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Apr 28

The Explainer: Rice-a-rama

We’re continuing the rice problem topic we began last week, with focus, tonight, on how problems get magnified because of a lack of information.

And as we do this, we’ll be galloping around the world wide web and consulting one of ANC’s very own talents.

Don’t panic! The Explainer’s here. And I’m Manolo Quezon.

 

I.   Lost

 

Last week, a member of our audience wondered if the so-called rice crisis is real.  She wasn’t alone in thinking this. As  Reuters recently reported, “Rice price surge frustrates and puzzles Asians” and as another Reuters report puts it, as things become clearer, one thing’s sure: there’s “No quick fix to soothe Asia’s rice shortage fears.”

http://www.vmvz.com/rice-price-surge-frustrates-and-puzzles-asians/

http://www.bworldonline.com/BW042808/content.php?id=004

As I told you last week, tonight we’re going to take a peek at Thads Bentulan’s comparison of rice prices in Hong Kong, Singapore, and here at home.

Bentulan has a pet theory of his, in mind, called HyperWage, but that’s for another episode of this show to tackle. What I thought you’d find interesting and relevant tonight, is his comparison of how many hours it takes two kinds of workers, to earn enough money, to buy a kilo of rice.

He looked at domestic helpers and janitors; DH’s, because many Filipinos are in that line of work in Singapore and Hong Kong; and janitors, because that’s about the most menial job a native Singaporean or Hong Konger will be in.

[present some slides]

From the research of Thads Bentulan –and you can check out or Explainer blog for the entire PowerPoint if you like- let’s go on to Nouriel Robini.

http://www.rgemonitor.com/index.php

Her’es his site. He’s an economist who made waves predicting the subprime crisis in America. He sends out a newsletter and in one of them, there was this interesting graph.

 

See how food prices actually dipped, but then began to climb, so that roughly last year, food prices were back where they’d last been in the late 1990s? And then –bam!- look at the sudden spike since last year.

If you’ve been following the news and last week’s discussion, there’s many reasons for this. Economic growth in our part of the world means more people are gobbling up more food; and even if you don’t have growth, there’s lots more people, period. And in either case, land once used for farming’s being gobbled up for malls, and factories, and residential areas, too. Add to this pretty bad weather last year.

All of it combined, this year, in such a manner and in such a way, as to suddenly bring forth a mental image like this one:

 

This was drawn by Albrecht Durer several centuries ago, showing –see this guy with the scales?- Famine, one of the horsemen of the Apocalypse.

Countries that export rice said hold on, maybe we won’t sell as much; which panicked countries that import to start buying like mad; which led people everywhere to start hoarding like crazy.

Let’s step away from our shores and look at Indonesia.

Pat, I’d like to ask you to read from this blog:

http://feuinewbies.blogspot.com/2008/04/consumer-or-farmer-first-anomaly-and.html

It starts with the dilemma faced by the Indonesian government:

In one side the government must keep inflation and food price low enough so its does not hurt the poor. But on the other side the government must maintain a reasonable high price to give incentive to farmers to increase their production and increase rural welfare.

So what should be done? Pat?

Is there any policy to achieve both objective above? Yes! Give high subsidy to the farmers like the Developed Countries do. But the problem is our government does not have the money to do it. Then they turn their head to the consumer, Cheap Food Politic.

And what’s this “cheap food politics?” Pat?

The principle of Cheap Food Politic is as long as the food price cheap, the majority (poor) will keep silent. This policy is simply urban bias. Cheap food price is good for poor urban (the 40%), which main source of income is service and manufacturing sector. But bad for poor rural (the 60%), which main source of income is agriculture sector. Lower food price mean lower income and also lower welfare for rural area. The government sacrifice the rural for the sake of the urban. Why? Because poor urban is more attractive politically than poor rural.

Sounds familiar, doesn’t it? RG Cruz in his blog,

http://www.rgcruz.com/?p=689

 

quotes a rice trader in Bangkok saying our government bought very expensive rice there and if we keep doing it will only drive the prices up.

But this comes at a cost, and as the Secretary of Agriculture just announced, since harvests look pretty good and the rice supply’s expected to ease up, the government will be taking steps to ease up on distributing cheap rice.

But this still leaves us with the problem that rice prices may stabilize, but they’re not going to go down much, and probably keep going up over time.

Which means people are getting over their initial panic, and starting to take a sober look at the problem of supply.

One way is by identifying that our rice is feeding a lot of mouth’s it shouldn’t. India has that problem, too.

On April 23, Bloomberg reported that India loses about 10% of its rice harvest to pests, including rats, and also because of inadequate warehouses.

I’ve heard we lose 1.6 million metric tons to pests, which is more than the 1.2 million metric tons we import from Vietnam: if this is true (and I’ve only seen it in one place, a student reporting a lecture she attended in UP Los Banos), fighting pests is one campaign we have to undertake.

The other is as old as government itself: graft and corruption.

David Llorito, who’s been a guest on this show, maintains a blog.

http://davidllorito.blogspot.com/2008/04/rice-crisis-this-palay-seeds-subsidy.html

Here’s something he wrote on April 8. Pat?

Under the government’s rice subsidy program, farmers only pay about half the price or P1100 per bag per hectare for a hybrid seeds that’s supposedly would cost P2,600 since the government, through the Department of Agriculture, provides the subsidy amounting to P1500 per bag per hectare.

So then Llorito asks a question: So farmers get cheaper seeds, right? Yes, he says, but points but it doesn’t follow that the seeds will be there when the farmer needs it. Pat, will you read Llorito’s explanation why?

This is how the whole thing works: the seeds are distributed by the municipal agricultural officers (MAO). They also serve as conduit of the government subsidy amounting to P1500 per bag. Once the farmers give the “farmers equity” or his payment for the seeds that comes from his pocket to the MAO, he gets the seeds, and the seeds producers/suppliers then collects the payment—P1100 from the farmer and P1500 subsidy per bag from the government through the MAO/LGU—totaling P2600 per bag per hectare.

But in reality, many of these MAOs, once they got the cash both from the farmers or the money from government subsidy simply keep the money.

And there’s the science of it.

A website I’d like to encourage you to check out is filipinovoices.com. One entry, by a blogger named cocoy,

http://www.filipinovoices.com/of-food-and-men

Says what we need is to spend –yes, spend- on equipment and scientists for PAGASA, so they can predict rain and such, better. We need more agronomists, we need hydrologists, we need more science- and math-whizzes to figure out our rainfall, land use, and so forth.

And we all need something we learned in Sesame Street and which Batibot may have taught you, too, Pat: cooperation.

What kind?

Regional governments have therefore stepped in to reassure the region that supplies will continue.

http://piaohaoreport.sampasite.com/blog/Rice-and-margin.htm

The China financial markets blog maintained by Dr. Michael Pettis in Beijing, says the Chinese government’s announced it intends to keep exporting rice.

http://imsokthy.com/2008/04/25/will-cambodia-become-a-world-largest-export-country/

A blog that focuses on Cambidia, Im Sokthy, also points out the Cambodian government intends to increase its rice exports from the 2-3 million MT it expects to sell this year, to a whopping 8 million MT by 2015!

http://asiafoundation.org/in-asia/2008/04/23/averting-the-impending-food-crisis/

A blog we mentioned last week, the Asia Foundation’s In Asia blog, has another article by Bruce Tolentino this week, with a practical suggestion. Pat?

The Association of South East Asian Nations (ASEAN) already has a base to build from in serving as a framework for multilateral dialogue and collaboration in the management of food supplies and prices. ASEAN members include two of the world’s leading rice exporters, Thailand and Vietnam, as well as the leading rice importers, the Philippines and Indonesia. In the wake of the food crisis of the early 1970s, ASEAN has been, in fits and starts, organizing and tinkering with the ASEAN Food Security Reserve—an agreement among members to set aside and share rice stocks for situations just like this. It’s high time these discussions be accelerated and implemented.

 

When we return, a further look at why prices are high.

 

II.   You ain’t seen nothin’ yet

 

There’s a nifty new interactive chart on Inquirer.net’s special section, The Rice Problem.

In it, they gathered data on rice prices so you can look and immediately spot where prices are ok, and where prices are high.

You can look at Mindanao, see here-

Or you can focus on particular localities-

Take this screencap, showing Baguio- prices are good, and In fact one Baguio native recently complained to me about media pointing to empty NFA shelves there. Rice is so plentiful and good, the Baguio native pointed out, that hardly anyone eats NFA rice. So media was being alarmist.

Or this screencap, showing Legaspi City-

Or this one, showing Iloilo, which, by the way, happens to have the highest rice prices in the country.

 

But there’s another factor, and let’s have our guest for tonight tell us what that is.

You know Ricky Carandang as one of the anchors of ANC and ABS-CBN. You’re probably less familiar with his blog, rickycarandang.com. We mentioned his blog briefly in our Spratleys episode, but let’s focus on his latest entry, this one:

http://www.rickycarandang.com/?p=137

And so let’s ask him to give us the Reader’s Digest condensed version. Ricky?

When we return, more with Ricky Carandang .

 

My view

 

Knowledge is power. And because of a lack of knowledge, many of us who take our citizenship seriously, feel powerless.

You know the story of the worst sort of thing to hear, during a time of crisis. And that is –hearing someone telling you, with fear in their voice, “don’t panic, don’t panic!”

Well we all panicked. Government panicked. Media panicked. And we all panicked. A friend who was in Thailand when the whole thing was unfolding, said that the moment the Thai government announced it had enough supplies for its citizens, prices of rice went up 10% in a week in the groceries.

It’s human nature to hoard –even when there’s no actual shortage on the shelves.

If you watch this program, chances are you have time to do a little reading, and I’d like to encourage you to do so on line. There’s so much out there, and it will help you figure out who’s being unnecessarily alarmist, and who is thinking things through, long-term.

Because our food supplies are too important, as the saying goes, to leave it completely in the hands of the experts.

 

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