While the fighting rages on in Marawi and everyone’s attention is focused on how we can, as we should, neutralize the threat of terrorism in our land, one national security issue worries me.
It is food security. Hopefully, my fears are wrong. Hopefully, government officials in charge are right, and though it may violate the freedom of information directive that everything in government should be as transparent and factual as could be, I wish our concerned agencies are not telling media the real truth about our rice stocks.
For our own sake, I hope they have aces up their sleeves.
Worrisome is the admission from the National Food Authority that they only have eight days of rice inventory in their warehouses. I heard that from an NFA source more than a month before they finally admitted it, which means as we write, there may be just about six days of stock.
Now let’s do simple math: The daily average consumption of rice in the country is some 32,000 metric tons. Yes, we consume that much, the equivalent of 640,000 bags of 50-kg sacks of rice each day.
So 32,000 multiplied by eight days is 256,000 tons placed strategically according to geographic givens and historic data on supply and demand all over the country. Islands and highlands which are supply-deficient and logistically difficult often are given priority. Urban centers such as Metro Manila and Metro Cebu need to have ample stocks because these places do not have any palay farms.
The Philippine Statistics Authority, which absorbed the Bureau of Agricultural Statistics formerly under the Department of Agriculture assures us that there are ample commercial and household stocks, while admitting that NFA stock is at a historic low.
The Department of Agriculture tells us and assured the President that we had a “bumper” crop of palay this summer. Relatively good weather may have been a factor, but I do not know that the National Irrigation Administration during the last year of Aquino and the first few months of Duterte had been able to increase irrigated rice fields beyond the incremental.
The summer crop has been good, but whether it is a bumper crop or less is debatable.
After the well-publicized tiff between the new NFA administrator and the National Food Authority Council chaired by the Cabinet secretary came to a head, the NFAC authorized the importation of 250,000 metric tons of rice through a Government-to-Private public bidding, as against what the NFA wanted, a G-to-G purchase.
Now let’s go back to the numbers. 250,000 tons is good for another eight days of consumption. That means that theoretically, we should have anywhere from 14 to 15 days NFA stock by July 1, a month from now, which marks as well the onset of the so-called “lean months” of July, August and September when our locally grown palay are yet to be harvested, and therefore no domestic supply additions to stock are available.
The lean months also coincide with our monsoon/typhoon season. Worse would be if a strong typhoon hits us in mid- to late September, thence October, which is the period when our palay farmers harvest their wet-season crop. Think “Ondoy” in late September 2009, followed by “Pedring” in early October 2009, or “Pepeng” on Sept. 26, 2011, ironically NFA’s foundation day. On those strong typhoons of recent memory, as much as one million tons (20 million bags) were lost in a single day of wind and water rampage.
Now the rule of thumb is that NFA must have 30 days stock in its bodegas at the start of July. And these stocks must be strategically positioned in critical areas where local supply is unavailable and logistics is difficult. If a strong calamity should occur, NFA could thus supply DSWD enough stocks for it to rebag and distribute. Or for local governments to procure for instant calamity relief.
Further to this, a 30-day buffer gives some elbow room for the government to “flood” critical areas with rice, so that the commercial sector, from millers to wholesalers to retailers, cannot unreasonably constrict the supply situation to artificially jack up prices. Here in Taiwan, buffer stock is defined as at least 90 days in the hands of government. And yes, they are self-sufficient in rice, and in practically every other farm product.
Now let us go to the question of timing.
The public spat between the NFA administrator and the NFA Council had to do with private rice importation under the Minimum Access Volume. The Council, worried about inflation (rice constitutes nine percent of the consumer price index) wanted to extend the discharge date of imports awarded December 2016 from Feb. 28 to March 31. The NFA administrator, for reasons quite unfathomable, wanted to penalize “late” arrivals, resulting in tremendous demurrage and unseen costs.
Finally, the NFAC had its way, but precious months have passed. Those importers will pass on the huge additional burdens to their price.
Because of the impasse and once more the immutable law of supply and demand, buying prices of palay in the last harvest season went as high as 22-23 pesos per kilo, which translates to roughly P43-P45 in retail prices, higher than current market averages. Already, the Bangko Sentral has publicly admitted that the higher second-quarter price index is on account of higher food costs, principally rice.
Now that the government has decided on a G to P purchase, that means at least a month from mid-May to mid-June (realistically more end-June) of preparatory work before bidding under our procurement laws. The winning private bidders will then import from their foreign sources. Given these timelines, the imported rice should be here in August yet.
That is a long and ripe period for speculators to take advantage of the market situation. Threatening to “raid” warehouses and stockpiles will just fuel more hoarding, not only by the big players, but more difficult to police, the retailers and even middle-class consumers who if they can afford it, buy more rice than the usual and stock these in their houses, hoping to protect themselves from rising prices or worse, possible temporary shortages.
Remember, rice is a fungible commodity. You wouldn’t know the difference between five-percent or 10-percent brokens and 25-percent brokens when mixed in the retail store. You could pay a premium for what is “bad” rice.
Of course, there is a big difference now, unlike in 2013-2014 when wrong policies and a delusionary goal of rice self-sufficiency caused prices to jack up to as much as P50 for medium-grade rice. That caused the NFA, NIA, PCA and even the Fertilizer and Pesticide Authority to be removed from the rib-cage of the Department of Agriculture into the plate of Malacañang.
The difference is there is a Rodrigo Duterte who could strike fear into the hearts of would-be price gougers and hoarders, who could take advantage and as smart businessmen, create an opportunity out of crisis.
But the numbers, and the timing, do not inspire confidence. Hopefully, our economic managers can see through the potential problem, and have aces in their sleeve. Act with stealth, and shun publicity.
At the end of the day, rice prices which are central to the price index, can bring down popularity indicia. Rice is both an economic and political commodity. And—food security or the absence thereof, no matter how temporary, is a national security problem.