Moreover, because of tightening global supply, combined with uncertainties in the U.S. economy that encourage massive speculation in commodities including rice, the price of rice has been soaring. As a consequence, local retail prices have been increasing rapidly.

The NFA has been ineffective in stabilizing rice prices, which is one of its mandates, as it has been substantially weakened by commercialization and privatization efforts of past and present governments. While the government intends to keep NFA rice at P18.25 ($0.44 at the March 28 exchange rate of $1:P41.82) per kilo, NFA’s limited participation in the local rice market (only 5 percent according to IBON Foundation), which continues to be dominated by a cartel, does not make a dent on overall rice retail prices.

Tight supply and high prices will hurt the poor most. The rich have extra money to buy a big volume of rice, even at unusually high prices, that could meet their families’ need for a couple of months. For most families, however, they buy rice to meet a day’s need, or in many cases, a meal’s need.

The urgency of drastic reforms, both in the short and long term, is highlighted by the fact that the various reasons behind the tightening global supply of rice – climate change, energy insecurity, U.S. recession and the crisis of monopoly capitalism in general – are far too complex to be resolved any time soon. On the other hand, indicators show that they will continue to worsen in the coming years, and thus put even greater pressure on the country’s food security. Changing weather patterns, for instance, will significantly reduce production and yield in the generally backward agricultural systems of the world’s rice producing countries, including the Philippines. The mad rush to shift to biofuels to meet growing energy needs, in particular in the First World, will continue to undermine food production.

To ensure food security, the country needs to be self-reliant and self-sufficient in its food production. Medium to long-term reforms must include the implementation of genuine agrarian reform; substantial and reliable state support to encourage farmers to be more productive; reversal of agriculture liberalization; reversal of NFA privatization/commercialization and strengthening of its mandate to ensure sufficient and accessible supply at affordable prices of food crops; dismantling the rice cartel; and a stop to land use and crop conversion and expansion of domestic food/rice production among others. These policy reforms must start now.

In terms of immediate interventions, Mrs. Arroyo must stop downplaying the crisis and recognize the urgent need for significant state intervention. These should include: centralized procurement of imported rice by the NFA and cancellation of the import licenses of private traders; an increased presence of NFA distribution/retail outlets particularly in areas where poor families are concentrated (urban and rural); an emergency fund that will directly go to rice farmers to subsidize production cost; price control (under RA 7581 or the Price Act, government can impose a price ceiling during times of calamity, disaster or other emergencies.)

Unfortunately, Malacañang is more worried that the rice crisis could further destabilize the government and fuel more protests. So the expedient thing to do is deny, obfuscate and cover-up the crisis. Indeed, old, bad habits die hard. Business World /(Bulatlat.com)

*Published in Business World
27-28 March 2008

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