Editorial

Volatile rice prices

The government must take seriously the timely warning of the Los Ba?os-based International Rice Research Institute on another sharp increase in rice prices this year. The Philippines may have survived the surge in prices last year but it remains vulnerable to world rice production shortfalls.

The Philippines still imports a great deal of its rice requirements from abroad, notably Thailand and Vietnam. A shortfall in the yields of these major rice exporters will cause prices to spike and send the Philippines scrambling for alternative sources.

IRRI said on Friday that the price of rice?a staple for almost 700 million of Asia?s poorest?will likely rise sharply for the second straight year in 2009 as the global economic slowdown hits farmers and consumers alike. Rice prices have gone done dramatically from their peak in 2008 but the worldwide credit crunch, according to the IRRI report, will make it hard for farmers to secure cash for essentials such as seeds and fertilizer.

The global credit crunch has complicated the rice equation. IRRI said the economic downturn may increase demand for rice in developing nations as falling income forces poor people to switch back to less expensive staples.

But the institute said ?production uncertainty due to tight credit and declining rice prices combined with strong demand growth points to another rise in rice prices in the coming months... Price volatility will remain high.?

The Philippines is most susceptible to a tight rice supply situation because of its inability to become a self-sufficient producer. Local production is inefficient because many farmers have not gained access to modern farm technology. Rice wastage also remains a major problem due to the lack of storage facilities.

?If the yield growth rate does not improve, we can expect rice prices to continue to rise, and at a faster pace than that seen since prices started moving up in 2000,? warned IRRI.

The institute added that the only solution was to boost rice yield growth through higher investment in research and the development of agricultural infrastructure to allow rice farmers to put new scientific breakthroughs to work.

The Philippines should respond soon to IRRI?s warning to prevent the riots and protests set off in some parts of Africa and Asia last year in the face of a global food shortage.