Philippines and beyond: rice crisis  reaping the 'fruit' of market capitalism

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Author: GRAIN
Date: 22 April 2008
Short URL: /e/1641

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GRAIN | 22 April 2008 | Hybrid rice files (2002-2010)

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The recent price hike in rice has caused many people, from Asia to Africa, to panic. Expectedly, perhaps, as more than half of the world's population depend on rice for food, most of them the poorest of the poor. In the Philippines alone, the 'shortage' triggered daily long queues of low-income people in different parts of Metro Manila desperate to buy a few kilos of subsidised imported rice, rationed by the government's National Food Authority. The price of commercial rice was high enough to affect even the middle class. The purported reason: short supply in the market.

However, the situation comes perfectly incongruent with the FAO prediction 20 days ago of global production increases, further harbouring suspicion among people whether the short supply is real or simply imagined. According to FAO, global rice production is expected to increase by an additional 12 million tonnes this year in all the major Asian rice-producing countries. Grain production in 2007 was a hefty 2.3 billion tons.

Some point to inflation as the real cause of the crisis, emphasising the role of a plummeting dollar in an ever-fluid free market. Indeed the devaluing dollar, still the world's reserve currency, is partly causing the price, not only of rice but practically everything, to skyrocket. The oil price is constantly rising, making all petroleum dependent production and distribution of goods and services expensive. A ton of rice sold at US$ 500 in January now fetches around US$ 1,200.

But all of this is just a sign of an inherent crisis – that of market capitalism and trade liberalisation policies that many developing countries reliant on foreign debt are forced to accept. The Philippines is a good example of a country that was pushed to ignore its own food production and liberalise its industries, including rice, in order to comply with its many commitments, such as the IMF-WB's structural adjustment programmes, the WTO Agreement on Agriculture, and FTAs with several countries. An inevitable consequence of liberalising the rice industry is its vulnerability to currency fluctuation and supply-demand manipulation. To be continuously dependent on rice imports especially while the dollar performs badly, is a perfect recipe for crisis.

In the past days, government agents were quick to barge into rice traders' warehouses – often stacked to the roof – and suspect them of hoarding. But there seems to be more logic in what some traders say, than with what the government suspects. “We are stocking rice so that people will have something to buy and eat during the lean months of July-August,” according to a rice trader in Cebu. The current government, as well as those of past administrations, regularly boast about cracking the rice cartel, but never with much impact. In any case, this suspected "hoarding" pales in comparison to what's happening at the international level. The Philippines couldn't fill its latest import tender for rice because the traders were asking for twice the already inflated prices of rice in March. "The prices are just too high," said Vic Jarina, the deputy director of the Philippines National Food Authority.

This is what happens when governments give up and liberalise, rather than tighten, control over the rice industry. The private hands are given more room to play and manipulate the game to their liking.

But it's not just the warehouse that's becoming privatised under liberalisation. Across the globe, the whole agricultural system is becoming privatised. The world's rice production, dependent on private seed and agrochemical companies, is one of the biggest industrial monocultures primarily traded by private companies in the world market. Currency fluctuation, fertilizer price spikes, oil price increases – all this makes rice, considered a political commodity, also a highly vulnerable traded good.

Just a week ago, a large contingent of farmers, joined in by 16 foreign participants from different farmers organisations and NGOs in several Asian countries, gathered in the streets of Jakarta for the culmination of a week of rice action. They had just wrapped-up activities celebrating the various initiatives of Asian farmers in securing more sustainable rice farming and production systems. They called on the government to pay attention to the importance of food sovereignty in the equitable distribution of goods. They emphasised the problems with liberalising the rice industry and the dangers of being dependent on rice imports. They criticised the inherent flaw of an agricultural production system that is reliant on seed and chemical inputs from transnational companies. In short, they were there exposing the root causes of the rice crisis, and offering solutions.

Their calls sadly fell on deaf ears. Moreover, the foreign participants, who were there in solidarity with the Indonesian farmers, were arrested and detained. In the Philippines, several farmer and peasant groups have been coming up with proposals too. The Kilusang Magbubukid ng Pilipinas, for example, points to several solutions: an increase by at least 25 percent in the NFA's local paddy procurement; scrapping of the Agriculture and Fisheries Modernization Act and WTO's agricultural liberalisation; stopping land use and crop conversions; implementation of genuine agrarian reform.

But so far the governments of the Philippines and Indonesia have not showed any signs that they are listening, preferring instead to turn to the very agents who led them into this mess and who continue to push the very same mantras of neo-liberalism and green revolution technologies.

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