Govt, traders wary about repeat of rice crisis

MACTAN, CEBU - Agriculture officials and traders are wary about a potential repeat of the 2008 rice crisis as consumption continues to rise and production levels off. The lack of funds for research to come up with adaptive varieties, lack of investments in infrastructure, a weakening US dollar, and the devastating effects of back-to-back typhoons were described as further threatening the rice market and the global economy. To preserve stability, Agriculture Secretary Arthur C. Yap reiterated the need for a global food reserve that would benefit both producers and consumers. When prices of rice soar, producers may deposit their stocks and halt the rise in prices while consumers can turn to the stockpile in times of volatility. "The potential is there for volatility. We don’t know when it’s going to happen, but we know it’s coming," Mr. Yap said. USA Rice Federation Vice-President James Guinn, in a separate interview, agreed that "the bias [for prices] is upward." "Given the situation in India and the continuing trend of weakness of the [US] dollar, prices are more likely to go up than they are to decline," he said. US rice production, which he described as "fairly stable," is projected to decline as rice farms cope with saltwater intrusion and hurricane damage. Rice is also getting competition from soybean, which costs less to produce but is more profitable, he added. Jeremy Zwinger, president and chief executive officer of The Rice Trader, also believes that the "potentiality of a difficult situation is very much there." "Food stocks are tight and the volatility in the market is great. There’s a major hunger throughout the world," he told the conference. Citing US Department of Agriculture figures, he said the Philippines, which is the biggest rice importer in the world, is expected to import 2.4 million metric tons next year considering the destruction of ripened paddy rice by back-to-back typhoons that hit Central Luzon, the country’s rice granary. Mr. Yap, however, said he was still waiting for an inter-agency evaluation report that would specify the country’s import requirements for next year. Ludovico J. Jarina, National Food Authority (NFA) deputy administrator, said a planning session has been scheduled later this week ahead of a Philippine tender on November 4. "It’s hard to tell now how much we are going to import," he said in a separate interview. The Philippines imported a total of 1.775 million metric tons of rice this year, a decrease from last year’s 2.45 MMT. Demand for rice in the Philippines has been growing by an average of 4.7 percent annually over the last five years while production has increased by just 3.8 percent, NFA Administrator Jessup P. Navarro said in a presentation. Mr. Yap asked conference delegates to look at and address issues affecting the stability of the global rice market. "I don’t see the rice trade as an ending in itself, but as a means to ensure food security for our people and stability for our economy and financial system," he added. To roll out climate change adaptive rice varieties, Mr. Yap said the International Rice Research Institute in Laguna needs $150 million. Among these varieties are flood-tolerant rice and drought-resistant varieties. Before the twin typhoons devastated Luzon, government had projected that the Philippines would require 13.2 million metric tons next year. Well-milled rice production, however, is expected to reach only 12.1 million metric tons. - BusinessWorld