Date: Tue, 19 Sep 1995 09:06:46 -0500 (EST)
From: nick cullather <>
Subject: Re: recent rice price hike, foot and mouth, locusts
In-Reply-To: <>
Message-Id: <>

In reply to Brian Fegan, here is an article from Asiaweek:

Broken Rice Bowl: A food shortage eases, but Manila is still worried

AsiaWeek, 1 September 1995

AS IT ONLY THREE years ago that the Philippines actually exported 35,000 tons of rice? Last week in Manila, Filipinos were treated to a sight not seen in 30 years: people queuing to buy imported rice at government-controlled prices. "It's worth the wait," says factory worker Cecille, a mother of two. She lined up for an hour at the Alabang wet market south of the capital to buy 3 kg of the staple, the maximum allowed each buyer. At 40 cents a kilo, the price was almost half what private sellers were charging. Cecille was lucky. In the central Philippine city of Bacolod, some people lined up for two days to buy cheap rice. One woman suffered a miscarriage because of the long wait.

Sugar is getting scarce too. Supermarket shelves were emptied of the commodity last week. Before that, chicken had disappeared from markets and groceries. Filipinos are turning to white meat because of reports that foot-and-mouth disease has hit up to 100,000 pigs in the past eight months. Between July and August, rice prices increased by 64% while the price of refined sugar and dressed chicken rose by nearly half. Only pork prices retreated. No wonder a huge rally of angry consumers met President Fidel Ramos when he returned Aug. 23 from an eight-day visit to Australia and New Zealand.

Where has all the rice gone? Agriculture Secretary Roberto Sebastian says drought and bad weather have affected production, though he maintains that the country will end the year with a surplus. Because rice production is lowest from July to September, the government draws from its stocks during the period. This year its granaries were less than full because many farmers sold their rice to private traders, who offered higher prices than the state-owned National Food Authority. The NFA also failed to import rice early enough. Demand for the cereal is higher than usual. There are shortages as well in China, Indonesia, Bangladesh, North Korea and Africa.

Sebastian also blames the price ceilings slapped on cheap varieties of rice in July, in anticipation of oil- price increases that have yet to be imposed until now. "When traders saw that, they stopped milling ordinary rice and injected fancy rice into the market, because it's more profitable," he says. Hoarding worsened the problem. Consumers stocked up not only on rice but also other commodities. The government says unscrupulous traders held back their stocks as prices soared. Agents from the National Bureau of Investigation raided eight warehouses in Metro Manila Aug. 17. Only one was found to have suspect documents.

Critics say officials should have anticipated the problem and acted sooner. The NFA had bought only 20,000 tons of unmilled rice so far this year, down a third from the same period last year and just 5.7% of the total purchases in 1993. The government ordered 245,000 tons of the grain from Thailand and other exporters, enough to tide the Philippines over until more abundant harvests in October. Last week some 87,000 tons of rice finally arrived. As private traders started releasing the 125,000 tons they are said to be hoarding, Executive Secretary Ruben Torres said the temporary tightness should ease soon.

Perhaps so, but periodic shortages are not likely to go away. A key problem: rice fields in the Philippines yield only 2.8 tons per hectare, compared with 6 tons in China. "There's a shortage of irrigation everywhere," complains Gov. Roberto Pagdanganan of Bulacan province, a major rice grower. Less than a third of the total 2.3-million hectares planted to rice is irrigated. Sebastian says his department needs $390 million a year for irrigation. But Congress slashed the agency's proposed $822-million budget by 40% this year.

The problem of productivity is made more urgent by the country's real estate boom. Total hectarage is shrinking as farms near Manila and other urban areas are turned into housing and industrial estates. Other crop lands are being affected, including sugar plantations, one reason why sugar production dropped 35% in the current crop year. Also factors in that decline are drought and bad weather, which devastated the corn harvest too.

Pagdanganan has other complaints. The NFA "is supposed to influence the price of rice when there is drought," says the governor, "yet they don't have funds to buy." NFA administrator Romeo David says about 90% of NFA's 300 warehouses are empty. In 1993, recalls Sebastian, the Agriculture Department proposed building up a strategic buffer stock of 250,000 tons of rice. Congress found the $77-million price tag too high.

Legislators are hitting more visible targets. Sen. Gloria Macapagal Arroyo suspects that the rice imports "may be overpriced by about $100 a ton." Summoned to a Senate hearing, Herculano Co, president of the association of rice traders, denied members of his group acted in a cartel-like manner during the crisis. A bill has been filed penalizing hoarding and profiteering with life imprisonment. Those convicted are now fined just $40. Sen. Ernesto Maceda has more food for thought. "Everywhere in Asia, countries are expecting shortfalls in rice production," he warns. In the future, the Philippines may find that importing rice is no longer an option - even if it has the money to pay for it.