related development, the Philippine Atmospheric, Geophysical and Astronomical Services Administration or Pagasa said this year's climate would be favorable to the country's agriculture sector, belying an earlier claim by Yap that climate change is also to blame for the poor rice supply.


"In terms of rainfall, we're expecting normal amount of rain for 2008 that would be very beneficial to agriculture, " Pagasa director Prisco Nilo said at a press conference.


Flaviana Hilario, chief of Pagasa's Climatology and Agrometeorology branch, meanwhile downplayed the La Niña phenomenon's effect on rice production.


La Niña refers to abnormal cooling of sea surface temperatures in the equatorial Pacific and is characterized by excessive rainfall.


"The La Niña phenomenon has reached its peak based on global models," Hilario said. She said La Niña is expected to last until May.


Worse to come


In another development, farmers and civil society groups warned of a worse scenario in the coming months, with the price of rice likely to soar to P40 per kilo.


"Reports of tightening global supply of rice have pushed local prices abnormally high even as the harvest season is still headed for its peak this coming April," said Jessica Reyes-Cantos, Rice Watch and Action Network lead convenor.


"Let this be a wake-up call for the government to take seriously a very basic commodity that is rice," she said.


Farmers predict that based on their estimates, rice output this harvest season will not exceed 1.9 MMT, and will only be good for two months.


"The price of rice is expected to go up to as high as P40 by July as the traders will definitely take advantage of the limited supply, while the government will be dependent on the imported rice for its buffer stock," Jaime Tadeo, chairman of the National Rice Farmers Council, said.


The farmers reported that the traders' buying price for palay ranges from P12 to 16 per kilo while NFA's is still pegged at P10 per kilo.


"The looming rice crisis is due to long years of government neglect of the agriculture sector," Tadeo said. "Where can anyone see a country's food security based on the importation of rice? It's only in the Philippines.


"The government is merely turning a blind eye on the situation. The government only does not want to admit that there is a rice crisis," he said.


Trinidad Domingo, chairperson of the Pambansang Koalisyon ng Kababaihan sa Kanayunan, said, "With this lopsided participation of NFA, we will not be surprised if the traders who bring the rice to the market are able to command the price of this basic commodity and will be able to set the prices when the supply further tightens in July to September."


Tadeo said the national average yield is only 3.5 tons per hectare or a total output of 3 MMT. But since only about 65 percent of output is recovered after milling, actual yield is expected at 1.9 MMT in the coming harvest season. Filipinos consume 33,000 tons of rice daily, based on government figures.


"Higher buying price of palay will give temporary relief to farmers as they will be able to bring home bigger income. However, they will be forced to buy rice during the lean months of July to September and may not be able to contend with the very high prices of rice," Domingo said.


"The government is banking on rice import from Vietnam, which only committed 1 million metric tons, and Thailand, which has not committed any rice supply for the country, to fulfill the rice production shortage. But it is going to be difficult for the government to get rice from abroad for its buffer stock because China is set to get all of the available rice in the world market amidst China's growing population and land shortage," he stressed.


"It would seem that rice traders would instead be able to have the stock during the lean months since aggressive buying of palay in the countryside is already happening right now; and therefore, rice traders would be the ones to have the control...  It is not impossible that they (traders) would be the ones to dictate the price of rice by July."


Tadeo said the government was not even able to help the farmers cope with the rising cost of petroleum-based farm inputs and even promoted chemical farming instead of training the farmers to be more self-reliant and go organic to reduce their production costs.


"We are calling on the farmers to hold on to their palay and leave some for their household consumption so they will not have to buy rice for their own needs, especially in the coming months when the prices will be more unbearable for them," Tadeo said.


Cantos criticized the government for relying on imports to satisfy the country's rice requirements.


"If the government is really sincere in ensuring that affordable rice is available to the poor through the rice coupons, it should buy rice directly from the farmers at prices higher than the traders' offer to ensure that this program will benefit the poor farmers as well," Cantos said.


High cost of subsidy


The government may have to part with P21.7 billion this year to subsidize the cost of cheap NFA rice and possibly stave off a worse social unrest, according to Sen. Francis Escudero.


Escudero said the scenario is possible if NFA continues to sell rice at P18.50 per kilo vis-à-vis the import cost of P29.40 per kilo.


He said the Arroyo administration may have to shoulder the P10.90 per kilo difference as its "political premium."


Senate President Manuel Villar Jr. said the looming rice crisis underpins the importance of reforms in the agriculture sector as well as the need to reexamine the function and powers of the NFA.


"This exclusivity clause that authorizes only the NFA to import rice has to be repealed. Attended by allegations of corruption, the system no longer works and has to be reformed to include other sectors of society," Villar said.


Escudero said the two million metric tons the government plans to bring in this year will cost P58.7 billion, based on a P41.50 to $1 exchange rate. The figure is also based on the $707 per metric ton the government paid for the 335,000 metric tons it bought this month.


He said only P37 billion of the amount can be recouped, "assuming completely zero trading, storage and transport losses."


The estimated import price tag, Escudero said, assumes no tax or duty paid. The rate is 40 percent under the country's commitment with the World Trade Organization, but it can be waived if there is food shortage.


"Taxes collected on the gas pump will just be swapped for rice. The rise in the world prices of rice, which translates into bigger corporate subsidy for NFA, was never factored in this year's expenditures, " he said.


"It's either a balanced budget or a balanced diet. In this clash of policies, I predict the 'politics of the stomach' to win hands down," he said.


Villar, meanwhile, filed Senate Bill 1897, which seeks to give farmer cooperatives and organizations the authority to import rice.


"The farming sector has always been at the receiving end of any importation as this tends to dampen or lower the price of palay resulting in no or low income for our farmers," he said.


"If their collective organization is given the privilege of doing rice importation, they are given an opportunity to earn additional income," Villar said.


The measure also proposes that NFA funds be used only to purchase locally produced palay or farmer imports for the food security requirements of the country.


– Marianne Go, Christina Mendez, Katherine Adraneda, Helen Flores






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