Speculation & hunger altert: President Aquino (Philippines) cuts food (rice) subsidies

[Hannah Bell]

The plenary session of the Philippine legislature has just approved the 2011 budget proposed by president Benigno ‘Noynoy’ Aquino. The budget for the National Food Authority (NFA), the agency responsible for the purchase and sale of rice at subsidized prices, is part of wider cutbacks to social spending.

The cheap rice that is available in the marketplace is being sold at reduced prices subsidized by the NFA... It purchases rice from local farmers at prices higher than that paid by rice merchants, stockpiles rice to maintain an adequate supply in the event of a food shortage, and sells the rice at reduced prices. The NFA imports cheap rice from abroad, mixes the imported and locally grown rice, and sells the rice at reduced prices to the public. NFA rice can sell for as low as 18.25 pesos per kilo, 25 pesos less per kilo than the cheapest non-subsidized rice. For decades, rice merchants, mill operators and grain importers have been demanding the privatization of the NFA.

In the 2011 budget originally proposed by the Aquino administration the NFA’s allotment was cut to zero. Media coverage of the budget deliberations has been muddled and poor. The majority of papers have reported that the 8.5 billion peso budget has been restored to the NFA. This is not the case.

The remaining NFA budget for 2010, 6 billion pesos, had been placed on hold pending budget deliberations. This money, already allotted by the previous Arroyo administration, has now been released. Congress transferred 2.5 billion pesos from the proposed 2011 budget of the Department of Agriculture to the NFA. By combining this sharply reduced budget with the release of the remainder of this year’s money, Congress and the Aquino administration have disguised the slashing of the NFA’s budget to less than a third of its original size.

The NFA in the coming year is going to cut its buffer stock of rice. It has in the past kept a supply of rice adequate to provide 30 days worth of consumption. This amount is going to be cut in half. The NFA will end its program of subsidized rice importation. The Philippines is the largest importer of rice in the world, with 95 percent coming from Vietnam. Philippine imports make up 10 percent of the world rice trade and its rice policy is closely watched by commodities speculators. The proportion of rice consumed in the Philippines that is imported has risen from 8 percent in 2000 to 15 percent.

The Aquino administration justified the ending of import subsidies during recent deliberations by claiming that the goal was to achieve rice self-sufficiency. This is belied by two facts. Aquino has not increased the amount of rice purchased locally by the NFA beyond the 5 percent of the rice harvest. Aquino has also gutted the budget of the Philippine Rice Research Institute (PhilRice), a government funded research organization whose stated purpose is to achieve national rice self-sufficiency. The PhilRice budget was cut from 435 million pesos in 2010 to 91 million pesos for 2011.

The limited NFA rice purchase means that the vast majority of (local) farmers (will) wind up selling their harvests to private rice merchants...There is a looming rice shortage. The NFA projects a shortfall of 1.5 million metric tons of rice next year—equivalent to more than 10 percent of the annual consumption. This shortfall was projected after having already reduced the calculated per capita consumption of rice from 122 kilos to 118. In other words, the NFA first projected that an already hungry people would go even hungrier and then still found that there would not be enough rice to feed everyone. Part of the shortfall will be made up through imports by private businesses, which is likely to drive up prices...

http://www.wsws.org/articles/2010/oct2010/phil-o20.shtml

[Turbineguy]

1. Messing with rice

is how the Marcos Regime went into meltdown. He borrowed 350 million USD from the World Bank and bought rice on the world market. Rice flowed into Manila and was given away free as a campaign trick. The local rice market collapsed and Marcos' cronies bought up land dirt cheap from wiped out farmers. Little did those eating the free rice understand how expensive it really was.

[Hannah Bell]

2. otoh, philippines achieved self-sufficiency in rice production for a few years during marcos's reign

http://newsinfo.inquirer.net/inquirerheadlines/nation/view/20080426-132782/Marcos-Masagana-99-made-RP-rice-exporter-self-sufficient

philippines was a rice importer before marcos, i've read. i think their food situation can't be boiled down to one guy, but does have a lot to do with philippines colonial history, e.g.:

The Philippines has been a rice importer for most of the past 100 years. Apart from a few years during the Marcos period, rice production has not been a priority so import demand has grown steadily

http://www.asiasentinel.com/index.php?option=com_content&task=view&id=1156&Itemid=32

this is funny, though:

"The last thing the rest of Asia, let alone the world, wants is to see Japan-Korea style subsidies protect the "culture" of rice growing for its own sake regardless of market pressures."

right after they say demand is outstripping supply.

corporate press = laugh-a-minute.

japan's rice subsidies work quite well: self-sufficiency + keeping people working their land.

[Hannah Bell]

3. k

[maryf]

4. morning K&R

[Hannah Bell]

5. k