The many factors that aggravate the rice situation
(For the week ending April 20, 2008)
Recent coverages in international publications support what we have been saying all along: the rice problem is it not unique to the Philippines nor is attributable to the President as her critics would want the public to believe.

The New York Times has run a series of articles entitled “The Food Chain” examining the spiraling cost of food worldwide. One of the latest articles focuses on the drought in Australia, caused in no small measure by global warming, which has reduced Australia’s rice crop by 98 percent [New York Times, 17 April 2008]. My daughter, who visited Australlia recently, tells me that as her plane landed in Melbourne a few days ago, she did not expect to see the fields there looking so brown.

The collapse of Australia’s rice production is seen as one of the factors contributing to the recent surge in rice prices, not just in our region, but also in places like Haiti where food rioting has erupted.

Australian farmers who have been adversely affected have resorted to abandoning rice as a crop and shifting to those which are less water-dependent, to the detriment of countries which rely on rice as a staple food.

The New York Times article also cited recent reports of the Intergovernmental Panel on Climate Change which warned that existing models for the effects of climate change on agriculture do not yet include newer findings that global warming could reduce rainfall and make it more variable. Apparently, changes in the timing and amount of rain are more important for crops than temperature changes.

Time Magazine [21 April 2008] also cites data that rice is not the only staple whose price has spiked. In the US, the cost of eggs has risen 24 percent owing to the cost of animal feed, which in turn has contributed to the fastest increase in food prices there since 1990. In Italy, wheat shortages have increased the price of pasta by 14 percent. Ground beef, bread and dairy products are other staples identified by Time.

Certainly, citing the experiences of other countries is not meant to shift attention away from our own situation, but rather to put ours in the proper perspective. After all, we are part of a global village. Our local issues should not be seen with a myopic eye, but with an appreciation of how we figure in the global web.

That said, we still believe that the Philippines is still one of the best prepared to weather the storm.

Since the global situation became apparent many months ago, President Gloria Macapagal-Arroyo has personally been committed to helping increase and stabilize the supply of rice, as well as to deliver targeted subsidies to the poor who are most directly affected by the global price rises. She has reached out to our neighbors like Vietnam and others in ASEAN and elsewhere to ensure a stable supply and affordable prices. She has also directed our government to crack down on price gouging; increase the supply of rice where necessary; invest more in planting and agricultural reform; and to provide rice subsidies for our poor. During her visit to the provinces last week, she personally delivered rice to the poor and personally went to markets across the country to spot-check prices to protect our consumers.

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We accompanied President Arroyo during her provincial trip to Caraga last week.

We saw how mining has transformed several towns in Surigao del Sur, the municipality of Carrascal in particular. Local officials described the mini-boom that is taking place, with close to 3,000 new jobs created by nickel mining operations. Officials estimate the number to double within the next two years.

There has been significant interest and investment from foreign mining companies since the Supreme Court ruling in 2005 that opened up the mining sector to foreign investors and today, some of the world’s biggest players in the mining sector including Xstrata, Anglo-American, and BHP Billiton are active players in our mining sector. Regardless of what some might say, the fact is that mining continues to be a key driver of our economy and an important sector that is creating jobs for the people and spurring exports.

During the last three years, the DENR reported 40 mining processing and exploration projects, together with 23 other exploration projects. These have generated investments totaling US$1.4 billion and we see potential additional investments of another US$9 billion by 2011 generated by these projects alone. The bulk of the projected investments are expected to come in between 2008 and 2010 when these projects progress to the construction and development stages. So our mining industry has the potential to grow by as much as five times to US$10 billion by 2011. This will support our bid to become a mining country defined by the World Bank, with exports from the minerals industry expected to grow to 6.5 percent of our country’s exports by 2011.

But President Arroyo wishes to emphasize that while we are focused in achieving significant growth in the mining sector, we are also very concerned about how development is done; it has created a lot of controversy in the past, and it is in the best interest of the mining companies to work closely with our civil society organizations and local government representatives to make sure investments work for the community, not just the company.

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