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Apr 30

Cooperation in the Wake of Rice Panic

Arab News

Cooperation in the Wake of Rice Panic

by Manuel L. Quezon III

 

Last week, on my cable TV show, a member of the 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.”

Recently, Nouriel Robini, the economist who made waves predicting the subprime crisis in America, included an interesting graph on food prices since 1995.

The graph showed how food prices actually dipped in the late 1990s, 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! — a sudden spike since last year.

If you’ve been following the news 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 are lots more people, period. And in either case, land once used for farming is being gobbled up for malls, and factories, and residential areas, too. Add to this the pretty bad weather last year.

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.

A look at Indonesia is instructive. The blog Youthful Insight (http://feuinewbies.blogspot.com) on April 25, started with the dilemma faced by the Indonesian government: “On 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? According to the blogger,

“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?” Well, “The principle of cheap food politics 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 percent), which main source of income is service and manufacturing sector. But bad for poor rural (the 60 percent), 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.” And this is what’s played out in the Philippines. Filipino TV journalist R.G. Cruz, in his blog quoted a rice trader in Bangkok saying the Philippine government bought very expensive rice there and if it keeps doing it would only drive the prices up.

Which explains why the Philippine secretary of agriculture just announced that since harvests look pretty good and the rice supply is 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 percent 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, a journalist with the newspaper The Business Mirror, wrote on April 8 (in his blog) that “Under the government’s rice subsidy program, farmers only pay about half the price or 1100 pesos per bag per hectare for a hybrid seeds that’s supposedly would cost 2,600 pesos since the government, through the Department of Agriculture, provides the subsidy amounting to 1500 pesos per bag per hectare.”

So then Llorito asks a question: 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. Llorito explains 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 1500 pesos 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 — 1100 pesos from the farmer and 1500 pesos subsidy per bag from the government through the MAO/LGU-totaling 2600 pesos 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 says what we need is to spend — yes, spend — on equipment and scientists for the weather service, 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 to value in school: cooperation.

What kind?

Regional governments have, therefore, stepped in to reassure the region that supplies will continue. The China Financial Markets blog, maintained by Dr. Michael Pettis in Beijing, says the Chinese government has announced it intends to keep exporting rice.

A blog that focuses on Cambodia, 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!

And the Asia Foundation’s In Asia blog has a practical suggestion. “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.”

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