First of three parts
The current El Niño episode may have been the single biggest factor behind the decision of the government to import more rice for this year and 2016. In the next five years, however, experts warned that the increase in the country’s population would make it more difficult for the Philippines to avoid the international rice market.
The drought caused by El Niño has forced the Philippines to front-load its importation of 500,000 metric tons (MT) of rice for
next year. The National Economic and Development Authority (Neda) said the government is looking to buy an additional 1 million metric tons (MMT) of imported rice for 2016.
Neda, chair of the interagency Food Security Committee on Rice, said the government is stockpiling rice as the dry spell could cut rice output for the years 2015 and 2016 by 25 percent. Economic Planning Secretary Arsenio M. Balisacan said this is on a par with the damage caused by El Niño in the years 1997 and 1998.
While the National Food Authority (NFA) Council has yet to approve the purchase of the additional 1 MMT of imported rice, experts said the Philippines may have done the right thing in purchasing rice from abroad this year. Samarendu Mohanty, head of the International Rice Research Institute’s (Irri) Social Sciences Division, said the price of rice in the international market currently remains stable. But Mohanty warned that prices could go up next year as El Niño ravages other rice-producing countries in Asia.
Mohanty noted that some areas of India are experiencing drought and El Niño’s damage on rice crops will not be known until the end of the month. Meanwhile, planting season in Indonesia will also start by the end of October.
“The price of rice could rebound by 15 [percent] to 20 percent in the next three months if rice crops in India and Indonesia are affected by El Niño. The two countries are not the most affected by El Niño but they could decide the price,” he said in an interview at the sidelines of the Asean Rice Future Forum held in Vietnam from October 14 to 16.
“There is [also] concern that the stock level of five exporters have gone down significantly much lower than what it was three years ago. This might influence market direction and cause prices to go up. This could happen next year,” Mohanty added.
More Filipinos in 5 years
The current El Niño has made paddy rice production more challenging in the Philippines. Lower water levels in the country’s big dams have discouraged farmers from planting rice. This is because producing one of kilogram of palay requires some 1,500 liters of water.
Apart from the vagaries of weather, the expansion of the country’s population to 112 million in 2020 could make it more difficult for the Philippines to wean itself away from rice imports. Dr. Suthad Setboonsarng, member of Irri’s Board of Trustees, said in his presentation before the Asean Rice Future Forum, that the 10.6-million increase in the country’s population in five years could force the Philippines to import more rice.
According to data from the Philippine Statistics Authority, each Filipino consumes about 114 kg of rice. This means that the Philippines needs to produce nearly 11.6 MMT of milled rice every year just to fill the requirements of its population. This does not yet include the buffer stock that the NFA is required to maintain every month.
In a joint report released by the Organization of Economic Co-operation and Development and Food and Agriculture Organization, the country’s rice imports could increase by an average of 4 percent a year from 2015 to 2024.
Setboonsarng said the increase in the population of the Philippines and other countries in Asia would affect future rice market. In the next five years, he said global population will increase by 433 million. Of this figure, 50 percent will come from Asia, while Africa will account for 34 percent.
“Aside from higher rice consumption due to an increase in population, less and aging farmers, urbanization, and the deterioration of rice farm lands would affect the rice market,” he said.
Setboonsarng said the increase in population, as well as changes in global rice production would have a major impact on Asean. By 2024, five Asean countries would be classified as net rice exporters, while five others would be considered net rice importers. The Philippines is projected to remain as a net rice importer.
The Philippine government, however, did not want to remain dependent on rice imports. Because of its experience in 2008, the Arroyo administration was forced to target “self-sufficiency” in rice. At the time, the Philippines was forced to buy imported rice at $1,000 per metric ton (MT) due to tight global supply.
The Philippines produced 16.24 million tons of palay in 2007, representing a 6-percent growth over the 2006 palay production. Despite the jump in production, it was not enough and the government had to scramble for stocks to augment local supply. Population growth, the increasing consumption of rice, and the need to beef up buffer stock for emergencies like calamities, necessitated
the importation of 2.3 million tons of rice in 2008.
As soon as President Aquino assumed
office in 2010, Agriculture Secretary Proceso J. Alcala had declared that the Philippines would remain focused on achieving its rice self-sufficiency bid. To achieve this, the government poured money into the farm sector, with the rice subsector cornering a huge chunk of the Department of Agriculture’s (DA) annual budget. From 2011 to 2015, the DA received a total of P339 billion, the highest budget it has been allocated within a span of five years.
The increase in budget allowed the DA to rehabilitate irrigation facilities and expand irrigated areas. This and other interventions such as the use of high-yielding seeds, Alcala said, increased the country’s rice self-sufficiency level to 96 percent from 82 percent in 2010. To be continued