Where has all the RICE gone?

Where has all the RICE gone?
Understanding the Rice Crisis

by Berna Ellorin

Either the Arroyo government is in deep denial, or engaged in a massive cover up when it claims there is no rice crisis in the Philippines. If this were true, why are our families back home telling us otherwise? Why are more and more Filipino-Americans sending home smaller bags of rice in their balikbayan boxes? Why, in a country known for its picturesque rice terraces, is there all of a sudden not enough rice for the domestic population of the Philippines?

Once a top rice-producing country, the Philippines is now the world’s top importer of rice. As the tables have drastically turned, more and more Filipinos and even overseas Filipinos are being hit hard by the global food crisis. Rice prices rose sharply in March and April 2008 after many exporting countries, including Brazil, Egypt, India, Vietnam and top exporter Thailand, announced that they were restricting exports to ensure domestic supplies.

The first step in understanding the global food crisis is understanding the framework of how global trade currently works. Trade policies, especially related to developing countries such as the Philippines with largely poor populations, are dictated by multi-lateral agreements between nations such as the Asian Pacific Economic Cooperation (APEC) and the North American Free Trade Agreement (NAFTA). What is striking about these foreign trade agreements (FTAs) is the inclusion of steep uneven and unequal considerations between the needs of developed countries such as the United States and countries in Europe, and the role of developing countries such as the Philippines with a largely agricultural-based economy.

Because needs of consumers in the First World are often given higher consideration, the structural agricultural policies for many countries are molded to fit these needs. As a result, many agricultural lands are forced into conversion for export. This is evident in the Philippines, where 90% of the population are farmers living off and tilling converted lands. Without the consideration of national sovereignty in its own agricultural production, the Philippine government keeps exporting its agricultural goods and ignoring the domestic population’s needs.

This same situation is now intensifying in other rice exporting countries near the Philippines. In fact, the governments of Thailand, Malaysia, and Vietnam are already taking government measures to limit the exportation of rice to feed their domestic populations. Because the majority of the world’s rice comes from these regions, and with the declining value of the US dollar, the US price of rice has also gone up. Now packaged rice in US supermarkets are not only considerably more expensive, but they are also smaller packages.

Just imagine how the souring price of rice, the staple food of the Philippines, leaves this basic commodity as inaccessible to the majority of the population, and what EXACTLY has been the Arroyo government’s response? The answer bears resemblance to the handling of the ZTE-NBN scandal– using the disadvantage of the Filipino poor to make more money for corrupt politicians with deep pockets.

The price of rice has long been artificially high as a result of the rice cartel operation plus expensive inputs resulting from transnational corporate agri-business monopoly dictates of global trade policies. The role of the government sector in the rice marketing structure is primarily expressed through the operations of the National Food Authority (NFA). The NFA undertakes grains procurement and distribution in order to have an impact on supply. It also maintains a buffer stock to enable government to intervene in times of supply and price fluctuations.

There has been very limited intervention from the public sector in alleviating the pain of the rice crisis in the Philippines. The NFA only supplies 12% of the domestic rice market, at most, while the vast majority are imported from other countries. It is estimated that private merchants handle around 95% of domestic production. Although rice merchants are important contributors to the viability of rural and urban economies, many in the past were engaged in rice cartel operations that were responsible for controlling the flow and distribution of rice and subsequently fixing its price.In addition, the prices of other basic commodities critical to agricultural production, such as fertilizer and oil, are also souring up, out-of-reach for farmers.

This has deeply stagnated the local production of rice considerably in the Philippines. In fact, 75% of rice farmers produce less than 4 MT/ha., while the standard to sustain food supply security is at least 5.4 MT/ha, illustrating low productivity and hurting the Filipino people even more. Rice production has remained on subsistence level, landlord-dominated, and lacking in government support. Because of these basic crisis features, rice farmers are one of the poorest sectors of the rural economy.

Because feudal and semi-feudal production relations predominate in the Philippines, the operation of private merchants sometimes dictate the movement of price both in the farm level and in the retail level such as in the case of rice. But this tendency arises only to the extent that inadequate public spending to help farmers gain access to the markets through roads and credit is inadequate. Also, the costs of marketing are increased with the length and complexity of the marketing chain.

At this current rate, with no plans of government’s economic intervention by way of comprehensive and genuine land reform (towards a sovereign perspective and handling of Philippine soil) or national industrialization to modernize basic farming, the Philippines remains in a long-term or permanent food crisis and in deep food insecurity.

And what about the role of the rice cartel that controls the price of rice? For starters, the Arroyo family owns one of the largest rice cartels operating in the Philippines today. Because of this, the Arroyo family is responsible largely in part for the high retail price of rice. They are literally making more money off of the desperation and hunger of Filipinos everywhere!

What needs to be done to stop the rice crisis? For the long term, we need to get to the root of the problem and shift the Philippines from a country in crisis to a country with a self-sufficient economy, independent of the dictates of uneven and unfair global trade policies. This will take a considerable change in our national leadership to make happen and more policy input from those on the ground in the agricultural sector. There also needs to be a considerable national economic investment in modernizing farming technology in the Philippines to increase rice production levels.

In the short term, we need to continue to demand government’s immediate intervention in the control of the price of rice and an end to the corrupted rice cartel system. There should also be an emergency fund set up to assist rice farmers with the increasing cost of production as well as a suspension of all forced land and crop conversion. ###

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