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Roots of Asia's rice crisis

Tight supplies reflect population boom and neglect of farming.

(Page 3 of 3)

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.

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Filipino officials said last week that the country is spearheading a regional meeting of 10 Asian countries to discuss the crisis, tentatively scheduled for this summer. Some analysts, however, don't expect much to come out of it.

"Rice is such a politically sensitive issue. Countries are not going modify their rice prices to satisfy others. They're going to pursue prices that they believe are in their national interest," says Nicholas Minot, a senior research fellow at IFPRI.

Reactions inside Asian countries have not helped, either. Hoarding has become a problem in India and Bangladesh, and caused such domestic price spirals in the Philippines that the government has threatened life imprisonment to prevent it.

Solutions, analysts warn, will not be immediate, but could take the form of food-for-work programs, targeted school feeding programs, and conditional cash transfers (where poor households are given cash assistance if they attend health clinics and keep their children in school).

"These types of programs are more effective in helping people adjust to the high prices than price controls or universal food subsidies," says Mr. Minot.

In the Philippines, Arroyo's short-term response has been to flood markets with highly subsidized rice, broker a quick deal with Vietnam for 2.2 million tons of rice, and call for a halt on converting farmland into development space. Observers say they're all steps in the right direction. "The Philippines is a relatively positive situation, where the government is taking very productive steps," says Paul Risley, a spokesman for the World Food Program in Thailand.

Investment needed and on the way

But as the crisis mounts, observers agree that Asia needs a second Green Revolution, a movement launched in the 1960s that resulted in double rice yields through better irrigation and investments in rice technology. Money has to be put back into the science of feeding, they say.

"In the long term, developing countries and the international community need to increase investment in agricultural research and development to develop new disease resistant, higher-yielding varieties," Minot adds.

The Philippines looks to be doing just that: Last week, President Arroyo announced a $1 billion investment to improve rice production. The money would go toward seed production and training and loans to farmers, as well as updating irrigation and transport systems. "We must work harder to grow and breed what we need," President Arroyo said recently at a national food summit.

Small farms like Plorensio's in Bohol, meanwhile, show that investments can pay off. Four years ago, the local government introduced a plant-now pay-later scheme, allowing farmers to buy seeds from a bank, rather than planting their own. Production is way up over the past few years, Plorensio says.

A few weeks ago, Plorensio and other farmers in his town petitioned their local congressman for a $12,000 loan to fund an irrigation system. If the loan comes through, he says, those rice fields won't be idle any longer.