Is there an impending rice shortage ? Despite government assurances that there will be an adequate supply of this dietary staple, the indications are not good. President Arroyo said that although prices are bound to rise due to domestic and international factors, supply will be sufficient. Should we believe her ? Consider the following facts.
Senator Mar Roxas, himself a former trade secretary, identified three signs of an impending crisis–the country’s traditional rice sources such as Thailand and Vietnam could not commit to any volume, the price of rice has jumped sharply in the world market, and Agriculture Secretary Arthur Yap has suggested that people cut their normal serving of rice from one cup to one half.
President Arroyo requested Vietnamese Prime Minister Nguyen Tan Dung to guarantee the Philippines up to 1.5 million metric tons of rice, in itself an unusual step. Is Vietnam in a position to deliver ? The Vietnamese government announced on Friday that it would cut rice exports by nearly a quarter this year. It hopes that keeping more rice inside the country would hold down prices for its own people.
An agreement signed by Philippine Agriculture Secretary Arthur Yap and Vietnamese Trade Minister Yu Huy Hoang, binds Vietnam to supply us with 1.5 million tons of rice this year except in case of natural disasters or “unforeseen harvest loss”. This gives Vietnam an escape clause should it decide to renege on its promise. In fact, an obscure plant virus in Vietnam has already caused annual output to level off over the last three years.
Other countries have been just as cautious. India effectively banned the export of all but the most expensive grades of rice. Egypt announced that it would impose a six-month ban on rice exports, starting April 1, and earlier, Cambodia banned all rice exports except by government agencies. Thailand, the world’s largest rice exporter, has taken a wait-and-see stance and has not guaranteed any export volumes. According to the International Herald Tribune, rising prices and a growing fear of scarcity have prompted some of the world’s largest rice producers to announce drastic limits on the amount of rice they export.
Who can blame them ? The price of rice has almost doubled in international markets over the last three months. They need to look after themselves first.
Several factors are contributing to the steep rise in rice prices. Worldwide demand has increased . At the same time, drought and other bad weather have reduced output in Australia, Southeast Asia and elsewhere. Many rice farmers are turning to more lucrative cash crops, reducing the amount of land devoted to the grain. High fuel prices add to transport costs. And urbanization and industrialization have cut into the land devoted to rice cultivation.
Indeed, rice is a political commodity and the looming shortage and price increases could spell trouble for the government. The level of social unrest is sure to increase following even a temporary rice shortage. Coming in the heels of the numerous scandals hounding the Arroyo government, this could prove to be the final nail in her political coffin. No large-scale corruption scandal can match the desperate immediacy of an empty stomach. This will bring the people out into the streets, even without prodding from Arroyo’s critics.
Which explains the almost frantic efforts exerted by GMA to forestall the crisis.
GMA ordered a crackdown on rice hoarders, calling on Secretary Yap to ensure that subsidized government rice would reach those who needed it most. She also made it clear that she will not hesitate to use the police and military to enforce order in the distribution of rice. The DSWD and NFA are preparing to issue rice coupons to poor families to cushion the impact of increasing prices. A complete ban on the conversion of rice land to subdivisions and commercial use has been proposed. And an official appeal has been made to fast-food outlets throughout the country to offer half-portions of rice to patrons to prevent wastage. Secretary Yap has even suggested switching to brown or organic rice, which costs twice as much as ordinary polished white rice, as a way of alleviating the crisis. Which is akin to to telling the people, a la Marie-Antoinette, who, informed that the French populace had no bread to eat, supposedly said: “Then let them eat cake”.
Will these steps be enough ? I sincerely hope so. As pointed out by the Inquirer:
Many Filipinos can go without meat, pork, chicken, fish and vegetables, but they will consider it the worst kind of deprivation to have to go for days without rice. The poorest of the poor are content to have just steaming rice on which water and salt or patis (fish sauce) have been sprinkled for their one or two meals of the day.
To provide them with rice is literally a life-or-death proposition for the Arroyo administration. Failure could be fatal for her presidency. Better governments have been overthrown for less.
The Economist sums up the dilemma of the Arroyo government neatly:
But if Thailand is worrying about recent developments in the rice market, its problems are modest compared to those of major importing countries. The best-known casualty is, of course, the Philippines. The country is periodically the world’s largest importer of rice, needing about 1.8m tonnes a year, and the tightening of supply has led to the government desperately trying to secure imports from Vietnam. The president, Gloria Macapagal Arroyo, is under pressure over a plethora of issues that include a corruption scandal relating to a large telecommunications contract. Given the Philippines’ recent political history, she must always have the worry of another “people power” movement booting her out of office. This makes popular protests over food prices something to avoid. Short-term problems have been exacerbated by structural issues such as low agricultural productivity and rapid population growth.
The government is concerned enough about the impending shortages that it is thinking about cutting rice import duties heavily. The duties are intended to protect domestic farmers, who still produce the majority of rice consumed in the country. This underlines the policy and political dilemmas for the Arroyo government, as measures to appease one important constituency (low-income consumers) risk angering another (farmers). Such measures, if implemented, would also negatively affect government revenue at a time when fiscal consolidation remains a priority.
According to Robert Zeigler, president of the International Rice Research Institute in Los Banos, Laguna, our rice yields per hectare are double those of Thailand, but “there is just not enough land.”
The government is taking a tough stance, including possible filing of criminal charges of economic sabotage or plunder against rice hoarders and going after “the Chinese rice cartels“, while Arroyo convenes a food summit. GMA appears to be milking the crisis for maximum political mileage. But Justice Secretary Raul Gonzales’ racist tack is not helping her any.
According to The New Republic blogger Marty Perez, who makes reference to the Financial Times, “there is havoc in the markets for rice and other important staples like palm oil all over Asia and Africa. There is also panic in some streets.”
According to Warren Beattie of the FT, disputes over sharing the costs and benefits of higher food prices have shot up the political agenda in many developing countries as sharp reductions in purchasing power, particularly for the urban poor, have put increasing pressure on governments.
However,experts warn that price controls are counterproductive.
The world food crisis worsens, and developed countries need to step up to the plate.