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Governments serve the secondary purpose of intervening
when free markets come perilously close—or are perceived
to be close—to losing control. As uncertainty in rice
supply continues to loom, some fastfood restaurants have
been prompted by circumstance as well to do their share in
mitigating the crisis. Industry leaders Jollibee and
Chowking, as well as the venerable family chain Max’s,
were among the first to respond to calls to rationalize
rice consumption.
Jollibee
now offers a half cup of rice at P5.50 each. A full cup of
rice costs P11 each. Chowking, Jollibee’s sister company,
offers a half cup of rice at P8.
This
strategy has drawn positive reactions from consumers. Law
student Macel Ortiguerra of the
University of
Santo Tomas
thinks that the “half-rice campaign is a very good shift.
Many of my friends who eat at Jollibee don’t always finish
their rice so it’s agreeable that they have that option.”
“And, it’s
also nice to know that we’re given the opportunity to help
in what they call rice shortage,” she adds
matter-of-factly.
“Sometimes
the rice that Chowking serves is too much. It’s good that
I can order less now,” echoes Anna Cruz, a bank analyst.
McDonald’s
has also started to offer a half cup of rice, but at the
more pricey P11 each. The fast-food chain explains that it
did not halve the price correspondingly because the
remainder of the menu price will go to the Ronald McDonald
House Charities, which it touts as supportive of programs
for the health and well-being of children around the
world.
People’s
reactions have been mixed at best.
“I think
it’s a very good move. Even though I have to spend more, I
can still help the deprived,” says Christina Beboso, who
works in a call center.
On the
other hand, Vladimir Rivera, a medical representative,
says he eats in McDonald’s “a lot and I don’t think it
will be a very effective program. Most people won’t go for
it because money is harder now, and it seems like they’re
paying twice the amount that they’re getting.”
The
numbers, of course, are most telling.
“In about
a week, there have been a total of 15 people who have
availed themselves of our half-rice portions,” says a
McDonald’s branch manager who refuses to be named. “The
program is still new and I’m sure more people will avail
themselves of it in the near future.”
In March
Agriculture Secretary Arthur Yap first made the pitch for
reducing wastage of rice by asking fast-food chains to
offer to the public the half-cup option. He says it would
benefit customers who cannot consume one whole cup of rice
in one sitting because they can conserve their
increasingly tightening budget, while reducing the
scandalously high levels of rice lost to bad consumption
practices.
Leocadio
Sebastian, executive director of the Philippine Rice
Research Institute (PhilRice), had estimated that about
25,000 bags of rice every day go to waste, or P22 million
worth of rice. It is enough to feed more than 3.5 million
Filipinos in one day.
Translating the figure, the entire population will need
8.9 million metric tons (MT) of rice a year while wasting
more than 457,000 MT of rice annually.
Guaranteed
support
RECENTLY,
the
Philippines,
the world’s biggest rice importer, bought 70,000 MT of
rice under the United States export-credit program. In the
near term, the government says it will purchase another
30,000 MT of rice under the same credit program.
In 2007
the Philippines—through the National Food Authority (NFA)—imported
1.7 million MT of rice, so far the third-highest rice
import of the country by volume since 1984.
Kristie
Kenney,
US
ambassador to the Philippines, recently declared that the
US has guaranteed to supply the Philippines with rice.
America, she stressed, will help the nation weather the
ups and downs of the world economy.
The
Philippines is also tapping China, Japan, India, South
Korea and Bangladesh to supply it with as much rice as it
needs. Yap says these nations, aside from the 10 countries
that make up the Association of Southeast Asian Nations,
will be invited to convene an emergency meeting on the
region’s food crisis.
The
gathering is likely to be held in April or May, with a
venue that had not yet been fixed.
Surging
food prices
GRAIN
prices including rice, the staple food for half the world,
have swelled to records this year on concern of tightening
supply. The anxiety has so filled the markets that it has
become one vicious cycle, trapping heavy importers like
the
Philippines.
More than a week ago, the Philippines’ tender of 500,000
MT of rice was blamed for pushing the price in the futures
market to new record highs.
Apparently
heeding concern that such panic-buying methods could
boomerang on the global prices and cut deeply into the
country’s own fiscal health, President Arroyo suddenly
announced this week that she has ordered a review of the
rice-importation policy and the mandate of the NFA, which
has been importing the rice and distributing it to the
market at subsidized rates.
Back home,
data from the Bureau of Agricultural Statistics showed
that commercial rice had an average retail price of P27.28
per kilogram in the first quarter of the 2008, a
13-percent rise from the same period last year.
The price
of rice has slowly been increasing since the second
quarter of 2007. During the first quarter of 2007, average
retail price was P23.71. By the end of the fourth quarter
of 2007, this had risen 9.4 percent, or P25.95.
As of
April this year, the average price of rice was reported at
P33.25, from P29.95 as of the end-March this year,
representing an 11-percent increase.
The United
Nations Food and Agriculture Organization says dissent
over surging food prices may erupt in more places (rioting
has already caused the head of Haiti’s prime minister) as
falling stockpiles caused by, among others, crop failures
and the increasing diversion of grains to biofuels, stoke
inflation worldwide.
Sen.
Francis Escudero argues that farmlands transformed into
golf courses and subdivisions and crops converted as
alternative fuel have caused supply tailbacks.
As for
biofuels consumption, which helped push global food prices
up 83 percent in the past three years, the World Bank (WB)
warned recently that such will drive inflation and strain
developing economies into the next decade.
The bank’s
economists said in a report to the institution’s
development committee that the observed increase in food
prices is not a temporary phenomenon, but one that is
likely to persist in the medium term.
In March
global food prices increased 57 percent from a year
earlier, according to the organization.
In the
Philippines, the government plans to start the ball
rolling on wage increases to help workers address rising
food and fuel costs, but business groups have warned of
the expected inflationary impact of haphazardly approved
across-the-board wage increases, saying these would
eventually reduce the beneficial impact of any pay hike
and hurt workers further.
Socioeconomic Planning Secretary Augusto Santos had said
the national wage board will ask the regions to consider
wage increases so that workers’ pay could pull up
alongside prices, but he conceded the need for caution.
At
present, workers in Metro Manila take home a minimum of
P362 after a P12 increase last year.
Labor
group Trade Union Congress of the Philippines has sought
an increment of as much as P80 in daily wages to help
workers regain their purchasing power. According to a
labor department study, a family of five in Manila needs
P800 a day to survive.
The Bangko
Sentral ng Pilipinas is targeting inflation of between 3
percent and 5 percent this year, deputy governor Diwa
Guinigundo said earlier, but later bank statements have
conceded the strong possibility of higher inflation.
March’s inflation of 6.4 percent was the fastest in 20
months. It gets worse: on Tuesday, Fred Neumann, regional
chief economist of the Hongkong and Shanghai Banking
Corp., said inflation between now and June could reach up
to 8.5 percent.
Spreading
unrest
WHILE rich
nations have been busy the past few months discussing ways
to shore up the financial markets amid the spreading
credit crunch triggered by the US’ subprime debacle, their
counterparts from developing nations have been busy with
more gut-gouging issues, warning that political unrest may
follow if the food scarcity and expenses worsen.
Burkina Faso,
Cameroon, Egypt, Indonesia, Ivory Coast, Mauritania,
Mozambique and Senegal are already experiencing unrest
because of food- and fuel-price hikes. The WB revealed
that 33 countries from Mexico to Yemen may face such
predicament.
In
northern Egypt, about 500 political activists and textile
workers at a factory were detained and dozens injured in
conflict with the police earlier this month as they griped
against food inflation.
In the
past five years, the WB said the number of people living
on $1 or less a day has declined by 150 million. However,
a doubling of food prices in the past three years could
push 100 million people into deeper poverty.
The bank
recommends increased funding for agricultural projects and
discourages the sort of export controls that some nations
have imposed in response to tight food supplies in their
own countries.
The
country’s palay supply is low because of natural
conditions and factors like major typhoons and pests
during harvest season, where farmers can gather 50 percent
of the grain.
But
experts have argued in recent days that other aspects of
the whole farm landscape, which are partly responsible for
the lower yields and costlier farm operations, such as
lending interest rates to farmers to grow their crops and
to support palay wholesale centers, must also be given
thorough attention.
Most
formal financial institutions don’t prioritize
agricultural lending because risk in times of natural
disasters would definitely reduce the paying ability of
borrowers. In 2007 the Agricultural Credit Policy Council
granted a measly P15.5 million of loans for palay.
The
thinning formal lending channel has meanwhile spawned new
complications: some farmers cannot comply with all the
requirements required by the institutions and resort to
informal lenders that require little or no documentation
but charge them as high as 20 percent.
In rice
economics, low interest rates of lenders could be a viable
platform for lowering rice prices as working capital of
rice millers and traders will go down. Eventually, this
will increase the competition among rice traders as palay
wholesale centers limit the number of rice middlemen in
the marketing system.
While the
law of supply and demand standardizes prices, the local
rice supply level and cost of production have put the
country on the level of one of the highest-priced among
developed countries in Asia.
Studies by
the IRRI and the PhilRice have put the cost of producing 1
kg of palay in Central Luzon at higher than P1.10 over the
production cost at the Mekong Delta in Vietnam.
Controlled
irrigation, which is promoted by PhilRice, is also one of
the best answers in coping with the present rice shortage,
the rice organization asserts.
This
farming technique eradicates the practice of immersing the
rice paddy with huge volumes of water. Rice plants are
watered only when the water level is about to subside from
the root zone. This process has been seen to work, given
that the soil has moisture content which can last for some
time.
Partly in
response to this and similar initiatives to improve
production and, thus, slowly reduce the imports bill,
President Arroyo recently set aside a P28-million budget
for a program, to combat unfavorable climate condition and
acquire five more planes to conduct cloud-seeding
operations over dams and major rice field resources in
Luzon. Critics, however, noted that the amount is meager compared
with the billions that have been thrown at importation.
Winners
and losers
WITH most
of the news focused on the rising cost of rice hurting
consumers, the small rice retailer’s woes are often
shunted to the sidelines.
Commercial
rice retailers have complained in recent days of decreased
sales since the price of rice started increasing in the
past year. They attributed the decrease partly to the
presence of NFA rice.
“People
want the NFA rice because of the huge price difference,”
lamented Aileen Arcibal, a commercial rice seller in
Sampaloc, Manila. “Before, I would have 20 customers a
day, now, I barely see six.”
Stories
like these are common throughout the city, with commercial
sellers experiencing a sharp slide in rice sales.
One need
only compare the prices to see the complete story. Stores
like Aileen’s offer their cheapest well-milled rice at
P33. It is still P8 more expensive than the NFA rice being
sold at P25.50 and also the one being imported from the
US.
Some
retailers have tried to adapt by trying to sell NFA rice
themselves.
Marideth
Cana, who runs a small store in Kamuning Market, one of
the busiest in Quezon City, complains that her application
for accreditation has been denied several times.
“They just
stopped giving accreditations, so I am unable to sell
their rice,” said Cana, pointing out that she’s just
keeping the business afloat by relying on her customers
who own restaurants. “But even these clients have begun to
buy less,” she added.
“Before
the price increases, I could sell up to 10 sacks to these
restaurant owners when they come. Now, maybe just two to
three,” she said.
Still,
Cana could be one of the lucky ones.
Ana
Relador, who sells rice in Cubao area in Quezon City, said
people often buy a small amount of rice from her and mix
it with the NFA rice. “I sell them about 1 kg of retail
rice and they mix it with 5 kg of NFA rice because it
makes it taste better,” she revealed.
While the
business may look bleak, Relador is optimistic about the
future. Of course, the real winners here are the NFA rice
sellers who are surely thankful for new customers.
James
Dominguez, an accredited seller of NFA rice, says his
business is operating well. “Even at P25.50 for NFA rice,
people really line up to buy it. Before, I would have 10
to 15 customers in a day; now, the number is closer to
100,” he adds.
However,
these problems somehow seem isolated to sellers that cater
to the lower-income classes.
Hi-Top
Supermarket on
Quezon Avenue
in Quezon City said its rice sales haven’t changed at all
since rice prices started increasing. It says its
customers aren’t as susceptible to price changes for
something as necessary as rice.
At the end
of the day, it’s still a markets game. But as the crisis
deepens, the need for governments to intervene increases,
and the sooner bureaucrats realize the need to support the
farm sector with programs that ensure sustainable yields
in the long term—thus obviating the jostling for
supply—the slower the march to disaster. |
