There is an Actual Rice Crisis Aggravated by an Artificial One

There is an Actual Rice Crisis Aggravated by an Artificial One
Rice importation fosters crisis

By KMP

The militant Kilusang Magbubukid ng Pilipinas (KMP) reacted to the statement of Senator Edgardo Angara saying that the rice crisis today is artificial. The group clarified that there is an actual rice crisis in the country and the world and it is aggravated by an artificial one made by the rice cartel.

According to Rafael "Ka Paeng" Mariano, chairman of KMP and concurrent president of ANAKPAWIS party list, "the National Food Authority (NFA) and the Department of Agriculture (DA) themselves know that we are facing a rice crisis. The main cause of this crisis is the backward and feudal state of agriculture in the country and is worsened by neo-liberal policies of the Macapagal-Arroyo regime and trade liberalization that has drastically cut rice lands through land-use conversions and crop conversions. Now this was further aggravated by the rice cartel by their control of the rice industry and their hoarding practices today,"

"Malacanang may not admit it but a February 11, 2008 memo from the NFA shows their analysis of the causes of the rice crisis and they are as follows:

1.) PAGASA forecast, that the country will still experience abnormal weather conditions until the end of the 1st quarter this year. Above normal rainfall will prevail over most of Luzon and the Visayas with near normal to above normal in Mindanao areas;

2.) Neutral conditions will most likely occur during the second half of the year. Around two (2) - five (5) tropical cyclones are expected to enter Philippine Area of Responsibility (PAR) until June this year. The abnormal weather condition will more likely result to stress the standing palay crop, more especially during its booting
stage which would result to low yields;

3.) Total palay production for Calendar Year 2007 is recorded at 16.237 TMT, almost 6 percent above the output attained in 2006 at 15.327 TMT, due mainly to area expansion by 2.70 percent and the improvement in yield by 3.16 percent. for the 1st semester of 2008,the January 1, 2008 production forecast of Bureau of Agriculture Statistics (BAS) for the 1st semester of this year (January to June) would reach 7,154 TMT, 6.33 percent higher than the 2007 level because of the foreseen increase in area planted and yield;

4.) the registered growth in palay production is not enough to meet the combined effect of an increase in demand and the need to maintain the required buffer stock by July 1, the start of the traditional lean supply months of July to September of each
year. For 2008 per capita consumption of rice is estimated to increase by 2 kilos from 118-120 kilos per capita per year. Rice supply-use estimates for crop year 2007-08 considering three (3) scenario (high, medium, low) showed that despite projected gains in productivity, the country will still require an import level of 1.6 to 2.2 MMT, to fully meet demand and buffer stock requirement good for 90-day by end of June 30, this year;

5.) The reported tight global rice situation has been lately reported to worsen with the reported purchase of 1.0 MMT milled rice by China from Vietnam. Further, Vietnam was reported to have already suspended its rice export activities for 2008 due to limited supply. Also Vietnam wrote DA they will only assure 1 MMT rice exports to the Philippines;

6.) World market price of rice remains volatile, increasing at significant levels. The latest report from the International Surveillance & Consultancy Co. Ltd (ISC) at US$ 440/MT, FOB showed that as of February this year, FOB prices of 25 percent BKN rice is 52 percent higher than their levels the same period last year of US$ 289/MT, FOB.

Further, the report from ISC indicated that to comply with NFA's specs, the ISC quoted price will have to be adjusted upward by US$ 6.7/MT. The NFA last December 21, 2007 purchased 422, 702 MT of 25 percent BKN rice at an average price of US$ 409.52/MT, CFR. The following month, January 29, 2008, the NFA again purchased 454,000 MT of the same quality rice at an average price of US$ 474.41/MT, CFR, significantly higher by 16 percent from the December purchases;

7.) To date NFA has procured a total of only 1,658 MT palay (1,077 MT in rice equivalent) or 88 percent less than the volume procured same month last year. Prevailing farm price of palay in major palay producing areas in Luzon (region 2, 3, 4 & 5) ranged from a low of P11.00/kg (Isabela & Quirino) to a high of P14.50 in Nueva Ecija. In the Visayas, prices averaged at P11.50-P12.00/ kg while in Mindanao , prices were higher at P11.00-P14.00/ kg," read Mariano.

"There is also a DA memo dated February 27, 2008 that highlighted the world rice crisis and its price. It is as follows:

1.) In Thailand, palay harvest will be on March –April but the volume is only very limited estimated at 6MMT (roughly 30 percent of their annual production) since their main harvest will still be on November where harvest is estimated at 20 MMT. Ex-farm price of paddy is 9,500 bath/MT or P12.25/kg. Bulk of their palay inventory is still in the hands of the farmers as they are waiting for higher prices. Around 1.6 MMT parboiled rice is exported yearly to Europe and Africa but this year they are expecting this to significantly increase. Price of rice brokens shipped by Thailand to Africa is $430/ MT FOB. Also, Thailand has initially sold 60,000 MT to Iraq and may sell more rice to Iraq. The Thai government is still holding around 1.5 MMT two-year old rice but the new government is still adamant to touch the volume;

2.) Vietnam will still assess their targeted 4.5 MMT palay harvest. Part of Vietnam and China were hit by snow affecting their projected palay harvest. They now imposed
volume limitations on their rice exports.

3.) In Indonesia, palay harvest will still be on April-June and price of rice is at 4,000 Rupiah per kilogram or US$0.45. Estimated annual production of Indonesia is 50 MMT and import volume will still be determined by July – August.

4.) World rice prices are expected to continue its upward trend despite the palay harvest starting next month. This is due to the aggressive stance of some governments rushing to build up their inventories and pests damaging rice crops in the Delta Province in Vietnam. The steady population growth in the Middle East and Africa is also boosting demand for rice. In sum, rice is now a sellers market," added the peasant leader.

"It is crystal clear that there is an actual crisis that is why Malacanang is trying to increase our rice stock through importation. The rice cartel or the Binondo 7 knows this and that is the reason why they are hoarding and increasing their prices. Now, importing more rice from other countries will only make matters worse because there is no more rice supply in the world market available for export and second a food security program based on imports is not food security at all. It will only make us more dependent on other countries and hold our food security hostage to other interests. What we need now are immediate rice price controls and at least a 25 percent increase in the local procurement of rice of the NFA, so that the cartel cannot get their hands on the April-June harvest. These are our only chance to stave off the rice crisis until we implement genuine agrarian reform, so that this will not happen again," ended Mariano.###