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Philippines Swimming in Rice Amid High Imports

posted on July 30, 2010

MANILA, Philippines (AP) -- The world's biggest rice importer, the Philippines, is now "swimming" in the staple grain because of massive imports by the previous government that drove world prices to record highs and possibly enriched corrupt officials.

With government-run warehouses full and some flood-damaged rice stocks rotting, the National Food Authority, the state-run grain importer, has stopped new import orders for this year and asked Vietnam to delay its shipments until September, the agency's administrator Lito Banayo said Friday.

More than just food, rice is also a potent political weapon in a country where a third of its 94 million people live on $1 a day. The administration of former President Gloria Macapagal Arroyo, who stepped down last month after nine years in power, had put in place a policy of subsidizing rice to be sold at a cheaper price for the poor.

Faced with rising global food prices in 2008 and 2009 - and riots in some countries - the government went on a shopping spree, apparently fearful of shortages, according to the administration of Arroyo's successor, President Benigno Aquino III.

"We've hardly touched the amount that we imported," Banayo told The Associated Press in an interview. More than 2.2 million tons (2 million metric tons) out of the 2.48 tons (2.25 million metric tons) so far delivered this year are still in government warehouses, he said.

Government buffer stocks, reserved for food emergencies in case of a lean harvest, have now been extended to last 56 days from 30 days previously, he said.

"We're swimming in rice," he said, adding that he had ordered "no more imports for 2010."

Aquino, in his first state of the nation address Monday, blasted the excessive purchases, which he said were sometimes three to seven times more than needed.

"Is this not a crime, letting rice rot, despite the fact that there are four million Filipinos who do not eat three times a day," Aquino said.

Banayo said he was awaiting findings of an audit team that he is forming, but suspected that corruption can be partly blamed.

"When you're talking of volumes this high and when you're looking at the prices at which they were procured, which are often higher than world market prices ... I guess somewhere along the way, some people made a pile," he said.

In 2008, when Philippine purchases pushed world prices to historic highs, the government may have miscalculated industry and household stocks, Banayo said. Or it could have relied on faulty statistics from the Department of Agriculture "so much so that we may have panicked and because of the panic, we over imported and caused world prices to go up."

He said he was baffled why the former administration still approved importation of up to 3.53 million tons (3.2 million metric tons) this year despite having enough stocks.

Former Agriculture Secretary Arthur Yap defended the purchases, saying the imports were decided by a collegial body that involved other government agencies. He also pointed out that 2008 was the year of the global food crisis, while the Philippines lost 1 million tons of rice to typhoons last year.

Yap said no one reported to him any unusually large volumes of spoilage. He said any spoilage could be a result of mismanagement of stocks and not of oversupply.

Farmers and civil society groups on Friday called on the food agency to dispose of its surplus rice in the next two months by giving it away to the poor and selling the rest at the lowest price. They say it would bring down the prices of rice in the Philippine market - which ranges from 18.25 pesos ($0.40) per kilogram for subsidized rice to around 60 pesos ($1.30) for high-quality rice.

"Rice, as a staple food of Filipinos, has been the source of corruption and politicking," said Jaime Tadeo, president of the National Rice Farmers' Council. "The rice farmers always get the worst end of the deal while the rice traders, corporations and corrupt government officials manage to fill their money bag, intact and secured."

Tags: agriculture crops markets news Philippines rice trade