Analysis
Regime survival tops gov’t agenda
By Amando Doronila
Philippine Daily Inquirer
First Posted 01:19:00 04/16/2008
The country’s total rice stock inventory stood at 1.68 million metric tons as of March 1, down 8.5 percent from 1.82 million a month earlier, according to the Bureau of Agricultural Statistics. This inventory is expected to be sufficient to meet consumption needs for 52 days.
The bad news is the stock is shrinking, although the bureau gilds the lily by saying the March 1 inventory was 5.7 percent higher than the 1.5 million metric tons a year earlier. Fifty-nine percent of this stock is stored in households, 24 percent in commercial warehouses, and 17 percent in National Food Authority warehouses. By the time the inventory is depleted in May, the country will be running into the lean months of July-September before the main harvest arrives.
Do we have enough buffer stock to absorb the demands of the lean months? The shortfall is expected to be filled by the rice imports. The government has negotiated the emergency purchase of 2.7 million tons from Vietnam and Thailand to ensure sufficient rice supply for 2008. Vietnam has agreed to export 1.5 million metric tons, and Agriculture Secretary Arthur Yap expects half of the Vietnamese shipment to arrive by July. The government scrambled to seal the deal with Vietnam in a panic procurement spree to avert the nightmare scenario of rioting by hungry people protesting spiraling food prices fueled by supply shortages, like what happened in about a dozen countries around the globe over the past weeks.
The Philippines produces 16.2 million metric tons of “palay” [rice before milling] annually, which can be converted to 10.56 million metric tons of milled rice. Filipinos eat at least 11.9 million metric tons. The shortfall is covered by imports which comprise up to 10 percent of total consumption. Rice imports have more than doubled in the past decade, making the country the largest importer of rice in the world, reaching 1.7 million metric tons a year. The tightening rice supply from the main rice producers—Thailand, Vietnam and India—and the consequent skyrocketing of food prices have made the Philippine production shortfall more acute than in previous years.
The specter of rice shortages has morphed into a security threat that threatens political stability. Civil unrest in more than 37 countries has led to rioting by hungry people protesting against food prices which the poor cannot afford. The UN Food and Agriculture Organization (FAO) has warned that food riots in developing countries will spread unless world leaders take steps to reduce prices to the poor. Director General Jacques Diouf said that despite the forecast 2.6 percent rise in global cereal output this year, record prices were unlikely to fall, which would force poorer countries’ food bills to go up 56 percent. “The reality is that people are dying already in the riots,” he said. “They are dying because of their reaction to the situation.”
Food riots have broken out in several African countries as well as in Indonesia, the Philippines and Haiti, the FAO said. There is a risk that this unrest will spread in countries where 40 to 60 percent of income goes to food.
The price of rice has skyrocketed in the Philippines to more than double in less than three months after the rice supply shortfall appeared. Although the National Food Authority (NFA) still sells subsidized rice at P18.25 a kilo, the price of non-NFA rice has increased to P40 from P25 in two months. Longer queues have formed at NFA outlets as its stocks have become scarcer, partly because of hoarding, forcing the government to ration rice to one kilo per person.
Dominique Strauss-Kahn, managing director of the International Monetary Fund, has warned that if food prices remain high, there will be war and other consequences for people in many developing countries. With governments in Haiti, Egypt and Bangladesh facing social unrest because of rising food prices and shortages, “thousands and hundreds of thousands of people will be starving. Children will be suffering from malnutrition.”
The Philippines is not far removed from this scenario of civil unrest, a contingency that has rattled the government and has driven it to avert an outbreak of violence. President Gloria Macapagal-Arroyo has made highly publicized visits to NFA warehouses to show they are filled with rice. But it’s not the visible rice stockpile that reassures. As one FAO official has pointed out, the hungry and the poor see the food stocks on the shelves but it’s the high prices that’s driving them to the streets. It’s their rebellion against food prices.
Defense Secretary Gilbert Teodoro, in a display of incredible insensitivity, has dismissed the possibility of riots flaring up in Manila over the rice crisis, saying food riots have never happened in the country. It’s a smug assumption.
The impact of the rice price increases hits the poor hardest. The government response is to make NFA rice available to the “poorest of the poor.” But middle-class consumers have also been going to the NFA outlets for cheaper rice, resulting in longer queues and a reduction of supply for the poor.
Yap said, “We have to be sure that rice reaches the ones most affected by high prices. This is the bottom 80 percent of the population who spend 60 percent of their household budget on food, and of which 40 percent is spent on buying rice.”
Rice is traditionally a political issue in the Philippines, and adequate supply and low-priced rice have shifted the government’s priority to preventing civil unrest. Any response that calls for the comprehensive review of food policy, resulting in the recurrent rice crisis, takes a back seat to political stability. The immediate concern is regime survival.
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