2008 Rice Crisis

Ramon T. Ayco, Sr.

May 1, 2008

Rice is the main source of calories for half of the world’s population and the main source of
income for two billion people. But as of late 2007, increased farming for use in biofuels, world
oil prices at nearly $100 a barrel, global population growth, climate change, loss of agricultural
land to residential and industrial development, and growing consumer demand in China and
India have pushed up the price of grain. Food riots have recently taken place in many countries
across the world.

Early this year (2008), a global rice shortage is triggering an international crisis, with countries
banning export and threatening serious punishment for hoarders. With rice stocks at their lowest
for 30 years, prices of the grain rose more than 10 per cent on Friday (April 4, 2008) to record
highs and are expected to increase by a further 40 per cent in coming months. Already China,
India, Egypt, Vietnam and Cambodia have imposed tariffs or export bans, as it has become clear
that world production of rice this year will decline in real terms by 3.5 per cent. The impact will
be felt most keenly by the world's poorest populations, who have become increasingly dependent
on the crop as the prices of other grains have become too costly.

In the Philippines, the National Bureau of Investigation has been called in to raid traders
suspected of hoarding rice to push up the prices. Meanwhile, activists have warned of the risk of
food riots.

Fear is so deep that the country’s agriculture secretary, Arthur Yap, this month asked fast-food
restaurants including McDonald's and KFC - which generally supply a cup of rice with their
meals in Asian branches - to halve the amount of rice supplied, so that none would be wasted. In
addition, traders who try to stockpile rice have been warned that they face a charge of 'economic
sabotage', which in the Philippines carries a life sentence.

Rice is the most important food commodity in the Philippines; a shortage would mean hundreds
of thousands, if not millions of Filipinos going hungry.

The Philippines consumes about 11.9 million metric tons (13.12 million U.S. tons) of rice
annually, most of which is grown domestically. But dwindling domestic production and
corruption in the rice supply chain have created a recurrent shortfall of about 10 percent. The
government has to purchase about 2 million metric tons (2.20 million U.S. tons) from the
international market every year, making the Philippines the world's biggest rice importer.

Now, while President Gloria Macapagal-Arroyo (PGMA) assures the Filipino people that there
will be no rice shortage in the country, rice prices have started to inch up already in the local
market. From the lowest P25 per kilogram a month ago, it went up to P35 – P45 per kilogram
this April.

While PGMA assures the people that there will be no rice shortage, the government is now
facing the problem of distribution of the remaining stocks. Huge queues form wherever
government stocks are being sold at subsidized prices of P18.50 per kilogram. The Department
of Agriculture (DA) has tapped the Catholic Church in the distribution of government-subsidized
rice, assuring it a weekly allocation of at least 50,000 sacks for the poor in various parishes in
Metro Manila.

“There's no shortage,” insist Agriculture Secretary Arthur Yap. ‘The problem is not with
supplies, but with price.” PGMA has assured that the country would weather the rice crisis,
telling the people not to panic over the lack of supply of the staple. At least 500,000 metric tons
(MT), 70 percent of which are from Vietnam and 30 percent from Thailand, have arrived. In
April, May and June, 700,000 MT more are arriving from Vietnam and Thailand and 30,000 MT
from Pakistan.

But Rafael "Ka Paeng" Mariano, chairman of KMP and concurrent president of ANAKPAWIS
party list, insist that there is really 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.

"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.

PGMA has vowed to crack down on rice hoarders, people who buy rice at a subsidized price
from the NFA and sell it at a higher price in markets. Though no charges have yet been filed,
Yap was staking out warehouses and following trucks to see where the rice was going, the
President said.

But KMP is pointing to the government officials as the main culprit and they asked Congress to
investigate Agriculture Secretary Arthur Yap for the reported hoarding of the government-
subsidized rice by some unscrupulous rice traders.

“It’s Secretary Yap who assigns the rice quotas in regions, so he himself should be held
accountable why so much rice is being diverted. This has been occurring even when he was still
NFA administrator,” KMP said. “These are known at the top of the NFA and DA, at least. As we
found out, this practice of diverting NFA rice to commercial sales has been happening for a long
time and has already been exposed by the NFA Employees Association,” KMP added.
-o0o-
REFERENCES:

1. Food security; From Wikipedia, the free encyclopedia

2. Food riots fear after rice price hits a high; The Observer; World news section; April 6 2008

3. Farmers warn that Philippines faces rice shortage, as government signs import deal; The
Associated Press; March 26, 2008

4. Farmers’ group calls for rice price controls; By Jerome Aning; Philippine Daily Inquirer;
03/27/2008

5. Gov’t taps Church in distribution of NFA rice; By Jeannette Andrade; Philippine Daily
Inquirer; 04/08/2008

6. Arroyo assures people anew against rice crisis; By Lira Dalangin-Fernandez;

INQUIRER.net; 04/08/2008

7. A rice shortage?; Editorial; Philippine Daily Inquirer; 03/25/2008

8. There is an Actual Rice Crisis Aggravated by an Artificial One - Rice importation fosters
crisis; by Kilusang Magbubukid ng Pilipinas; April 2008]