GMA allots P44b to counter rice crisis

PHILIPPINE NEWS SERVICE — President Arroyo unwrapped yesterday a P43.7-billion package to address the rice crisis, boost agricultural productivity and ensure the country’s food security.

The President outlined the package at the National Food Summit at the Fontana Convention Center here as finance ministers of the Association of Southeast Asian Nations met in Danang, Vietnam, to look at ways of coping with soaring prices and the global economic slowdown, which are expected to hurt growth across the region.

At the same time, Asean member Thailand, the world’s biggest rice exporter, pledged supplies to neighboring countries as shortages drove prices to a record high and threatened to trigger protests in Asia and Africa.

Mrs. Arroyo said the government will focus on a six-point assistance package under the acronym FIELDS, which stands for Fertilizer, Irrigation and infrastructure, Extension and education, Loans and insurance, Driers and post-harvest facilities, and Seeds.

“We are going to cluster our food production drive in six assistance packages, which are the essential ingredients in making food abundant, accessible and affordable,” she said.

The government has set aside P500 million from the Agricultural Competitiveness Enhancement Fund for fertilizer support and production, especially for organic fertilizers. “We will renew our call for organic fertilizers because the cost of urea has increased 200 percent in the last two years,” she said.

She also said the government will spend P6 billion on irrigation, P6 billion on infrastructure, including farm-to-market roads, roll-on roll-off ferry ports, and no frills airports for agricultural cargo.

For education, the government will allocate P2 billion for research and development, P1 billion for capability building, P1 billion for trainors and technicians on new technologies in agriculture, and another P1 billion for agricultural and fisheries education.

The biggest chunk of the fund, amounting to P15 billion, will be used to establish a credit facility so that farmers could borrow from government financial institutions. The P15 billion is on top of the P5- billion fund that the Land Bank of the Philippines earlier said it would set aside for rice planters.

“If all that credit is available, why is it that farmers don’t have credit? I ask Congress to enact a law making farm lands acceptable as loan collateral,” the President said.

Mrs. Arroyo said the government will spend another P2 billion, from budget and off-budget sources, for dryers and post-harvest facilities.

For seeds, Mrs. Arroyo said the government will provide the necessary financing to sustain the government’s seed support program, with P2.7 billion earmarked for hybrid seeds and P6.5 billion for certified seeds for five harvests in 2009 until 2010.

“Some 600,000 hectares this year will be targeted all over the country for certified seeds, with another 900,000 hectares for hybrid seeds planted by our farmers from 2009 to 2010,” the President said.

She said half of the planet depended on rice but stocks were at their lowest since the mid-1970’s, and that based on forecasts, global rice production this year would fall below the global consumption level of 430 million tons.

“In all these programs, we must be transparent. We will work to fix the corruption that still plagues our nation, including the agri-business sectors. We especially prohibit our officials from dealing with fertilizer brokers and agents. They can only deal with official distributors in the regions and provinces,” Mrs. Arroyo said, adding she will appoint a deputy ombudsman for agriculture to deter corruption.

Meanwhile, Asean finance ministers gathered in Danang to look for the “best common measure” to address the situation, Vietnamese Deputy Prime Minister Nguyen Sinh Hung said.

“Recent developments in global and regional financial conditions are posing new challenges to maintaining macroeconomic stability and growth of individual countries and the whole region,” he said at the annual one-day meeting.

But many experts believe that Asia in general will be able to weather the financial turmoil that started in the United States with the subprime mortgage crisis, and weather it better than it would have been able to do in the past.

With the crisis hitting demand in the US, a key export market for Asia, there was nevertheless still cause for “cautious optimism” in the region, World Bank managing director Juan Jose Daboub told Agence France-Presse.

Daboub said there were “three balls” to juggle: “One being the impact of the situation in the United States… the second ball being of course food prices and oil prices, and the third one keeping the pace of reforms.”

“In virtually every East Asian country, high food prices are raising headline inflation and contributing to a significant decline in the real incomes of the poor,” he said.

But Thailand said it “has enough rice for export to neighboring countries’’ and may be able to deliver as much as 1.2 million tons a month, Prasert Gosalvitra, head of the rice division of the farm ministry, said in an interview with Bloomberg yesterday. Thailand had shipped about 1.1 million tons a month since October, he said.

Prasert said the country could not export more than 1.2 million tons of rice a month.

“We’re ready to help solve the global food crisis, but we have to be sure our people are taken care of,” he said by telephone from Bangkok. “It’s not possible to ship 3 million tons a month. The maximum we can do is 1.2 million tons.”

Rice, the staple food for about three billion people, gained 0.8 percent to its highest ever in Chicago Friday after doubling in the past year on increased imports by the Philippines, the biggest buyer, and as China, India and Vietnam cut exports. Record food prices have stoked inflation, contributing to riots in Ivory Coast and a crackdown on illicit exports in Pakistan.

“We expect a significant rise in prices—well above the long-term average, in the short-to-medium term,” Les Gordon, president of the Rice Growers Association of Australia, said. Population growth, urban encroachment on land, and rising grain prices are contributing to the increase.

Rice for May delivery rose 17 cents to a record $20.37 per 100 pounds on the Chicago Board of Trade. The United Nations’ Food and Agriculture Organization said global exports would drop 3.5 percent this year as nations curbed sales.

Commodity prices are posting their seventh year of gains. The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials more than tripled in the past six years as global demand led by China outpaced supplies of metals and crops. The Standard & Poor’s 500 Index of US equities gained about 22 percent over the same period.