Tuesday, 8 April 2008

Booming rice harvest in Philippine rice granary amid soaring prices

By Wu Qiang
Xinhua
http://news.xinhuanet.com/english/2008-04/08/content_7939639.htm

CAUAYAN CITY, the Philippines, April 8 (Xinhua) -- Under hot sunshine, trucks carrying yellow corns for making feeds were entering a large stock house compound in this northern Philippine town located in what is called the country's granary, the Cagayan Valley Region 300 kilometers north of Manila.

Wilfredo Pua, a local corn dealer, was buying corn products from local farmers who were in the process of collecting farm products from the field in the first harvest, locally called cropping, of the year.

"There is no food and rice shortage in the Philippines, the only problem is the supply is not meeting the demand and the prices are rising due to hoarding, higher fertilizer prices and restriction of selling rice by exporting countries like Thailand and Vietnam," said Pua, when he was asked to comment on the full-flown scare about rice shortage in the Philippines.

Like hundreds of food dealers in this agriculture town, Pua hasbeen witnessing the sharp rise of rice prices over the past few months. He said in January, first class rice was purchased with 28 pesos (0.7 U.S. dollar) per kilogram, second class rice could be bought with 22 pesos per kilogram, and government-subsidized rice was available with 18 pesos per kilogram.

But now the first class rice is priced as high as 40 pesos per kilogram, second class rice 32 pesos per kilogram and government-subsidized rice 22 pesos per kilogram, he said.

Here in the Philippines, the biggest rice importer of the world, things seemed to be much worse than a report by the UN Food and Agriculture Organization released recently which said that international rice prices have increased by about 20 percent in the past three months and at least doubled since 2004.

But in this vast valley in northern Philippines, this season's rice harvest is seeing a booming and local farmers are expecting good income due to higher food prices.

Along the highway, farmers were collecting products, putting them on the trucks and bringing them to dealers' store houses. The government also purchases the products through the National Food Authority, which is charged with guaranteeing food security.

Amid looming fear of rice shortage, the Philippine government is now taking all measures necessary to stop hoarding, inspecting market, increasing import at higher prices, allowing private businessmen to buy rice abroad without quota restriction and checking rise of prices to ensure that one third of the country's population, or 30 million people, living with less than 2 U.S. dollars a day can survive soaring expenses for survival.

President Gloria Macapagal Arroyo Monday approved the lifting of the import quota on rice and corn importation by privetraders, but a 50 percent tariff on the trade remains. But private sector, which was formerly allowed to buy 300,000 metric tons of rice annually, is usually reluctant to buy food from abroad due to higher prices than at home.

The government is also appealing to the powerful Roman Catholic Church to help distribute government-subsidized rice to make sure the country's poor will survive. In the meantime, the government is cracking down on illegal hoarding of rice products, and offenders could be given life sentence for sabotaging national economy.

But food dealers have expressed doubt over the effect of cracking down on hoarding on reducing food prices.

"If the government cracks down on hoarding, the price will not go down. What is important is that we must have enough supply in business. The price will go down if the demand goes down. When demand is high, the price is high," said Pua.

  Apart from international rice supply cut and hoarding, other reasons for rising rice prices in the Philippines are attributed to a weak fertilizer industry as well as the marginalization of the agricultural sector giving way to services sector over the past 20 years.

Conchita la Madrid Palencia, an agricultural business expert in Isabella Province, said compared with China, Thailand and Vietnam, the fertilizer and seed industry in the Philippines is weak, and the price of imported fertilizers are very expensive.

The imported inorganic fertilizer price doubled in one year's time from 700 pesos (17.5 U.S. dollars) one bag weighing 50 kg to 1,400 pesos (35 U.S. dollars), as chemical fertilizers are made with oil whose price is also soaring, she said.

"But this could be a blessing in disguise, because purely chemical inorganic fertilizer damages soil, while using organic fertilizer, which is made of human and animal manure, corn cob, and other non-chemical materials, are good for protecting environment and natural resources," she said.

Ediberto Ang, a local fertilizer and seed maker who owns a small factory and a homestead cattle farm, said he sees a bright future for organic fertilizer in local market. He said he produces organic fertilizer costing 230 pesos (5.75 U.S. dollars) only for one bag, which leads to equally good products as inorganic fertilizer.

Located in northeastern Luzon covering an area of 2,7000 square kilometers and inhabited by some 3 million people, the Cagayan Valley Region was colonized by the Spaniards as early as 1570s and became a granary of the Luzon region ever since. At least 60 percent of its rice, yellow corn, peanut, cassava and sugarcane products are sold in Metro Manila and the central Visayas region.

Second only to the province of Pangansinan in central Luzon in agricultural production, Cayagan Valley region also is more socially oriented in terms of agrarian land ownership, compared with Mindanao and some other Luzon regions, with a 10-person-houseshold owning one hectare of land in average.

Eugene Gabriel, a farm equipment and component dealer who sellstractors, corn pickers, planters, harvesters and small engines to local farmers, said each hectare could yield 30,000 to 35,000 pesos (750 to 875 U.S. dollars) worth of products in one good harvest.

Local farmers can have two to three harvests a year as the country is located in the tropical zone.

Once a rice exporter, the Philippines became a net rice importer after former President Ferdinand Marcos was overthrown in 1986. In an editorial published on Sunday, the local daily "The Philippine Star" said food security has become a serious problem for the country because of rising prices and hoarding, reported diversion of subsidized rice for the poorest, and tightening global supplies.

The editorial said while agricultural remains one of the best performers in the economy in recent years, "indiscriminate development and conversion of agricultural lands for commercial, industrial or residential purposes,combined with poor irrigation and inadequate farming and marketing support have turned the country from a rice exporter to importer".

Some Filipino economists said recently that the government is not investing enough in agricultural sector to make it more productive.

Arsenio M. Balisacan, director of the Southeast Asian Regional Center for Graduate Study and Research in Agriculture, said that of the 6.9 percent gross domestic product growth forecast for thisyear in the first quarter, the government attributed only 0.8 percentage point to agriculture against 4.9 percentage points to the services sector.

The increased subsidies to rice at the farm gate and the retailmarket could "dent" improving fiscal situation of the government, but lack of food for millions of poor could lead to political unrest, said experts.

The government has vowed to achieve 90 percent food self-sufficiency by the end of the year and is encouraging the plantingof alternative food like white corn, which is good for substituting rice with cheaper price through hybrid technologies.

"Because of better technologies in seed producing and fertilizer making, China, Vietnam and Thailand can produce rice with much lower costs than the Philippines. We need to develop agricultural technology," said Palencia.

Like many other local businessmen in this city, Palencia owns about 2 hectares of land herself. She is now working with her sister, who is the wife of the governor of Isabella, to make better plans for the farming of her rich and beautiful land.
Editor: An Lu

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