Philippines "rice crisis threat to national security": buying 200 metric tons rice from Vietnam

The report, prepared on Feb. 20 and a copy of which was furnished President Benigno Aquino III, said one of the possible flash points being watched by the local intelligence community was the supply and prices of rice worldwide.

Soaring prices of cereals due to production shortfalls led to food riots in several countries and toppled a government in 2008, while prompting the Philippines to buy huge volumes of rice, which it sold to the poor at a discount.

A top security analyst, who helped prepare the NICA report, said early signs of unrest as a result of the price increases this year were being watched closely.

Pockets of protesters have been holding rallies against price increases and a nationwide strike called by the transport sector is a cause for concern, said the security analyst, who asked not to be named because of the nature of his work.

“The sources of unrest are not just terrorist movements or political conflicts, but also issues of the stomach. The most vulnerable of people are the ones who are hungry,” he said.

In March, the average price of rice in the international market was a little over $500 a ton, according to United Nations’ Food and Agriculture Organization (FAO). The agency said recently that food prices worldwide this year were about 37 percent higher than last year’s.

In the country, the average retail price of rice ranged from P30 to P35 a kilogram, the Department of Agriculture’s Bureau of Agricultural Statistics (BAS) reported on April 9.

The NICA report came a few days before Social Weather Stations released the findings of its survey on poverty that said at least two out of every 10 Filipinos had experienced hunger this year and more than half of the country’s population rated themselves as poor.

Unusual weather

The NICA report, tagged as confidential, said unusual weather patterns brought by climate change and upheavals worldwide were exacting a heavy toll on food supply and costs in many parts of the world, including the Philippines.

Some of the writings on the wall that point to a potential crisis in rice supply, according to the report, are the following:

• Weather disturbances—flooding and drought—“have greatly affected food production worldwide.”

• Rice-producing countries, “without any exemption … experienced overall reductions in production.” These are the Philippines, Thailand, Vietnam, Pakistan, India, China and Cambodia.

• Massive losses in wheat production due to flooding and a cold spell in Australia, Russia, Ukraine and countries in Eastern Europe are likely to force wheat consumers to shift to rice, further straining worldwide supply.

“Wheat affects rice importation because rice and wheat are reciprocal alternatives, being similarly the world’s most important staple food,” the NICA report said.

• A warning made by the FAO of a worldwide food crisis as a result of sharp declines in international food production.

Ledac meeting

The report has reached the desk of the President and was taken up at the first meeting of the Legislative Executive Development Advisory Council (LEDAC) on Feb. 28, according to the source.

At a press conference following the LEDAC meeting, Mr. Aquino was quoted as saying he had asked the agriculture department to review its figures on rice availability “because if we suddenly have a shortage … this will certainly have a deleterious effect on consumers.”

“This report is being made to mitigate the spiraling costs (of goods and commodities) which started going up at the start of the year 2011,” the NICA report said.

The most-watched commodity is rice, it said, because “any increase in the cost of vital commodities, such as rice, will be politically critical to any administration.”

Vulnerable

The report said the country was very vulnerable to the tightening of food supplies in the world. The country currently has a production shortfall of 1.3 million metric tons (MT) of rice.

“In short, our rice production will not be able to meet our food demand for the year 2011,” it said.

The country has a buffer stock of rice amounting to at least 2.5 million MT, according to the BAS.

Agriculture Secretary Proceso Alcala was earlier quoted as saying that the Philippines may need to import up to 800,000 MT to fill the gap in local production.

More rice imports

Jittery over the possibility of price increases in the international market and the specter of stronger storms, the National Food Authority (NFA) said it would import more rice to ensure a stable supply and prices in the latter part of the year.

NFA Administrator Angelito Banayo Monday said he was in favor of importing an additional 300,000 MT of rice to boost buffer stocks.

The NFA recently ordered from Vietnam 200,000 MT, which cost the agency about P4 billion under a government-to-government deal. The rice will be delivered from April to June.

“I would like to play it safe and buy some more. It won’t be too much,” Banayo said.

The NFA is allowed to buy 1.3 million MT of rice from abroad. Of that amount, 200,000 MT will be brought in by the government, while 660,000 will be imported by the private sector.

The country consumes more than 13 million MT of rice a year, said a report quoting the US Department of Agriculture.

Strained finances

The NICA report said the biggest question was whether the Philippine government could afford the costs of importing rice, strained as it is with expenses incurred in repatriating Filipino workers from troubled countries in the Middle East and North Africa.

The report said “there is a growing pattern of rice-importing nations already purchasing or locking up the dwindling supply of rice in the face of lower production of both rice and wheat.” This could lead to higher costs of imported rice, it said.

The report said Indonesia, which did not import rice in 2008 and 2009, started importing 1.08 million MT of rice late last year and early this year from two of the Philippines’ top rice producing neighbors—Vietnam and Thailand.

Indonesia plans to import a total of 3.2 million MT of rice this year, the report said.

Even one of the world’s poorest countries, Bangladesh, recently entered into a rice supply deal with Vietnam.

Malaysia, the report said, had “quietly locked up” 800,000 MT of rice from Vietnam. South Korea is also importing rice from the same sources as the Philippines.

One of the most worrisome developments, the report said, was China’s purchase of rice from Vietnam and Burma (Myanmar).

“The actions of these other countries pose a great danger to our food security as there is a possibility that they will soak up the supply available for rice or if there would be remaining supplies, these would be very expensive,” the NICA report said.

Left behind

The report said the Philippines was being left behind by other countries. “(A)nd the danger of a food crisis in this country is reaching the point that is has now become an issue of national security.”

“What is more troubling is our very own weather is contributing to lower rice production,” the report said. Floods in the Visayas and Mindanao recently “while not significantly reducing potential harvests still add up to the shortfall for national consumption.”

The report warned that a shortage may open the door for “private traders ... to create an artificial supply-demand inequality that could lead to higher prices.”

The report said rice importation should be protected from kickbacks. A shortage will benefit only a rice cartel that continues to operate in the country, it said.

The report stressed the need for Mr. Aquino to require the NFA to submit a detailed report on rice availability and measures being undertaken to ensure supply.  

Source: Philippine Daily Inquirer 04/12/2011
By Tony S. Bergonia