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IRRI: Unstable rice prices to haunt importers in '09


MANILA, Philippines - Volatility of rice prices that marked the first half last year will continue to haunt rice importers this year due to higher demand and stunted production, the International Rice Research Institute (IRRI) said Thursday. "Production uncertainty due to tight credit and declining rice prices, combined with strong demand growth, points to another rise in rice prices in the coming months," IRRI said in its quarterly publication, Rice Today. Furthermore, lower use of farm inputs, like fertilizers and quality seeds, will continue to challenge production growth. "The meltdown of commodity prices may have caught off-guard many farmers, who in late last year harvested a lower-priced crop produced with high-priced inputs. Burned once, these farmers will likely play safe and reduce input use," IRRI said. In July last year, the Agriculture department received reports of a 30% drop in petrochemical fertilizer use by farmers, as prices of these fertilizers, which account for up to 30% of crop production costs, then almost doubled from year-ago prices. The government had likely missed last year’s palay production target of 17.3 million metric tons by 2.36% at 16.89 million metric tons due to high fertilizer prices, crop forecast of the Bureau of Agricultural Statistics show. "The neglect of agricultural research and infrastructure development since the early 1980s has started to bite[but] the credit crunch is likely to further tighten funding for infrastructure improvements, as well as research and development activities," IRRI said. The Philippines, the world’s largest rice importer, spent P80 billion for its 2.3-million metric ton rice imports last year. The government eyes cutting rice imports this year to 1.5 million metric tons, down from the record-high purchase last year, which drove benchmark world rice prices to a record $1,100/MT in April from $350 to $400/MT in December 2007. "We are monitoring the trend in world market prices, then we enter the market if prices are low," National Food Authority deputy administrator Ludovico J. Jarina said in a phone interview. — Neil Jerome C. Morales, BusinessWorld
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