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. ###

Other events this weekend!

YEHEY! Cultural Show
Lourdes Filipino Restaurant
Party – Benefit
Friday, May 30, 2008
Time: 6:00pm – 10:00pm
58-02 37th avenue
Woodside, NY
The Philippine Forum Youth or the young educators for health and empowerment of the youth, aims to enhance the leadership capabilities and artistic talents of high school and college Filipino youths through leadership training, sports, workshops and cultural festivals.
It strives to make Filipinos and people of Filipino heritage aware of their roots, conscious of their rights and their responsibilities as members of both the American and Philippine societies and as citizens of the global community.

After a series of retreats and workshops, developing them as leaders in their own way, the Philippine forum youth decides to present something to the community and their families and so comes the cultural show….

tickets are available for $20 per persons
Please RSVP to Michelle (917)213-7720

========================================
CRICES
Saturday, May 31, 2008 at 7:00pm
BarYo! Restaurant
65-14 Roosevelt Avenue
Woodside, NY

A music benefit to raise awareness of the so-called “rice crisis” in the Philippines.
$10 Entrance

Performers:
Kiwi – www.myspace.com/kiwi
Deep Foundation – www.myspace.com/deepfoundation
Taospuso
Miss Josephine – www.myspace.com/maryjosephinemusic
Rockin’ Forum
w/ DJ Boo
and much more!

This show is also dedicated as a tribute to the late Congressional Rep. Crispin “Ka Bel” Beltran who passed away on May 20,2008.

Rice Crisis in the NYT

ttp://www.nytimes.com/2008/05/09/business/worldbusiness/09food.html?_r=2&hp=&adxnnl=1&oref=slogin&adxnnlx=1210317565-rKhT0oVD5erkQrGyImAsSA

May 9, 2008

High Prices for Staple Foods Dip, but Volatile Markets Persist

HONG KONG — After months of startling increases, the prices of rice, wheat, soybeans and several other foods have come down recently, a development that could ease some of the panic in global food markets.

Prices remain volatile and remarkably high by historical standards, and few agricultural experts expect the days of inexpensive food to return soon. There is no sign of a drop steep enough to make food affordable again for the hundreds of millions of people in poor countries who are struggling to maintain adequate diets.

Still, any price decline is welcome news for many countries, particularly those heavily dependent on imported rice.

The spot price of rice from Thailand has dropped by close to 20 percent in the last two weeks after nearly tripling in the first four months of this year. Rice prices on American markets have been rising this week, including a sharp increase on Thursday, but are still down 10 percent from their high on April 23.

Similarly, despite jumps in the last few days, contracts for future delivery of American wheat and soybeans are down markedly from their highs in March — by 34 percent in the case of wheat. The prices of canola oil and palm oil, two alternatives to soybean oil for cooking and food processing, are also down.

“The floodwaters have stopped rising, but the problem isn’t over yet, and prices could stay at this level a few years,” said Nicholas W. Minot, a senior research fellow at the International Food Policy Research Institute in Washington.

Agricultural markets remain deeply unsettled. For several years, farmers have been unable to catch up with rapidly rising demand for food and animal feed, and the world’s grain stocks have been falling. The situation peaked in recent months as prices spiraled out of control, setting off hoarding in many countries and food riots in at least 19 of them.

United States corn prices hit yet another record on Thursday, just above $6.30 a bushel, amid fears that rainy weather in the Midwest would suppress yields this summer. Most corn is not used for food; it is used for animal feed and, increasingly, for ethanol production. The high corn prices of recent years have prompted farmers to plant more of it, displacing crops like wheat and contributing to higher food prices.

Experts say that shoppers may not see much benefit from the recent price dips. Many retailers and wholesalers around the world had not yet passed the full extent of this spring’s price increases along to consumers.

The spot price of a heavily traded good grade of rice exported by Thailand peaked at $1,100 a ton in late April, with a few purchases at even higher prices by buyers demanding huge quantities. But traders said Thursday that the going price was $880 to $920 a ton, although buyers of large quantities could still expect to pay more.

“I don’t expect a crash in prices, but I think there is a correction,” said Ben Savage, the managing director for rice at Jackson Son & Company in London, one of the world’s oldest rice brokerage firms.

Rice is perhaps the world’s most politically fragile crop. Nearly half the world’s population depends on it as a staple food. An even higher proportion of the world’s poor people depend on it, as imported rice has displaced local crops in cities across Africa and the Caribbean over the last decade, even as the crop retained its primacy in Asia.

The latest rice prices are still far above the price of $385 a ton prevailing in mid-January, and even further above the 2003 price of $200 a ton. Even with the slight decline in prices, the cost of rice remains high enough to put considerable strain on poor families in countries like the Philippines and Nigeria, the world’s two largest rice importers.

“The market has been a buyer’s market for 40 years and recently it switched to being a seller’s market, particularly in the last few months,” said Vichai Sriprasert, president of the Riceland International Company in Bangkok.

While rice prices have fallen in recent days, global rice consumption remains greater than production, he said, adding, “It will remain a seller’s market for years to come.”

The recent cyclone in Myanmar, formerly known as Burma, heavily damaged rice fields there and sent rice prices soaring in the country. But rice traders said this had not pushed up world prices because Myanmar’s exports were tiny and the country and aid agencies lacked the money to buy large quantities of rice on world markets.

“I don’t think the Burmese cyclone is having any significant effect,” said Korbsook Iamsuri, the secretary general of the Rice Exporters Association in Thailand.

Experts cite a range of reasons for the dip in commodity prices. Traders said that some speculative money might be moving out of agricultural commodities, putting downward pressure on prices. Additionally, it is clear the price spikes of recent months suppressed some demand. And the increases encouraged farmers to plant more crops on land that is marginally fertile and not worth farming when prices are lower.

Moreover, rice exporters, after clinging to inventories as prices climbed rapidly, have begun to sell. Many Thai rice exporters bet on continued increases in rice prices by building up large inventories with borrowed money, but they are now struggling to meet interest payments on their loans, said Mr. Vichai, the president emeritus of the Rice Exporters Association in Thailand.

“Now that every one of us has overstocked ourselves, then when there’s a sign that prices have overshot, we all get excited” and become more willing to sell, he said.

The government of the Philippines, the largest rice importer, has played a role in the turnaround in market sentiment. Receiving only one bid for a rice tender on Monday, the government decided it had enough rice in its stockpiles and would wait until prices fell before buying more.

“We currently have a sufficient supply of rice and are only looking to import supplies to further strengthen our reserves,” the agriculture secretary, Arthur Yap, said in a written reply to questions. “Given this flexibility, we will only purchase from the international market when the price and other terms are suitable, and in this instance, we decided to defer the process and to wait for a better price.”

Copyright 2008 The New York Times Company

Rice Crisis Makes Wage Hike More Urgent

Rice Crisis Makes Wage Hike More Urgent

BY ALEXANDER MARTIN REMOLLINO
LABOR WATCH
Bulatlat
Vol. VIII, No. 12, April 27-May 3, 2008

Children begging in the streets at night
Knocking on cars till the morning light
People standing in line for a kilo of rice
Welcome to the Dark Ages, the era of lies…

— The Jerks, “Rage”

For Kilusang Mayo Uno (KMU or May 1st Movement) chairman Elmer “Bong” Labog, the rice crisis presently plaguing the country makes a legislated P125 nationwide, across-the-board wage increase all the more urgent. The rice crisis, he said, worsens workers’ already miserable conditions.

From what used to be as low as P26/kilogram, rice prices have shot up to as high as P40/kilo in the last few weeks. The National Food Authority (NFA) continues to sell rice at P18.25/kilo, but only in limited quantities. Long queues of people waiting to get a kilo each of NFA rice have become a common sight.

“Workers, especially those living in urban poor communities, have long been trying to survive on lugaw (gruel),” Labog said in an interview with Bulatlat. “This means hunger will worsen because they can no longer afford rice at its present high prices. It is rice of a very low quality that is being sold by the NFA (National Food Authority) at P18.25, and the average worker struggles to feed a family of six daily with only a kilo of rice. The problem of workers is that their wages are not enough to buy the staple food.”

This problem, Labog says, is worsened by the present rice crisis.

Wage increase: 1999-present

The demand for a P125 wage increase was first put forward by the KMU – then under the leadership of Crispin Beltran – in 1999, nearly a year into the presidency of Joseph Estrada who won the 1998 presidential elections on an avowed populist “platform.”

Back then, the family living wage for a family of six – the average Filipino family – was P379.51 ($9.71 at the year’s average exchange rate of $1:P39.09) a day on a national average, based on data from the National Wages and Productivity Commission (NWPC). In contrast, the daily minimum wage stood at a national average of P193.67 ($4.95).

A P125 wage increase at that time would have brought the national average minimum wage to P318.67 ($8.15), or P60.84 short of the national average family living wage that year.

The Estrada administration, which ascended to power on the basis of a proclaimed love for the “Filipino masses,” never paid heed to this demand of the KMU.

Estrada was ousted in 2001 through a popular uprising that was largely anti-corruption. He was succeeded by his vice president, Gloria Macapagal-Arroyo.

The demand for a P125 wage increase was among the items in the “People’s Agenda” that cause-oriented groups presented to Arroyo during her first days in office.

The required living wage for an average Filipino family was in 2001 a far cry from what it is now. That year, it stood at a national average of P445.53 ($10.89 at that year’s average exchange rate of $1:P40.89), based on data from the NWPC. The highest regional minimum wage then was in the National Capital Region (NCR), which was pegged at P250. At a national average, however, the daily minimum wage that year stood at P222.42, based on data from the Department of Labor and Employment (DoLE).

Even then, a P125 across-the-board, nationwide wage increase would have been insufficient to bridge the gap between the minimum wage and the required family living wage. An additional P125 would have brought up the 2001 daily minimum wage to P347.42 – which is P98.11 short of what an average Filipino family needed to survive daily that year.

Nearly seven years after first assuming power, the Arroyo administration has yet to heed this demand of the KMU.

The national average family living wage has risen by more than P125 since 2001. Since then there have been trickles of wage increases – which were soon eaten up by runaway inflation.

Based on March 2008 data from the NWPC, the national average family living wage stands at P770 ($18.32 at the April 25 exchange rate of $1:P42.04) a day.

The highest regional minimum wage at present is P362 ($8.61) for the National Capital Region (NCR), which has a regional daily family living wage of P858 ($20.41). The region with the lowest minimum wage rate is the Autonomous Region in Muslim Mindanao (ARMM), with only P200 ($4.76) even as it has a regional daily family living wage of P1,186 ($28.21).

During his three terms as representative, Beltran was able to file three bills for a legislated minimum wage hike. He first filed a wage-hike bill in 2001, as a representative of Bayan Muna (People First). It never did go beyond first reading.

The second, HB 345 – which Beltran filed as Anakpawis representative – was approved at the plenary of the House of Representatives by a vote of 151-0 on Dec. 20, 2006. Sen. Jose “Jinggoy” Estrada – son of Arroyo’s predecessor – was sponsoring a counterpart bill at that time.

The next month, however, HB 345 was recalled upon a motion filed by Cavite Rep. Crispin Remulla, purportedly to allow further debate and deliberation. Malacañang supported this move of the House of Representatives, and the younger Estrada deferred sponsorship of the counterpart Senate bill.

If HB 345 had not been recalled and its counterpart Senate bill was also passed, the national average minimum wage would have gone up to P408.67 ($7.96 at that year’s average exchange rate of $1:P51.31). But that would have still been short of what the family of six would need on a national average to survive daily, based on 2006 data from the NWPC.

“It is but just that there be an immediate wage increase,” Labog said. “This should be done at the soonest possible.”

Rice crisis

Even without more recent figures from the NWPC, it is easy to conclude that the cost of living has risen sharply since last March, given that rice prices have jumped in the last few weeks.

The socio-economic think tank IBON Foundation has blamed the present rice crisis on the government’s adherence to neoliberal economic policies, which the International Monetary Fund and the World Bank (IMF-WB) – two institutions organized as a result of a conference in Bretton Woods by the victors of World War II, thus the moniker Bretton Woods Twins – are imposing on Third World countries.

In particular, IBON cites the enactment of the Agriculture and Fisheries Modernization Act (AFMA) in 1997 as having worsened the country’s dependence on rice imports and thus a major contributor to the country’s present rice crisis.

As of 2006, the country’s rice imports have reached 1.7 million metric tons – more than twice the 722,000 metric tons recorded for 1997.

Meanwhile, NFA rice procurement has dropped from 7.95 percent of total palay production in 1977-1983 to only 0.05 percent in 2000-2006. The NFA’s original mandate is to procure at least 12 percent of palay production. Rice procurement is increasingly being dominated by traders.

Urgency

“It is but just that there be an immediate wage increase,” Labog said. “This should be done at the soonest possible.”

Unlike in ordinary times, even some business leaders have expressed support for wage-hike demands aired by various labor groups, demonstrating the urgency of a wage increase amid the rice crisis. For instance, Makati Business Club executive director Albert Lim, interviewed recently by the Philippine Daily Inquirer, has said the wage-hike demand is something they “may support” at this time.

Labog sees this as something that is but logical, considering the nature of the times.

“They can no longer deny that workers’ wages can no longer cope with rising prices of goods and services,” Labog said. “They would be put in a very defensive position if they oppose demands for a wage increase at this point. So they have articulated positions that are not opposed to wage increases. The question is by how much they are willing to increase workers’ wages.”

“We maintain our stand for a P125 wage increase,” he also said. Bulatlat

ON RICE ISSUE

2 NEWS ON RICE ISSUE:

Compiled by G.L.

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Rice Shortage at Sam’s Club and Costco

The Retail Outlets Limit Rice Sales

Rice shortage at Costco

A sign at a California Costco store limiting the amount of rice customers can purchase.

Photo: Paul Sakuma/AP Photo
By Annie Bell Muzaurieta

The Sam’s Club and Costco chains will limit the sale of large quantities of rice due to what Sam’s Club called “recent supply and demand trends.”

According to the Washington Post, Sam’s Club announced that stores will limit customers to four bags at a time of 20-lb bags of jasmine, basmati, and long-grain wild rice. The company said the restriction will mainly affect businesses, and the limit does not apply to retail size rice packages.

The Sam’s Club decision follows a similar one made by Costco, which also limited bulk rice purchases in some of its stores.

Kristy Reed, a spokeswoman for Sam’s Club, said in the article that she could not say whether the problem was caused by short supplies or by customers stocking up in anticipation of higher prices. David Coia, USA Rice Federation spokesman, said there is no rice shortage in the United States.

Riots have broken out recently in developing nations over short rice supplies and increased prices. The article says poor crop yields and demand have pushed rice prices up 70 percent this year.

Brazil announced yesterday that it would temporarily halted rice exports to ensure domestic supply as global prices rise, following on the heels of several Asian nations that have done the same.

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From Wal-Mart quotas to a ‘frenzy’ in Vancouver, Asia’s rice crisis goes global

PAUL WALDIE

April 24, 2008

Vancouver’s Western Rice Mills Ltd. has been importing rice from Thailand for years and sending it to grocery stores and restaurants across Canada. But yesterday the Thai shipments stopped, leaving the company scrambling to find supplies.

“We’ve never seen anything like this in the history of this company,” said Lawry Poupart, controller at the company, which supplies major chains including Safeway and Save-On-Foods. “Everybody is precariously watching what’s happening in the world.”

Rice has been hit by a convergence of factors recently, including increased demand from developing countries and weakened supplies due to poor crop yields, rising input costs and limited growing areas. World rice stocks are at 20-year lows and riots have broken out in some countries where rice is a staple. While global rice production is expected to rise by nearly 2 per cent this year, demand will still outstrip supply, according to the Food and Agriculture Organization of the United Nations.

Compounding the problem were recent moves by two big rice producers, India and Vietnam, to restrict exports in order to preserve ample supply at home. Thailand, the world’s largest producer, has also restricted some exports, although the country’s Prime Minister vowed yesterday not to cut exports or distort prices.

Rice futures hit a record $24.85 (U.S.) per hundredweight on the Chicago Board of Trade yesterday before closing at $24.82.

The price of the popular Jasmine variety from Thailand, an industry standard, has doubled in the past six weeks.

The global rice crisis is also starting to have an impact on North America.

Sam’s Club stores, a division of Wal-Mart Stores Inc., has began restricting the amount of rice customers can buy at outlets across the United States.

“We are limiting the sale of jasmine, basmati and long-grain white rice to four bags per member visit,” said company spokeswoman Kristy Reed. “We are working with our suppliers to address this matter to ensure we are in stock, and we are asking for our members’ co-operation and patience. At this time, we are not restricting purchase amounts of flour or oil.”

Karin Campbell, a spokeswoman for Wal-Mart Canada, said similar restrictions were not in place in Canada.

Costco Wholesale Corp. said it has seen a spike in rice purchases at some stores in the U.S, but so far it has not introduced limits on purchases.

Henry Poon, a spokesman for Vancouver-based T&T Supermarkets, which specialize in Asian products, said the company’s stores have enough rice to last a few weeks. “Right now there’s a frenzy and there’s a bit of chaos in the market place,” Mr. Poon said.

The company, which operates 16 stores across Canada, buys most of its rice from suppliers in Thailand and the U.S. Now that Thai supplies have tightened, prices for American rice have jumped 20 per cent in the past month, he said. Many U.S. suppliers also won’t enter into long-term contracts in order to take advantage of rising prices. “I guess that’s the way it is in the whole industry and that’s how we have to accept it,” he said.

Rice shortages in the Philippines, one of the world’s largest rice importers, have prompted some Filipino Canadians to ship rice packages home to relatives. A popular tradition in Filipino communities is to send relatives balikbayan boxes, which are typically filled with small presents. These days, many people are shoving packs of rice in with their gifts, said Teo Paculanan, of Forex Parcel Delivery Inc. in Toronto. “They do put it in,” she said. “We’ve seen it.”

Mr. Poupart at Western Mills said he hopes the Thai government will ease export restrictions soon. Currently, the window for exports opens and closes randomly, he said. The company has found enough rice supplies to get through the next few weeks, but after that no one knows. “We’re totally at the mercy of the [exporting] countries.”


The rice price

Rising prices for rice can be partly attributed to what’s driving up the cost of other crops: Fertilizer is more expensive and oil prices are high. Futures speculation may also be playing a part, although rice futures trading is relatively small. Here are some other

reasons for the price rise:


Land

While acreage for other crops can expand in North America, Europe and South America, there has been almost no growth in land suitable for rice production, which requires flat land, lots of water and a warm climate. Rice bowl areas of China, South Asia and Southeast Asia have been losing land to urbanization.


Consumption

Low rice stockpiles have created an environment in which supply disruptions can produce rapid price swings. World rice stocks have shrunk from a peak of 130 million tonnes in 2000-01 to 72 million tonnes in 2007-08, according to U.S. Department of Agriculture figures, the lowest level since 1983-84.


Demand

Demand is growing quickly in countries with big oil revenues – Iran and Saudi Arabia, for example – which can afford rice at almost any price. At the same time, rice has become widely consumed in African countries such as Ghana, lulled by years of low rice prices and subsidized U.S. exports.


Labour

Growth in productivity has been low, running at around 1 per cent. The back-breaking work of growing rice is a disincentive in countries such as China where new urban job opportunities are opening up. Countries such as Japan and South Korea can achieve high yields with mechanized systems and huge inputs of fertilizer and pesticide, but at a big cost.