Wednesday, April 09, 2008

PhilRice: No Rice Shortage

PhilRice: There is no Rice Shortage

Doomsday isn’t coming and will never come for the Philippine’s rice supply with proper technologies, cooperation, and bureaucratic support. There’s been a fuss these past few days on rice supply. Is there rice shortage? Are we going to be a nation with close to 90 million starving people soon? Should the people start practicing eating bread instead of rice because rice price will be uncontrollable in the next days?

Global factors

There is no rice shortage, and the country’s rice supply is stable enough to last for 57 days, said Philippine Department of Agriculture Secretary Arthur Yap. If there’s no rice shortage, why is rice price abnormally high?

According to Dr. Arsenio Balisacan of the UP School of Economics and director of the Southeast Asian Regional Center for Graduate Studies and Research on Agriculture (SEARCA), the situation is not at all unique to the Philippines. It is global. Balisacan said there is a growing affluence in developing countries. This, as is being shown, has shifted the consumption pattern to meat, which eventually pulled up the prices of wheat, corn, and other feedstock for animals. Consequently, farmers find these crops more profitable resulting in crops shift. Hence, there is a decrease in areas planted to rice.

What’s more, only 7% or only 30 to 35 million metric tons of the world rice supply are traded in the market, said Dr. Leocadio Sebastian, executive director of PhilRice. This resulted in a tight supply in the world market which has an impact on the Philippines’ rice supply as it is a major rice importer. Logically, rice-exporting countries can hold selling rice up to the point where they can sell it at a higher price.

According to Dr. Sergio Francisco, leader of the Impact, Policy, and Research Program of PhilRice, the world’s rice exporting countries trade their rice in the world market. Considering that supply is tight and it is a sellers’ market, the country that can pay the higher price gets the rice supply. Result: Higher world rice price which is reflected in our retail market.

Likewise, growing demand for biofuels has resulted in crops shift. Farmers are getting more interested in planting crops for biofuel rather than for food explained IRRI director general Robert Zeigler.

Local factors

According to the book, Why does the Philippines import rice?, Filipino farmers spend twice the cost of Vietnam and Thailand farmers in producing rice. Roughly about 10% of the increase in rice production is due to high prices of inputs like fertilizers and fuel.

There have also been reports of hoarding imported rice by some traders creating a local supply shortage.

Moreover, Philippine traders face high interest rate of 15% in borrowing from banks compared with the low 5% in Vietnam and Thailand as stipulated in the same book.

Land conversion, overpopulation

According to a PhilRice study on the extent of land conversion from 2003-2007, 34,200 tons of rice are lost due to the 9,000 hectares land conversion annual average for the said period. Oftentimes the trend is from rice area or any other agricultural uses to uses with higher commercial values. These include factories, subdivisions, and malls mushrooming fast across the country.

The problem is exacerbated by the Philippines’ burgeoning population. By the end of this year, the projected population is 90.4 million.

Studies done by PhilRice show that rice production has been doing very well in recent years only that it cannot keep up with the speed of population growth. While there is no rice shortage, the Philippines should invest more on research on how to make rice farming more efficient and profitable for the Filipino farmers.

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