RP seeks cheap US rice

WASHINGTON – Officials of the Philippine government’s National Food Authority (NFA) and suppliers are here haggling over the importation of 100,000 metric tons of rice to Manila.

The NFA is using $75 million in credit guarantees from a US Department of Agriculture program, which promotes sales of US farm goods to developing countries by assuring lenders they will get paid even if a borrower defaults. 

NFA officials are in discussion with several US rice traders, hoping to secure the best rates.

The negotiations between Philippine food officials and major American rice suppliers are being made amid worldwide concerns over food security issues which continue to drive up prices of the staple, the USDA said. 

In its April circular on “Grain: World Markets and Trade,” the USDA said some major suppliers have banned or restricted exports in order to protect domestic supplies, placing additional upward pressure on prices. 

The cutback in exportable supplies resulted in record rice prices, as indicated by Thailand and the US, the report said. 

The USDA has increased the credit guarantee to the Philippines by $10 million in March to help it stave off a looming rice shortage. 

In a broad review of the international rice situation, the USDA said Vietnam, the world’s second-largest supplier, has re-imposed a ban on exports that could cut shipments by at least 20 percent.

This would result in a million tons less than the previous year at 4.5 million metric tons. 

China, on the other hand, placed a tax and quota system on exports while Egypt banned exports from April 1 to October this year to help stabilize high domestic prices, which have nearly doubled in recent months, it said. 

India recently imposed an export ban on non-basmati rice to replace its minimum export price, which has more than doubled to $1,000 per metric ton since October 2007.

Although Thailand is not presently limiting or restricting exports, it is faced with tightening domestic supplies and record prices.

Thailand is reportedly planning to release its own stocks into the domestic market to help lower prices caused by the threat of falling domestic supply which has been fueled by strong export sales, the report said. 

As for the US, its ending stocks are forecast at a 27-year low, but there could be additional foreign demand for US rice. 

The weakening dollar makes US commodities more competitive in the world market and constrained shipments from traditional suppliers could cause importers to increase purchases from the United States.

In Manila, Agriculture Secretary Arthur Yap urged Asian governments to hold talks on the sharply escalating cost of food.

Yap proposed a ministerial-level meeting of Asian governments to discuss means to raise food production and provide interim food aid.

“We must address the plight of food-poor families in the countries most affected by the rice price crisis,” Yap told the International Rice Research Institute (IRRI) during a recent meeting.

Sen. Manuel Roxas II also called on the government to take the initiative in calling for a food summit among member nations of the Association of Southeast Asian Nations (ASEAN), along with China, Japan and South Korea.

Roxas, chairman of the Senate trade and commerce committee, made the call as he noted the statement of the IRRI warning that the global rice crisis is not expected to diminish until 2010 and may take from five to 10 years to finally settle down.

Roxas said he would file a resolution tomorrow expressing the sense of the Senate that the Philippines should take the lead in calling for such a special leaders’ summit to ensure food and rice security in the coming months.

Roxas said the Philippines could invoke a provision in the ASEAN Charter on summits that allows its leaders to hold a meeting to “address emergency situations affecting ASEAN by taking appropriate actions.”

IRRI, the world’s premier rice research institute, held an emergency meeting at its headquarters in Laguna to discuss ways of easing rising rice prices that have swept the region and caused unrest in some countries.

IRRI had warned that rice prices were likely to keep rising for some time as production fails to keep up with soaring demand.

Turned down

The Philippines, one of the world’s biggest rice importers, has been struggling to procure enough rice for its 90 million people.

The country’s rice farms are mainly small plots and cannot meet domestic food needs.

Producers warned Friday that bread, noodles and processed meat prices are likely to follow rice prices in coming weeks as Trade and Industry Secretary Peter Favila said China had turned down Manila’s request to buy wheat.

“This would force the Philippine government to buy more expensive wheat from the United States,” Favila said.

“I am saddened that China did not grant our request and I have already received official communication to that effect. They did not give any reason. They just said the demand in China is also large,” he said.

Kevin Cleaver from the UN International Fund for Agricultural Development met with President Arroyo earlier Friday to discuss the implications of the food crisis on the Philippines.

Cleaver said, “In some 33 countries there is now civil disturbance, food riots caused by food shortages and higher prices. This is one of the subjects we discussed.”

He said people were suffering because the “price of rice and food has increased and we discussed a little bit what to do about that,” adding he and Mrs. Arroyo agreed that a solution was to ramp up production.

The President has pledged to make rice supplies available to every Filipino, drafting the military to distribute supplies and crack down on hoarders.

The President said the government had a plan for better irrigation facilities, according to Cleaver. That would help in the coming year but the shorter-term problem was more difficult to cure, he said.

Cleaver added that the world was taken by surprise because “most people have been complacent,” but governments could take steps to deal with the crisis.

Political issue

Malacañang admitted that the problems faced over the price and supply of rice are real amid claims by the political opposition that the situation is artificial and meant to divert attention from controversies hounding the administration.

While the government is faced with the challenge of maintaining the supply of subsidized rice from the NFA, deputy presidential spokesman Anthony Golez said all efforts are being exerted to keep the prices of rice and other basic commodities stable.

Golez did admit that an artificial crisis could take place if the traders engage in hoarding and other illegal activities aimed at taking advantage of the current delicate situation on rice.

He said the supply of NFA rice has been affected by an unusual increase in demand.

Because of the increase in the prices of commercial rice in the market, Golez said the middle class has also shifted to cheaper NFA rice.

With the quality of some varieties of NFA rice now at par with the commercial rice varieties, Golez said the shift was a natural move on the part of some consumers.

The entry of middle class consumers into the NFA rice market has resulted in a decline in supply for the low-income and poor sector that is the intended market of the subsidized rice, Golez said.

“So the supply that is for the poor is also going to other people who want to save money,” he said.

Presidential Management Staff chief Cerge Remonde, for his part, called for a “ceasefire” with the political opposition amid the problem of food price increases.

Remonde urged the opposition to work in finding solutions to the rice problem.

Opposition Sen. Panfilo Lacson, however, said Malacañang’s appeal for a political ceasefire amid the rice problem should not be allowed.

Lacson said any political ceasefire would allow the administration to get away with corruption.

Lacson said he is willing to work hand in hand with Malacañang, provided that it would stop its “shameless lying, stealing and cheating.”

Justice Secretary Raul Gonzalez, on the other hand, said the current situation cannot be denied by any sector, including the opposition.

Just like every issue raised by the opposition against the administration, Gonzalez said the claim of an artificial rice crisis is to be expected.

“But what is important is the basic truth which is facing the country today. I don’t think anybody can deny the fact that this is a worldwide crisis,” he said.

Gonzalez said the food crisis can always be caused by unscrupulous traders which the government is trying to prevent. - With Marvin Sy, Aurea Calica