Living in The Philippines > Expat life in Philippines

Prices They are a Changin...... And how it will affect us and those we love.

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I apologize for the length of this post, I stole it from somewhere else, but it has a good point to make:


DEVELOPMENT:  Rising Rice Prices Hit Asian Stomachs
By Marwaan Macan-Markar

Inter Press Service

BANGKOK, Mar 5 (IPS) - Soaring global rice prices are hitting the stomachs of Asia’s poorest citizens.

Among the worst hit are the people of East Timor, where nearly 40 percent live on less than 0.55 US cents a day, have just been told they may not receive their annual quota of food aid. ‘’We have been forced to provide less food to East Timor; provide less rice than we intended to,’’ Paul Risely, Asia spokesperson for the United Nations food agency, told IPS. ‘’We have requested the people of East Timor to look for local substitutes.’’

Part of the problem stems from poor planning with the Dili government urging the World Food Programme (WFP) to step in only after finding that it could not afford to purchase sufficient quantities of the grain from Vietnam, due to high prices. ‘’Any chance to reduce high malnutrition rate is severely curtailed,’’ added Risley of a country that suffers from chronic malnutrition, where some 46 percent of the children are stunted and 42 percent of children below five years are underweight. Currently, the WFP has pledged to feed one in five people in East Timor which has a population of 1.1 million people.

Vietnam, the world’s second largest exporter of rice, shipping out nearly 4.5 million tonnes of the grain annually, has been a major supplier of rice for the WFP’s global programme. Neighbouring Thailand is the largest rice exporter, shipping 9.5 million tonnes to the global market, which was 30 million tonnes in 2007. But last year, Vietnam placed limits on rice exports in order to meet domestic demand, triggering a spike in the price of its grain in the world market. The ban stemmed from national food security concerns in the communist-ruled country. Hanoi wanted to avoid a local food shortage due to flooding in the rice-growing central regions.

Yet, such a weather-related feature, which some are attributing to climate change, was only one reason to push global rice prices to new heights. Another trigger includes the steady rise in oil prices, making fertiliser more expensive, pushing the cost of harvesting up, and increasing the cost of transporting the grain. A weakening U.S. dollar has also been singled out as a reason, in addition to demand from the increasingly affluent China for more food to feed its population. In 2007, China marked a shift away from being a net exporter of rice and wheat, raising the export taxes on the grains to keep the locally produce at home. In the meantime, import tariffs were removed for easier access to the two staples from the world market.

And the prospect of early relief for the world’s poor for cheaper rice this year appears remote. ‘’It is very likely that the price of rice will drop this year. The prices will not stabilise until the end of 2008,’’ says Sumiter Broca, policy officer at the Food and Agriculture Organisation’s (FAO) Asia and Pacific regional office, based in Bangkok. But the price of rice, which rose by 40 percent last year, is not an exception. ‘’This time around, all other commodity prices have also risen, like cereals, vegetable oils, meat, sugar and bananas,’’ added Broca in an interview. ‘’It is part of a natural long-term trend, but this time the peak is worrying. There is no reason for any let up in this price increase in the future.’’

The current rise in rice prices began in 2002, following a six-year downward trend before. Yet at the same time, rice stocks today are ‘’at an all time low; the lowest in 20 years,’’ says Broca of a grain whose major producers are Bangladesh, China and India. The world’s total rice output reached 420 million tonnes during the 2007-08 harvest season, with the end of season stocks being 102 million tonnes for the same period, down by one percent from the 2006-07 harvest.

This means that in Asia, the world’s largest rice-growing region, rice production is ‘’increasing very slowly, (with) rice production in 2007 (being) only 0.5 percent higher than in 2006,’’ states the FAO. ‘’A major underlying reason for this is that yield growth is plateauing.’’ Land, too, is limited to increase rice cultivation to meet new demand for the grain from Africa, Latin America and the Middle East. And as China’s rice story reveals, land that was once allocated for rice has been taken away from farmers to meet the country’s other economic needs. China’s rice growing area saw a three-million-ha loss during a decade, beginning in 1996, because of ‘’economic pressure,’’ states the latest issue of the ‘Rice Today’ magazine.

‘’Although there may be some potential for expansion of rice area in other countries, the total area in Asia will unlikely increase much beyond the current estimate of 136 million ha,’’ writes Sushil Pandey, of the International Rice Research Institute (IRRI), in the magazine. ‘’Rice production is facing increasing competition for land, labour and water from other economic activities and the recent growth in biofuel production is likely to exert additional pressure.’’ Consequently, organisations like the IRRI, based in the Philippines town of Los Banos, are making a push for a repeat of the Green Revolution (1968-81), during which high yield varieties of rice were distributed to increase rice output by 42 percent over a 13-year period. ‘’A second Green Revolution to reverse the rising trend in rice prices and to keep process low is needed now as much as the first Green Revolution was needed earlier to avoid famine and mass starvation,’’ Pandey argues.

Yet activists who work with local farming communities are not impressed with such a call. ‘’We are cautious about such solutions, because hybrid rice depends on a lot of water and is only grown in irrigated areas. This isolates the other farmers,’’ says Neth Dano, a research associate at Third World Network (TWN), a Penang-based think tank. ‘’There has also been much hype about GE (genetically engineered) rice for the last 10 years, but we have not seen a good product.’’ A better route, she told IPS, is for governments to increase investments for local farmers to produce better rice yields. ‘’Governments are not doing this; these farmers are neglected financially. It is these farmers that best know the rice varieties that need to be produced now.’’

I am getting good at Plagiarism... ;D


Asia nations hurting as price of rice soars
by Staff Writers
Hong Kong (AFP) March 9, 2008
The soaring price of rice has triggered a supply and demand crunch that is hurting some of Asia\'s neediest nations, forcing them to spend more on imports, industry experts and officials say. For the likes of Thailand and Vietnam, the world\'s two biggest exporters of the grain, the rising demand is a money-spinner with rice now selling at more than 500 dollars a tonne in Bangkok and nearly as much in Hanoi. But from Bangladesh to the Philippines, from India to Indonesia, the squeeze is bad news as they seek to balance cost with the imperatives of feeding hungry populations and averting social chaos. \"Every Asian government is well aware of the close relationship between political stability and the stability of the rice price,\" Jonathan Pincus, the UN Development Programme\'s chief economist in Vietnam, told AFP.

\"So every government in the region will be doing all it can to maintain price stability, particularly for basic food grains.\"

At the end of February, Thailand\'s benchmark rice was trading at more than 500 dollars a tonne, a rise of more than 100 dollars from a month earlier and up from just 325 dollars a year ago. Exporters in Vietnam meanwhile were setting prices at 460 dollars a tonne last month, the state news agency VNA said -- up more than 50 percent from a year ago. \"It\'s a global issue. All cereal prices are going up,\" said Andrew Speedy, the UN Food and Agriculture Organisation\'s Vietnam representative. \"This is quite serious. It\'s hurting everybody, especially the poor.\"

In the first two months of 2008, Vietnam\'s rice exports brought in 150 million dollars, an increase of 78 percent from a year ago.

Much of the output is destined for the Philippines, whose President Gloria Arroyo asked Vietnamese Prime Minister Nguyen Tan Dung last month to guarantee stable supplies. Unable to meet its own needs, the Philippines will import up to two million tonnes of rice this year, according to the government. Last year its harvest was 6.44 million tonnes, National Food Authority spokesman Emmanuel Salonga said, but it needs 11.8 million a year. \"Our population is growing and arable land is being converted to other uses so we cannot cope with demand,\" he said.

Indonesia\'s rice production has been outpaced by its population growth for more than a decade, said Mangara Tambunan from the country\'s Centre for Economics and Social Studies. \"The government has to open the door to more imports. It should not be so reticent,\" he said. Last year, Indonesia imported 1.5 million tonnes. To ensure stability, a government agency buys and releases stocks and sets import duties. Heavily subsidised rice is also sold to millions of the poorest families, yet even those prices are rising.

\"They\'re trying to get producers to sign long-term contracts,\" the UNDP\'s Pincus said, referring to Indonesia and the Philippines.

\"But who\'s going to sign a long-term contract now for rice deliveries when prices are rising so quickly and so steadily? No one wants to be left without adequate stocks, and that contributes to driving up the price. \"They\'re willing to pay a higher price for future deliveries because they don\'t want to be caught short.\"

In Bangladesh, which has a population of 144 million, the price of rice has doubled in a year, vastly outpacing income levels, said Ruhul Amin, deputy head of the government\'s food planning unit. \"People are cutting all their other spending to focus only on food,\" Amin said, but with 40 percent of the population relying on a dollar a day or less, the poorest are struggling to survive. \"They have to survive on a pittance, and the rises are causing a general feeling of gloom and depression,\" he said. This year Bangladesh will need to import some three million tonnes due to damage caused by floods in mid-2007 and November\'s devastating cyclone.

Some of that is coming from neighbouring India, but otherwise New Delhi has halted exports of non-basmati rice to keep its own domestic prices in check. India allowed the export of 3.2 million tonnes of non-basmatic rice in the first half of the current financial year, but since October no new contracts have been signed. The move has upset the All India Rice Exporters\' Association. \"Farmers react to high prices by producing more,\" said its president, Vijay Sethia. \"Restricting trade just distorts the price signal.\"


For the purposes of copy write, please quote the source of your plagiarism

This is a real double whammy, because we are seeing the economic downturn in the U.S. starting to drive the peso back down, which is not good for imports. Granted, it is not at the level it was a couple years ago, but on the other hand, there was not a looming shortage of a critical staple a couple years ago, either.

And here\'s a piece of news that doesn\'t bode well for foreign currency inflow, either:

Deployment of over 10,000 OFWs delayed
The Philippine Star
Over 10,000 Filipino workers cannot leave the country for employment abroad due to the suspended operations of several local recruitment agencies.
The local recruitment industry on Sunday lamented that many agencies cannot operate and deploy workers at this time because of the new regulation on the renewal of licenses.
“About 50 recruitment agencies that usually deploy 10,000 OFWs a month cannot operate at this time because technically, their operations were suspended upon expiration of their licenses,” a recruitment leader said.
The recruitment officer, who asked not to be named, explained that while the Philippine Overseas Employment Administration (POEA) allows the processing of new job orders, workers cannot be deployed since the licenses of some agencies are deemed to have expired, therefore recruitment, placement and processing of new applicants are prohibited.
According to the recruitment official, the non-renewal of the agencies’ licenses could result in a crisis in deployment if not addressed immediately.
The official pointed out that many recruitment firms are having difficulty renewing their licenses after former Labor Secretary Arturo Brion, now one of the justices of the Supreme Court, ordered the POEA not to renew the licenses of agencies with pending cases.  Mayen Jaymalin

The suggestion of stockpiling some supplies that was made in another thread is looking, in my opinion, like a really good idea at this point.

I hate to be the bearer of worse news, but this just in, no wonder GMA is having to change pants every hour or so, if this info was widely known across the Philippines they would be out to lynch her, whether it is her fault or not.

According to this Yap says the Philippines is paying 650 USD per tonne and they expect it to hit over 1000 USD per tonne this year. He even says they are already paying over 745 per tonne already.

Simple math... 650 usd to pesos 27000 PHP per tonne, FOB Vietnam, now add shipping, destination charges, taxes, and profit. This is the government doing the buying yes the government has to make a profit, this is the Philippines remember. And this is for NFA rice, according to my wife, it is the cheapest, nastiest, smelliest rice on the market. At 1000 USD it will be 41,000 PHP per tonne.

Landed here and ready for us to buy at 80 - 100php per kilo this year, today we pay 1500 - 2000 per bag for rice for our own consumption, this year it will hit 3000 - 4000 for the same 50kg bag, Yeeeks.

This stuff will be a better investment than gold.


AFX News Limited
Philippines to increase rice imports as it races to beat rising prices
03.19.08, 12:24 AM ET

MANILA (Thomson Financial) - One of the world\'s largest rice importers, the Philippines, is gearing up to increase imports of the staple foodstuff as the government races to beat escalating Asian rice prices and secure thinning domestic stocks.

The Philippine government on Tuesday bought 335,500 metric tonnes of rice for 237.5 million dollars to offset an expected shortfall in domestic production.

In April, about 500,000 tonnes will be shipped into the country. That\'s on top of the more than 800,000 tonnes purchased since January and means that in in just four months, the country will have exceeded the original import target of 1.2 million metric tonnes. That target has been raised to 2.1 million tonnes. The National Food Authority (NFA) which is tasked with importing rice, said supply will come mainly from Vietnam, Thailand and Pakistan at prices ranging from 618 to 745 dollars a tonne.

\'We are trying to maintain food security and social stability. We will have to continue importing at market prices to beef up stocks of the NFA and keep prices from going up,\' Agriculture Secretary Arthur Yap told Thomson Financial. Rice is considered a socially- and politically-sensitive commodity, and securing supply at whatever cost is paramount.

In recent years, rice price movements across Southeast Asia have been increasingly influenced by the import requirements of the Philippines. Record domestic production there has failed to cope with increasing demand amid a steadily growing population that is expected to reach 90.4 million this year according to the National Statistics Office. \'It has always been a catch-up game, rice output has been increasing, even at record harvests, but it\'s not yet enough,\' said Yap. NFA administrator Jessup Navarro said that the average national daily rice consumption has gone up this year to 33,000 tonnes from 26,000 tonnes in 2003.

Securing domestic supply and making it available at affordable levels is a critical factor in reining in inflation. In February, higher food and oil prices pushed Philippine annual inflation to a 16-month high of 5.4 percent, pushing it above the government\'s full-year target of 3-5 percent. Rice has a significant share in the consumer and food basket and a significant spike in prices will trigger higher inflation. The NFA which regularly injects rice stocks at subsidized prices, wants to maintain its presence in the market to preempt any rice price spirals, especially in remote areas during the lean months from July to September when stocks are low. The agency has been successful so far in keeping retail prices stable, but with import costs rising, it has had to suffer bigger operating losses.

The government has had difficulty acquiring buffer stocks as global supply tightens. In an unprecedented move, the Philippine government last week asked Vietnam, one of its major rice suppliers, to guarantee rice shipments of about 1.5 million tonnes in a government-to-government deal. Vietnam though could only commit 1 million tonnes, 700,000 tonnes of which are part of previous contracts. Thailand, the world\'s biggest rice exporter and a steady supplier, is a reluctant exporter with the strong baht and high domestic prices acting as major deterrents. \'There is no strong incentive right now for exporters. Local rice prices are so high and it\'s very volatile,\' said Pacherin Hdad, a rice exporter from Thailand.

\'Rice prices here change so often, prices quoted in the morning may be entirely different in the afternoon. There is a lot of demand from importers but exporters are not too keen to ship out rice even if there are no export restrictions. We have to match domestic prices and right now, its just too high out there, and with the baht also up, our margins are so squeezed,\' said Hdad in a telephone interview. The Thai goverment adopted a ban on rice exports in the 1970s to control domestic inflation.

Prices elsewhere are also rising and are expected to continue to soar as global supply is tightening amid growing demand from the Middle East and Africa. The United States Department of Agriculture (USDA) said global rice supply for 2008 will hit 70 million tonnes, the lowest level since 1983-1984 with yields trending lower. The USDA said one factor affecting global exports in 2007 and early 2008 is the ban on exports in various countries like Vietnam and India as they struggle to balance exports and domestic supply. The International Rice Research Institute said the cost of rice doubled from 200 dollars per tonne 5 years ago to almost 400 million dollars at the start of 2008. Along with rising global demand and soaring crude oil prices that have increased freight costs, world market prices are now averaging nearly 600 dollars a tonne.

\'In the last quarter of last year, the government was importing rice at a range of 360 to 400 dollars per tonne, but now the cost has gone up to 650 dollars,\' said Yap. \'The uptrend will continue in the next year or two. Which is why we want to be prudent in managing our buffer stocks. It\'s not just a question of price anymore, but a question of supply. You may have the money, but there are no rice supplies to buy.\' \'Projections that a tonne of imported rice will hit 1,000 dollars within the year are not too far-off,\' said Hdad.

(1 US dollar = 41.52 pesos)

-- by Rocel Felix --


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