Rice News Compilation 4.9/10.08
News compiled by BAYAN USA Los Angeles, CA
1. Record rice cost hits Asia (Reuters)
2. Price of NFA rice going up (PhilStar)
3. NFA rice price may go up (Manilatimes)
4. Poor to pay more for rice (GMA News)
5. Stabilizing rice supply may cost $1.3B (Inquirer)
6. Rice crisis to cost Philippines one percent of GDP: study (Agence France Press)
Record rice cost hits Asia
By Staff Writer and Agencies on Wednesday, April 9 , 2008
The cost of rice has soared to a record-high level, forcing rice-exporting countries such as India and Pakistan to cut sales to ensure they can feed their own people. The rise has also driven consumers such as the Philippines to implement stringent measures to crack down on hoarders, Bloomberg reported on Tuesday.
With half the world’s population dependent on rice as their staple, the current global food crisis poses “huge problems of daily nutrition for half the planet,” the report quoted Roland Jansen, Chief Executive Officer of Switzerland-based Mother Earth Investments AG, as saying. Rice gained 2.4 per cents to reach $21.50 per 100lb (46kg) in Chicago, double the price a year ago.
China, Egypt, Vietnam and India – who together account for more than a third of global rice exports – curbed sales this year to protect domestic stockpiles. Likewise this week, Philippine President Gloria Macapagal-Arroyo announced plans to import as much as one million tonnes of rice to cope with domestic demand.
She vowed to lead “the charge against any officials and businessmen who divert supplies or distort the price of the staple food” by imprisoning people who steal or hoard rice. The Southeast Asian country’s Department of Agriculture had also asked fast-food chains and restaurants to serve half portions of rice to cut waste.
And as poverty-stricken countries become hard hit by rice shortages and the unabated increase in the price of basic commodities, experts warn the situation may lead to social unrest in Asia.
“Soaring food prices have become a serious threat for the survival of the present caretaker government. There could now be serious discontent, violence and food riots,” Ataur Rahman, Bangladeshi political scientist told AFP.
While no one can claim immunity from the effects of the food crisis, poorer Asian countries are likely to feel the pinch more than richer nations like Malaysia and Singapore, said Ooi Kee Beng of the Institute of Southeast Asian Studies in Singapore.
In a bid to respond to this crisis, experts have recently lobbied for the production of hybrid rice by crossing different varieties of rice to attain higher yields. The International Rice Research Institute, which is based in the Philippines, has led the initiative to team up with biotechnology companies to develop a hybrid that would ease pressure on rice costs.
The Vietnamese government will also move towards increasing its rice production by 2.4 per cent by allowing farmers to plant a larger crop along the Mekong River, a large delta that flows from southern Vietnam into the South China Sea and is known as a major rice-growing area.
The Mekong Delta currently produces 58 per cent of Vietnam’s (the world’s second largest exporter) rice production or about 10.5 million tonnes of milled rice.
Price of NFA rice going up
By Marianne Go, Philstar
Thursday, April 10, 2008
The government is considering an increase in the price of rice sold by the National Food Authority as well as a higher buying price for palay during the wet season, Agricculture Secretary Arthur Yap and NFA Administrator Jessup Navarro said yesterday.
The announcement came as the Department of Agriculture created an “eminent persons task force” consisting of former DA secretaries and other agricultural experts to help oversee the implementation of President Arroyo’s P43.7-billion program to sustain record-high palay yields and eventually achieve rice self-sufficiency amid an emerging global food crisis.
The DA and NFA will also allow the private sector to import between 300,000 to 600,000 metric tons of additional rice, on top of the 2.1 million MT that the NFA is set to import this year, Yap and Navarro announced at a press conference.
The NFA has set a floor price of P2 per kilo as a “fee” for the importation of the additional rice, and will schedule a bidding for interested private sector importers to bid on the import fee with the highest bidder paying the amount to the NFA, which would still technically be the importer on record.
The private sector importer, Navarro clarified, would pay the import fee as well as shipping and trucking cost, but the NFA would subsidize the 50 percent tariff duty through the tax expenditure fund (TEF) provided by the Department of Finance.
Navarro, however, could not say how much the national government is allotting for the additional subsidy.
The government, thus, would not earn from the tariff duties but would only collect the import fee.
“It’s better than nothing,” Navarro said, as there are no private importers of rice anyway and government wants to encourage the importation of additional rice. Last year, however, NFA’s losses amounting to P1.5 billion was charged to the consolidate public sector deficit (CPSD).
According to Yap and Navarro, the DA will also rationalize the current buying price for palay, taking into account the need to support rice farmers, but also taking into consideration the effect on consumers, especially those at the poverty threshold.
Yap cautioned that raising the palay buying price is not a simple and easy decision to make because of its impact on poor families. It will also have an effect on NFA’s selling price for rice, which is currently pegged at P18.25 per kilo.
The P18.25 per kilo, Yap and Navarro explained, already has to be reviewed to take into account the rising cost of importation.
The recently increased palay buying price of P17 per kilo is only temporary up to May this year, but the DA is still studying a possible increase for the wet season.
Navarro said the NFA is also increasing its market share from its traditional 15 percent to 30 percent.
At the moment, Navarro said, the NFA’s rice stock is good for 59 days.
Yap reiterated that with the importation and the DA’s rice production program, there is adequate rice and therefore no need to panic.
All hands on deck
The creation of the task force came at the heels of Yap’s meeting at the Manila Hotel with former DA secretaries Salvador Escudero III and Domingo Panganiban.
The members of the new task force are Dr. Emil Q. Javier, Dr. Leo Gonzalez, Dr. Santiago Obien, former DA undersecretary Apolinario Bautista and former NFA administrator Gregorio Tan.
Yap also held separate talks with Catholic Church leaders to ferret out plan to tap the Catholic Bishops’ Conference of the Philippines (CBCP) and its social arm, the National Secretariat for Social Action (NASSA) in the nationwide distribution of government-subsidized rice for the poor.
Aside from the faith-based community, the DA is also coordinating the distribution of NFA-subsidized rice with the Department of Social Welfare and Development (DSWD) and local government units (LGUs) because these three groups have, according to Yap, their respective poverty maps that will greatly help the DA identify low-income families.
Yap said agriculture officials will also meet with mayors and other local executives to further fine-tune the involvement of the faith-based community and LGUs in this new rice distribution program, as part of the government’s “aggressive procurement and aggressive distribution” strategy.
“We need to take decisive action to stop the hoarding and diversion of government rice stocks. Tapping the assistance of the Church, DSWD, LGUs and other groups in this effort will ensure that many eyes are keeping watch over the correct distribution of NFA rice,” Yap said.
He said these groups will help sell government-subsidized rice to poor communities to guarantee that the distribution of the affordably priced staple is “targeted and reaches the intended beneficiaries.”
The Catholic church leaders led by Manila Auxiliary Bishop Broderick Pabillo, Zar Gomez, country program head of CBCP-NASSA, and Fr. Mario of Caritas agreed to help distribute and sell 50,000 sacks of rice to low-income consumers via its CBCP-NASSA network.
Also present during the initial meeting were DSWD Undersecretary Celia Yangco, Undersecretary Nena Valdez of Malacañang and Undersecretary Jesus Paras of the DA and Navarro.
Tariff cut means gov’t loss
Meanwhile, the government is set to lose billions of revenue with its move to cut tariff on rice imports by 80 percent in a bid to solve a looming crisis in the country’s staple food.
Bureau of Customs (BOC) Commissioner Napoleon Morales said the reduction of import duties on imported rice from 50 percent to 10 percent would have repercussion on the agency, which he admitted is already having a hard time in meeting its P254-billion target revenue this year.
Morales called on the country’s economic managers to understand the impact of the reduced tariff and finally grant their plea for a reassessment of their target for the year.
The NFA has been tapped to charge the fee so that the importer on record will still reflect the government agency to ensure that they can avail of the government subsidy under the TEF.
Under the national budget, government-owned and controlled corporations (GOCCs) are allowed to apply for a tax expenditure subsidy. In the case of the NFA, to finance its grains procurement and pay for the tariff on rice imports using available funds under the TEF, which accounts for part of the national government’s annual budget.
According to Yap, this will serve as an incentive to urge businessmen to import more rice amid reports of the country’s dwindling rice supply.
Morales, however, admitted that he expects the earlier order of President Arroyo to lift quota on rice imports would counter effects of adjustments in tariff on rice imports on the revenue of BOC.
He believes that the removal of quantitative restrictions would increase volume in rice importation since importers are encouraged to bring in more rice shipments from abroad.
“We have not yet received official notice on the lifting as of present but we will implement it as soon as we are notified. This will definitely be beneficial for Customs,” he said.
Morales, however, assured that the BOC would continue to strictly monitor entry of imported rice into the country despite the lifting of the benchmark on the regulated product, adding that their drive against rice smuggling has also been very effective.
He said if smuggling were rampant, there would be flooding of the commodity in the market and no shortage in rice supply.
In a related development, Customs Intelligence and Investigation Service (CIIS) alerted 160 40-footer containers of rice from Vietnam and Thailand consigned to the Philippine International Trading Corp. (PITC), which entered the Port of Cebu early last month for spot-checking.
According to the commissioner, this is routine procedure to counter- check if the declared value of the shipment is the same as the benchmark test value of the NFA.
Malacañang earlier ordered the lifting of the 300,000-ton import quota on rice a year and corn, meaning any businessman can now freely import the two commodities for as long as they pay the right amount of duties and taxes.
In Bulacan, operatives of the National Bureau of Investigation is set to investigate two rice mills reportedly owned by Romeo Mariano Jr. after they were allegedly found violating regulations of the NFA.
NBI operatives said they found violations that include placing of commercial rice in inverted NFA sacks; failure to monitor the record book for grains business; no signboard of warehouse; no display of NFA license, no NFA license for processing and violation of the color-coding of sacks.
The establishments reportedly yielded an estimated P100 million worth of NFA and commercial rice.
Increase individual rice allocation
The Department of Trade and Industry (DTI), meanwhile, is proposing an increase in rice allocation to up to eight kilos per person from the current three kilos.
“I suggested that maybe we can increase from three kilos to a higher (allocation) but the retailers said if we increase that then we might encourage household hoarding,” Trade Secretary Peter Favila said.
He said the Philippines could follow the Bangkok model wherein the government is selling three kilos, five kilos and eight kilos of rice per individual.
However, he said the retailers have expressed strong opposition to the suggestion.
“We took note of the suggestion of the retailers so we agreed to keep it at three kilos but I reported to the president the plea of the people,” Favila said.
He said he has been fielding complaints from consumers who say they are wasting money for fare because the allocation per day is too little.
Likewise, Favila said consumers say it takes them the whole afternoon to line up for three kilos of rice.
“They tell me that by the time they receive the rice when they get home they are no longer hungry,” the secretary noted.
Summit on global food ‘emergency’
The head of the UN Food and Agriculture Organization urged world leaders yesterday to attend a summit in early June to discuss what he described as an “emergency” global food shortage.
“In the face of food riots around the world like in Africa and Haiti, we really have an emergency,” FAO chief Jacques Diouf told a news conference in New Delhi.
Diouf said as populations have moved to the cities, food output has stagnated, prices have risen and food stocks are at their lowest since 1980.
He said this crisis should be addressed by the 191 members of the FAO in Rome in early June.
Diouf said that in fast-growing countries such as India and China, which together account for a third of the world’s population, “demand for more milk and more meat because of economic growth of eight to 10 percent means higher demand for more cereals” that in turn worsens food shortages. – Elisa Osorio, Edu Punay, Evelyn Macairan
NFA rice price may go up
Agriculture secretary cites rising costs of production for likely increase
The price of government rice may go up.
Agriculture Secretary Arthur Yap on Wednesday admitted that they are studying increasing the price of rice from the National Food Authority (NFA) from the current P18.25 per kilo. He cited rising costs of production.
“As of now, [at] P18.25 [per kilo], we are studying the structure, [because] we cannot keep [this] price too long, the farmers might be affected,” Yap said.
He did not give a timetable for raising the price of government rice.“[We are] not sure when to make the decision [on the price increase]. We’ll try to come up with a rational pricing soon,” Yap said.
He explained that it is easy to make the decision but the Agriculture department, he said, is also considering that millions of people will suffer if the government acted hastily. Rice is the staple of the 86 million Filipinos.
Yap, though, hinted that the high costs of production will compel the government to come up with a new price for the wet season.
For palay [unhusked rice], he said, the government’s buying price of P17 per kilo will stay until end of May.
To stave off the apparent rice crisis, the Agriculture department has instructed the National Food Authority to increase its market share from 20 percent to 30 percent to respond to the high demand for government rice, particularly in Metro Manila.
Yap said local government units, faith-based groups, and the Social Welfare department will be tapped to help distribute the rice, especially to poor families. These organizations, he added, are to also help “stop the hoarding and diversion of government rice stocks.”
The National Bureau of Investigation also on Wednesday summoned three big-time rice traders for alleged rice hoarding and illegal possession of government-subsidized and imported rice.
Lawyer Ricardo Diaz, the bureau’s intelligence chief and concurrent head of its Task Force on Rice Hoarding, identified the three as Adoracion del Rosario of Philippine Grains Corp., Eleanor Rodriguez of Metro Grains Marketing, and Gloria Reyes of Isabela Green Fields Corp.
Diaz said a surprise inspection by the bureau’s agents of the warehouses owned by the three traders located in Bulacan, north of Manila, Taguig City in Metro Manila, and Paco district in Manila, showed thousands of sacks of rice, including government and imported stocks. Empty sacks bearing the logo of the food agency were also found.
All indications, he said, pointed to rice hoarding and illegal possession of government rice and sacks since the warehouses were not accredited by the food agency.
“We will ask them to present their log books and other supporting documents to prove that they are not hoarding rice,” Diaz added.
He said subpoenas had been sent to the suspected rice hoarders, giving them three days to appear before the bureau to explain their side.
Justice Secretary Raul Gonzalez earlier created the Anti-Rice Hoarding Task Force, whose members are all prosecutors empowered to file charges against rice hoarders.
Gonzalez said traders found to be hoarding rice could be charged with violation of Presidential Decree 4 (National Grains Authority Act), Consumer Code of the Philippines, plunder and economic sabotage. The National Grains Authority, created in the early 1970s by the Marcos administration, is the forerunner of the National Food Authority.
In a bid to stop hoarding, Administrator Jessup Navarro of the food agency said they are expanding their direct selling through the help of different sectors. Although they cannot supply 100 percent the rice needs of the country, he added, the Philippines will be rice-sufficient in the next 58 days. He noted that harvest time starts soon. The government had said it was expecting a bumper crop.
To help sustain record-high palay yields and eventually achieve self-sufficiency amid an apparently imminent global food crisis, the Agriculture department has created the Eminent Persons Task Force. The group is composed of agricultural experts Dr. Emil Javier, Dr. Leo Gonzalez, and Dr. Santiago Obien; former Agriculture Undersecretary Apolinario Bautista; and Gregorio Tan, former administrator of the food agency.
Yap said the task force will watch over the department’s implementation of President Gloria Arroyo’s “Fields.”
Fields stands for fertilizer; irrigation; education and training of farmers and fishermen; loans, dryers and other post-harvest facilities; and seeds of high-yielding, hybrid varieties. Industry leaders and chambers of commerce have thrown their support behind Fields.
At the grassroots, the government’s efforts to keep the flow of government rice steady appeared to have hit some snags.
The coordinator of Caritas Manila, Fr. Mar Castillo, also on Wednesday said the dwindling supply of government rice in the market has become alarming, forcing them to “hide” rice for distribution before it ran out.
The government had tapped the Roman Catholic Church in selling the subsidized rice.
Caritas Manila is a Church-based charity organization founded by the late Manila Archbishop Jaime Cardinal Sin.
“We don’t display it [government rice] anymore just to avoid a mob of buyers,” Castillo, also the vice-chairman of the Union of Church Cooperatives, said on the website of the Catholic Bishops’ Conference of the Philippines.
The priest said the allocation of 24,000 sacks of rice by the government thru the National Food Authority for all the dioceses of Metro Manila should be tripled for the Church to be able to cater to all buyers.
In Cubao, Quezon City, supply of rice for distribution to poor communities there was used up a few hours after the program started at the Transfiguration of Our Lord Parish Church.
The head of the Parish Social Service Committee, Rolly Retirado, said the number of sacks of rice given to them for distribution by the National Food Authority fell short of what they had expected.
“We asked for at least 25 sacks or rice, but the NFA said that they could only give us 20 sacks. I hope they will increase this [allocation] since there are many buyers,” Retirado told reporters.
Earlier, Bishop Broderick Pabillo of Manila said they have asked the Agriculture department to ensure that the “Bigasan sa Parokya” should get an ample supply of rice.
–Ira Karen Apanay, Angelo S. Samonte, Anthony Vargas And William B. Depasupil
Poor to pay more for rice
04/10/2008 | 02:25 AM
MANILA, Philippines – Heavy import losses caused by rising world rice prices have left the government no choice but to charge the poor more for the staple.
The socially sensitive grain is currently being sold to the poor at P18.25 per kilo by the National Food Authority (NFA), much lower than the retail price of P35-40. The subsidy means heavy losses for the state, with world rice prices almost double, at around $700 per ton, from the start of year.
“As of now, the price is still P18.25 a kilo but we are studying the pricing structure because we cannot keep the price for too long,” NFA Administrator Jessup Navarro said.
Agriculture Secretary Arthur C. Yap said “This is a grave decision but we will try our best so this would not take long. We will come up with a rationalized pricing soon but we will have consultations.”
The NFA posted P1.5 billion in losses last year. Investment bank Credit Suisse Wednesday said the government could post a $1.3-billion loss, equivalent to 0.75% of gross domestic product, if it imports rice at higher prices and sells it at subsidized rates. (See related story below)
Mr. Yap said the government had yet to decide by how much the NFA rate would be increased and when the adjustment would be implemented.
“We are not sure when to make the decision,” he said.
Mr. Navarro claimed that retaining the NFA’s P18.25 price had contributed to the rise in demand.
“Because the price that the NFA is offering is very far from that of the commercial rice price, it is hard to prevent the rise in demand since the quality of NFA rice is high and its price affordable,” he said.
Mr. Yap, meanwhile, said “The bottom 80% of our people are spending 60% of their budget on food and out of that 80%, 40% is spent on rice alone, so theoretically we have to balance the situation.”
Cabinet Secretary Ricardo L. Saludo gave assurances that Malacañang would consider plight of the public in studying whatever the Agriculture department proposes.
“The Cabinet will consider the proposal in light of our people’s needs as well as what they can afford and the cost of rice subsidies, which could reach P50 billion a year,” Mr. Saludo said in a text message.
“The Cabinet will also need to consider several factors so I cannot say when we would decide,” he added.
Rolando T. Dy, executive director of the University of Asia and the Pacific Center for Food and Agribusiness, said he was in favor of hiking the NFA price given its huge losses, but also noted that sales of the subsidized stable could be better targeted.
“Perhaps [the NFA should hike its price]. Otherwise, consumers will continue to fall in line as they will always prefer cheaper rice. However, not all of them are really poor,” he said in a telephone interview.
He said the government must continue providing substantial subsidies to the poor while increasing the price of NFA rice sold to other consumers.
“They should resort to targeted rice subsidy. The DSWD (Department of Social Welfare and Development) should identify the poor and then offer them lower-priced rice.
“As regards the open market, there should be a moderate increase,” Mr. Dy said.
He declined to suggest a specific price hike for the open market but said the increase should be “a level near the prevailing market price.”
“Pricing could also be based on the quality of the rice to be acquired. But it (NFA rice) cannot be more expensive than the commercial rice otherwise nobody will buy NFA rice anymore.”
World Bank Country Director Bert Hofman Wednesday also had a targeting comment, saying “The evidence is rice for the poor does not end up to the poor.”
He said the current subsidized rice program “could be better targeted. There’s many not-so-poor people that also benefit from the rice. And the question is whether that is the intent of the government.”
Mr. Hofman also said the 50% tariff on rice imports could be lowered as it has not only resulted in higher prices but has also discouraged private sector involvement.
In what the government calls a “temporary” effort given a shortage of the staple, private traders will now be allowed to place orders with the NFA and benefit from the lower 10% rate it enjoys.
“I very much welcome the step to open up more the international rice base to private actors. But I think, for now, the 50% tariff basically keeps out the private sector,” Mr. Hofman told reporters at the sidelines of the World Bank’s biennial “Panibagong Paraan 2008” program.
“It would be beneficial if tariff were to be lowered a little bit. And for consumers, it will mean lower prices,” he said.
“The interesting thing is, it will mean more tax revenues,” he added. – BusinessWorld
Stabilizing rice supply may cost $1.3B
By Doris Dumlao
Philippine Daily Inquirer
Government intervention to stabilize rice supply could cost $1.3 billion this year—nearly one percent of the gross domestic product—but is unlikely to threaten the national government’s credit rating, investment bank Credit Suisse said.
Private importation of rice, which has been negligible in recent years, is expected to remain low despite the recent doubling of quotas on private importation, Credit Suisse said in a report dated April 8, titled, “Philippines: The Fiscal Cost of Rice.”
Because of the tax subsidy it receives from the national government, the National Food Authority (NFA) has a big competitive advantage over private importers, who are slapped with a 50-percent tariff, said the study authored by economist Cem Karacadag.
“The surge in global rice prices would likely make the 50-percent tariff rate and the price differential between NFA rice even more prohibitive for private rice importers,” it said.
The investment bank said private imports could rise if the government were to exempt private importers from tariffs, as recent news reports had suggested, thus reducing the financial burden on the NFA, the country’s main importer of rice.
Credit Suisse assumed that the NFA would import the lion’s share of the 2.6 million metric tons of the country’s requirement this year, buying them at a high price and selling at domestic prices.
The $1.3-billion loss estimate was calculated based on the difference between the import price and selling price, and an average margin cost of P3 for storage and distribution per kilogram of rice imported.
“Our fiscal cost estimate is subject to two risks: Rice supply and smuggling,” Credit Suisse said.
“We assume that the NFA is able to import rice from the international market albeit at a high price of $1,000 per ton. If supply becomes scarcer in the global market, the market clearing price of rice could skyrocket further. We also assume that smuggling will not create the need for the NFA to import substantially more rice from abroad.”
The NFA is seen to finance the bulk of its loss through government guaranteed borrowings from commercial and state banks. Finance Secretary Margarito Teves was earlier quoted in news reports that state banks might extend a loan to the NFA amounting to P20 billion for rice purchases.
“Given the broad-based pressure on inflation from oil and food prices and rice’s importance as staple food of the poor, we doubt the government will pass on to consumers the recent surge in global rice prices,” Credit Suisse said. “We therefore assume that the NFA will shoulder the entire financial burden of the recent surge in global rice prices.”
Credit Suisse noted the price of “ordinary” rice in the Philippines had risen by 25 percent from 2000 to 2007. Rice imports have more than doubled in the past decade, making the country the largest importer of rice in the world, reaching 1.7-1.8 million metric tons a year from 2005 to 2007.
“The surge in rice imports stems from domestic rice output lagging behind consumption growth which, in turn, has been driven by population growth and increasing per capita rice consumption,” it said.
The government aims to import 2.6 million metric tons of rice in 2008, 44 percent more than in 2007, to build up stocks and prevent shortages.
The World Bank attributes the country’s insufficient rice production to its relatively low productivity.
The institution said Philippines rice yields averaged 3.5 metric tons per hectare in 2005, while Indonesia and Vietnam achieved higher yields of 4.5-4.8 metric tons per hectare. With editing by INQUIRER.net
Rice crisis to cost Philippines one percent of GDP: study
MANILA (AFP) — Soaring food prices are likely to cost the Philippines nearly one percent of its economic output this year to ensure adequate supplies to the poor, Credit Suisse said on Wednesday.
The government has announced plans to import up to 2.7 million tonnes this year even as prices soared to near-historical levels amid tight global supplies.
President Gloria Arroyo has cited rising food prices as a threat to the Philippine economy, while analysts have warned major rice importers that soaring prices could lead to social unrest and pose security problems. The government has deployed police and military to crack down on rice hoarders.
The Swiss-based investment bank said in a study that Manila was likely to import 2.6 million tonnes this year at up to 1,000 dollars a tonne to ensure it would have enough stocks to sell to the poor at state-subsidised prices.
“We estimate that the fiscal cost of importing rice at a high price and selling it at the current domestic price could approach one percent of GDP (gross domestic product) in 2008,” the Credit Suisse report said.
A potential loss of 1.3 billion dollars or 0.7 percent of GDP was likely because it would incur margin costs for storage and distribution and release it into the domestic market at its current selling price, it added.
The government, through the National Food Authority (NFA) is the Philippines’ main rice importer as well as the buyer of last resort for locally grown rice. It has recently raised the price it pays for rice it buys from Filipino farmers by 44 percent to discourage rice smuggling.
Credit Suisse said the NFA was likely to finance the bulk of its loss through government-guaranteed borrowings from commercial and state banks.
“Although the cost of the rice subsidy is sizeable, we think the government has enough fiscal flexibility to shoulder this burden without impairing its sovereign creditworthiness,” it added.
Credit Suisse said Philippine rice production has been rising steadily, to 11.3 million tonnes this year from 5.6 million tonnes in 1998, but that the growth of its population, now estimated at more than 90 million, has outpaced output growth.
Experts say the Philippines does not have adequate farmland suitable for growing the water-intensive crop.
While Philippine rice yields of 3.6 million tonnes per hectare (2.47 acres) are way above the 2.6 million tonnes per hectare in Thailand, the world’s top rice exporter, Manila’s production costs per tonne was substantially higher at 96 dollars compared to 74 dollars for Bangkok, Credit Suisse said.