Philippines Braces for Surging Rice Costs; Supply Shortage in Global Market

The Philippine government, one of the world's biggest rice importers, assured a jittery public Wednesday that it is taking steps to secure enough supplies amid surging prices and tight stocks worldwide.

Agriculture Secretary Arthur Yap said there was no rice shortage and that President Gloria Macapagal Arroyo had approved a proposal to augment the agriculture department's budget for rice production.

A worker waits for a truck, with imported rice to be unloaded at a government warehouse, in Quezon City, Metro Manila. (Photo: Reuters)

Yap said the plan calls for the planting of an additional 600,000 hectares (1.5 million acres) of rice during the rainy season in the country's top 10 poorest provinces, and another 500,000 hectares (1.2 million acres) in other provinces. Harvests expected in the months ahead also will beef up supplies, he said.

Arroyo said Tuesday that rice prices are expected to rise, but promised there will be no shortage.

Yap said the government's rice reserve would last 57 days and that the National Food Authority was receiving additional supplies from the international market.

"We're going to get additional support," he said.

The NFA said it has secured 500,000 metric tons (551,155 tons) of rice from Vietnam and Thailand for delivery next month—part of 2.1 metric million tons (2.31 million tons) to be imported this year.

Rising demand from the Middle East and Africa has hiked the price of rice in Vietnam and Thailand—the world's top exporters—to up to US $500 per metric ton, a 25 percent jump from a month ago, the Agriculture Department said.

But even those countries are struggling to keep pace with export demand and there are fears they may curb sales to damp domestic prices and protect their consumers.

A Philippine left-wing farmers' group, the May one Labor Movement, warned that any shortage or unchecked price of the grain, the nation's staple food, may lead to riots.

The Philippines consumes a total of 11.9 million metric tons of rice annually, most of which is grown domestically. The market price has increased by an average of 3 pesos ($0.07) per kilogram from a year ago, Yap said.

He said the government needs to prudently manage its rice stocks, and production and conservation measures must be boosted.

The NFA has deployed "rice marshals" to catch unscrupulous traders who reportedly hoard government-subsidized rice, diverting them from state-run stores to sell them at a higher price elsewhere, said Executive Secretary Eduardo Ermita.

National Food Authority chief Jessup Navarro has blamed dwindling rice fields for recurring shortfalls, with many farms in the country's rice growing region of Central Luzon converted to residential subdivisions, golf courses and shopping malls.

Arroyo last week earmarked $69 million in an effort to cushion the impact of the rising world prices of rice, other goods and crude oil.

She also ordered an expansion of government's hunger mitigation program, including expanding backyard vegetable farming and village food terminals, and intensifying swine restocking and livestock vaccination programs.