• ORICE_P1
• csmli-1
• stem-1

• ORICE_P2
• csmli-2
• stem-2

Roots of Asia's rice crisis

Tight supplies reflect population boom and neglect of farming.

from the April 22, 2008 edition

Page 2 of 3

Page 1 | 2 | Page 3

"Thailand, the world's largest [rice] producer, has 9.82 million [hectares of rice fields]. The Philippines has 4 million hectares of productive farmland. And those 4 million hectares are spread over 7,000 miles," says Mr. Macintosh, adding that the Philippines also lacks a river delta, which by providing an easy and abundant water source, allows Asian countries like Vietnam, India, and Cambodia to produce higher rice harvests.

Other factors in the rice crisis are also beyond the Philippines' control. Rising oil prices have made rice more expensive to produce, by increasing fertilizer and transportation costs; pests in Vietnam, one of the world's largest producers, have wiped out as much as 200,000 tons; and the collapse of Australia's rice production due to drought has eaten away at global rice stocks.

But many other factors are directly a failure of foresight here, as in the rest of Asia. Although government spending on agriculture accelerated in the 1960s and '70s, pumped into irrigation systems, fertilizer, and rice breeding that spawned the Green Revolution, it slowed by half throughout the 1990s, according to one study. In 2002, the Philippines invested only $0.46 for every $100 of agricultural output, a level consistent with the rest of Asia, according to a study by International Food Policy Research Institute (IFPRI) in Washington. It means that Asia is a slacker when it comes to investment in agriculture compared with the rest of the developing world, which spent $.053 for every $100 of agricultural output, and the developed world, which spent more than $2.0. The global average was around $.070.

Instead, Asia is increasingly transforming farmland into office parks and suburbs. In the Philippines, half of irrigated land has been transformed into urban development in the past two decades. While this fuels new economic engines such as services and industry, it also undercuts resources needed to grow food.

Less water, land, labor for farming

"Manufacturing is demanding more and more water. Asia expects to grow 1 percent more rice every year – but they're supposed to do that on less water, less land, and less labor," says Macintosh.

Perhaps most important of all, there are simply more mouths to feed.

The population in the Philippines has grown by roughly 2 percent a year since 2000, one of the highest rates in Asia, leading to a corresponding leap in rice consumption. And across Asia, exploding middle classes with more money and bigger appetites are eating more rice – and more meat. Meat production requires huge amounts of water, labor, and grains to feed cattle, which in turn diverts resources away from rice production.

And yet, despite this obvious population growth, governments throughout Asia have assumed they could always import more and more food, according to analysts. Global stocks of rice, as with other grains, are at their lowest since 1976, depleted by a combination of population growth, less farmland, poor planning, and bad weather.

"There's been no incentive for rice self-sufficiency in the Philippines. It was always so easy to buy rice from your neighbor," says Angelito Banyo, director of PR Politik, a think tank in Manila.

The current crisis has exposed the fallacy of thinking that supplies are in abundance, analysts say. It has also underscored a need for better coordination in Asia's rice trade, they add.

Instead of coordinating policies to respond to a problem that is affecting all of Asia, India, China, and Cambodia, among others, have imposed strict export restrictions, leaving countries like Malaysia and the Philippines to scramble for any deals they can grab. That will only cause prices of rice to climb higher in the open market, analysts say.

1 | Page 2 | 3 | Next Page