Wednesday, March 19, 2008

Philippines Brace for Rice Shortage

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This has been a long held thesis, and something I touched on just yesterday - the coming food crisis - well maybe crisis is too benign a term - the coming disaster? Not only do we have the "World of Shortages" scenario I've touted for a long time (too many humans entering 2nd and 1st world status/middle class vying for resources) but our central bank is exaggerating the amount of paper money chasing said commodities. While we are getting a correction the past 48 hours, the crisis, especially in food is real. But since it is happening in countries with hard to pronounce names that we only care about briefly during the Olympics it does not matter to Americans. The strains are showing up everywhere if you look hard enough for the news. But the crisis is building week by week, month by month - as I keep saying - it will hit the mainstream press sometime in 2009. The next step will be countries hoarding their food and restricting exports - we already saw that in wheat [Feb 25: Soybeans, Wheat Continue to Romp]- it will spread through the crop chain. And this macro theme of mine is why I shrug off almost any attack on the fertilizer stocks (but I do realize the stocks could get hit by over antsy speculators who only chase price momentum) ... but it's not a change in fundamentals. Thankfully we continue to come up with innovative solutions to the coming global food crisis, such as putting corn into cars.
  • The Philippine government, one of the world's biggest rice importers, assured a jittery public Wednesday that it was taking steps to secure enough supplies amid surging prices and tight stocks worldwide.
  • Agriculture Secretary Arthur Yap said there was no rice shortage and that President Gloria Macapagal Arroyo had approved a proposal to augment the agriculture department's budget for rice production. Yap said the government's rice reserve would last 57 days and that the National Food Authority was receiving additional supplies from the international market. The authority said it has secured 500,000 metric tons of rice from Vietnam and Thailand for delivery next month — part of 2.1 metric million tons to be imported this year.
  • Rising demand from the Middle East and Africa has pushed up the price of rice in Vietnam and Thailand — the world's top exporters — to up to $500 per metric ton, a 25 percent jump from a month ago, the Agriculture Department said.
  • But even those countries are struggling to keep pace with export demand and there are fears they may curb sales to damp domestic prices and protect their consumers.
  • A Philippine left-wing farmers' group, the May One Labor Movement, warned that any shortage or unchecked price of the grain, the nation's staple food, may lead to riots.
  • The National Food Authority has deployed "rice marshals" to catch unscrupulous traders who reportedly hoard government-subsidized rice, diverting them from state-run stores to sell them at a higher price elsewhere, said Executive Secretary Eduardo Ermita.
  • The head of the National Food Authority, Jessup Navarro, has blamed dwindling rice fields for recurring shortfalls, with many farms in the country's rice-growing region of Central Luzon converted to residential subdivisions, golf courses and shopping malls.
Keep printing paper money....

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