Rice Crisis getting worst. NFA says goodbye to P18.25 rice

April 9, 2008

NFA says losses mounting

THE National Food Authority yesterday said it is considering an increase in the price of rice that it is selling for P18.25 because of the agency’s heavy losses.

NFA administrator Jessup Navarro said that last year, the NFA incurred a loss of P1.5 billion as it tried to keep the current NFA price.

The NFA recently started to buy rice at P17 a kilo as support to farmers. This will be classified as “commercial grade rice (well-milled or double milled)” and sold by the NFA at P22 to P25 a kilo. The NFA’s regular buying price is P12 a kilo for the P18.25 a kilo rice.

“We can’t keep prices too low because our farmers might be affected,” Navarro said.

Cabinet secretary Ricardo Saludo said the NFA has been subsidizing consumers by as much as P50 billion a year to ensure its affordability.

The Philippines has pulled out all the stops in trying to source more supply of rice, including asking regional governments to secure supplies.

The rice import ceiling on the private sector was 300,000 metric tons annually, but in practice, due to high world prices and the tariff, less than 10 percent of that volume has been brought by private traders.

Agriculture Secretary Arthur Yap said under a new system, the government will charge private traders a minimum service fee of P2 per kilogram for importing the rice on their behalf and the private sector will not be subject to the 50 percent tariff.

This move would be equivalent to private importers paying a tariff of under 10 percent, officials said.

But rice traders said the move would not encourage private demand because international prices, which in some cases have doubled so far this year, are so steep.

“Even if they applied a 10 percent negative tariff, in other words a subsidy, it wouldn’t help because prices are so high,” said one dealer who declined to be named.

The Philippines imports around 10 percent of its annual rice requirement and wants to import up to 2.2 million tons this year, which would be its biggest purchase in a decade, to shore up stockpiles ahead of the traditional lean period in the third quarter.

Sen. Francis Escudero said a P50 per kilo of rice would create “a nation of Katipuneros” who would rise against the Arroyo government.

He said that at 50 percent tariff, imported rice will land here at P50 per kilo if rice can still be found. Rice-exporting countries have curbed foreign sales.

Escudero based his computation on a $795 per metric ton price of rice, which was how much the widely traded Thai grade B rice fetched last week, and yesterday’s 41.75 to 1 close of the peso-dollar exchange.

Using these assumptions, rice will already cost P31.19 a kilo at source, and a 50 percent tariff will bring up its price to about P49.80 a kilo, Escudero said.

“Wala pang handling fee, hauling and storage charges. And zero profit, which means traders, will be bringing in rice out of sheer patriotism, “he said.

“If all of the above will be factored into the retail price, plus a little mark-up for the tindera, then we are looking at P52 per kilo. Ito yung amount na hindi lang moderated greed pero zero greed na,” he said.

“A P50 kilo rice will overnight create a nation of Katipuneros, with one rallying cry: Dapat nang kalusin ang gobyernong gumugutom sa atin,” Escudero said.

Sen. Pia Cayetano said fully liberalizing rice importation could backfire on domestic rice production in the long run.

Cayetano made the remark in reaction to President Arroyo’s order to lift import quotas on rice and corn.

“Tinkering with the import quotas is a palliative solution. It may have the short-term effect of achieving a steady supply, but it could also permanently impair the country’s capability to produce enough of the staple grain for our rapidly growing population in the coming years,” she said.

She said flooding the market with cheaper imported rice will further displace local farmers who are now feeling the crunch of high production costs and inadequate government support and facilities.

“The long-term solution would be to expand domestic rice production by increasing government intervention in palay procurement and rice distribution, providing much-needed irrigation, farm-to-market roads and post-harvest facilities and protecting areas planted to rice from unwarranted land-use conversion,” she said.

Sen. Loren Legarda agreed, pointing out that of the 3.1 million hectares of rice lands that need irrigation, only 46 percent or 1.4 million hectares are serviced.

“From 1993 to 2003, only 195,200 hectares of the total target of 294,500 hectares received irrigation support.” She said.

President Arroyo took potshots at her critics, saying endless investigations and politicking will not address the country’s problems and the needs of Filipinos, like putting rice and food on the table.

Arroyo, at the 66th Araw ng Kagitingan celebration at the Dambana ng Kagitingan Shrine in Bataan, said everyone should put the interest of the majority above their own.

“It is time for action, not political wrangling. The people deserve that we focus on a positive agenda, not get wrapped up in political jockeying. No endless investigation will put rice on the table, a computer in a classroom or a health clinic in a barangay,” she said.

Arroyo said government’s short-term objective is to ensure food on the table of every Filipino family despite the global rise in the prices of basic commodities like fuel and rice.

She reiterated that there is no need to panic.

“We are in a much better position to weather these economic and price pressures than ever before. That does not mean it lessens the pain on our poor when rice and gas prices increase, but we are able to help ease this burden,” she said.

United States Ambassador Kristie Kenney said her government is prepared to export more rice in the Philippines.

Kenney said the US had been doing all it can to help ease the effect of rice problem — from participations in research and development of new rice strains to exporting supply.

The US last month exported some 100,000 metric tons of rice to the Philippines which the NFA has been selling as a high-grade commercial rice at P25 per kilo.

The United Opposition said Malacañang cannot hide behind semantics the fact that it is squarely to blame for the food shortage.

“The cause of rice shortage is the misgovernance of the Arroyo regime. This could have been avoided had they given priority to the agri industry. During President Erap’s time, the agri sector was the top priority since he wanted the people to have cheap food on their table. The problem with GMA is that she doesn’t know how it is to be hungry. She has lived a life of royalty which is why she is not sensitive to the needs of the people.” San Juan Mayor JV Ejercito. –

BY JOCELYN MONTEMAYOR With Randy Nobleza, JP Lopez and Reuters

source: http://www.malaya.com.ph/apr10/news1.htm

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