Inflation forces Philippines to release state rice stockpiles

Inflation forces Philippines to release state rice stockpiles
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First Published: Thu, Jun 12 2008. 11 36 PM IST

Drastic measures : Government-hired workers  distribute sacks of rice at the National Food Authority warehouse in Manila
Drastic measures : Government-hired workers distribute sacks of rice at the National Food Authority warehouse in Manila
Updated: Thu, Jun 12 2008. 11 36 PM IST
Manila: The Philippines, the biggest rice importer, has ordered the release of state stockpiles to “flood the market” with at least 1.2 million tonnes and curb local prices that gained 39% in the past year.
Drastic measures : Government-hired workers distribute sacks of rice at the National Food Authority warehouse in Manila
Between 300,000 and 400,000 tonnes will be released each month from June to September, agriculture secretary Arthur Yap said on Thursday. “He wants to flood the market,” National Food Authority spokesman Rex Estoperez said, putting current stockpiles at 850,000 tonnes, with an extra 650,000 tonnes due by August.
The Philippines, which is boosting spending to help the poor cope with price gains, consumes about 33,000 tonnes of rice a day. President Gloria Arroyo’s approval rating has slumped as inflation rose to the highest in more than nine years on food and oil costs.
“Given Arroyo’s situation, she needs to address the problem,” said Earl Parreno, an analyst at the Institute for Political and Economic Reforms. “Rice and food in general are really political issues that every leader should address.”
Rough-rice futures in the US surged to a record $25.07 (Rs10,73) per 100 pounds (about 45 kg) in April, driven by export curbs imposed by some producers, including Vietnam and India.
Asian governments and central banks are battling surging inflation, which has sparked protests from Indonesia to India. The Philippines is in talks with China, Pakistan, Thailand and Japan to secure additional rice supplies, Secretary Yap said on Wednesday.
“The government has the moral obligation to provide food at affordable levels,” Frederic Neumann, an economist at HSBC Holdings Plc.’s Global Markets unit in Hong Kong, said on Thursday by phone. National Food’s rice sales are equal to 10% of the grain traded in the Philippines, he said.
National Food will rebuild the nation’s rice stockpile from September, when the next harvest is due together with the expected arrival of new shipments from government-to-government contracts now being negotiated, Yap said by phone. “Considering the state of our negotiations with exporting countries, we’re expecting additional supplies,” Yap said, declining to elaborate. The terms of the supply contracts are still being discussed, he said.
Inflation in the Philippines climbed to 9.6% in May.
The government provides subsidized rice to poorer citizens through a distribution network that in April was extended to include church groups, local governments and stores in military camps.
Higher government spending “will go mostly to alleviate the burden on our people of the increase in the price of oil and price of rice,” President Arroyo, 61, said on Wednesday. “We have to reserve for ourselves the right to invest in our people.”
Francisco Alcuaz Jr. and Clarissa Batino in Manila, Catherine Yang in Hong Kong and Lilian Karunungan in Singapore also contributed to this story.
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First Published: Thu, Jun 12 2008. 11 36 PM IST
More Topics: Inflation | Philippines | Rice | Stock | Money Matters |