Rice crisis plus scandals may alter Arroyo’s future

MANILA (Reuters) – For Philippine President Gloria Macapagal Arroyo, already battling a corruption scandal, the price of rice could affect her political future.

Rice is more than just a food in the Philippines. It’s eaten at breakfast, lunch and dinner, sometimes by itself.

The country’s estimated 90 million people consume 33,000 tonnes per day and the government is trying to contain a surge in prices of the staple by securing guaranteed supplies.


The cost of some local grains has risen more than 30 percent from a year ago and while there have been no signs of mass anger, consternation is beginning to set in.

“It’s terrible, really terrible,” said Ronnie Tecson, a father of four, perusing sacks of fragrant Thai rice as well as domestic grain at one of the biggest food markets in Manila.

Near him, vendors at the Nepa-Q market were using erasable markers to write up prices on boards. Indelible markers don’t make any sense when costs climb so often.

“Some of the customers say, “Come on, help us out”, said Annie Bernardo, a stall manager, describing pleas to reduce the prices. “If I say “No” they get angry and ask me what kind of person I am.”

But consumer frustration, limited for now to raising eyebrows and voices at shopkeepers, can quickly escalate.


Arroyo is worried that if prices suddenly spike or there is a rice shortage, people will take to the streets. Her government is moving to secure stocks now, ahead of a traditional lean period for local rice that lasts from July to September.

“Rice is a political commodity here,” said Earl Parreno, an analyst at the Institute for Political and Electoral Reform.

“If there’s a shortage, it would really heighten the anger of the people against the government.”

The Philippines, one of the world’s biggest buyers of rice, paid about $708 per tonne at a tender this month for imported rice, more than double what it paid six months ago.

Despite rising global prices, the government has bought about 1.2 million tonnes of rice out of the 1.8 million it says it will need to import to meet demand in 2008.

The National Food Authority (NFA), the grain purchasing arm of the government that spends billions of pesos every year subsidising rice to the public, is now one of the biggest drags on public finances, with net liabilities in 2006 of nearly 43 billion pesos ($1 billion).

But the NFA has only a limited impact. In local markets, traders often tell customers they are out of NFA rice, which is kept at 18.25 pesos a kilogram, forcing them to pay nearly 30 pesos per kg for other varieties.


At the end of last month, government stocks were enough to last 9 days, below the average requirement of 15 days. During July to September the state aims to hold 30 days worth of stock.

Arroyo has assured Filipinos there is no threat of scarcity but her request to Vietnamese Prime Minister Nguyen Tan Dung last month to see if he could guarantee Manila up to 1.5 million tonnes of rice was exceptional and highlighted official concern.

Hanoi said it could only ensure a supply of 1 million tonnes.

This week, the government said it would ask fast-food chains to start offering half portions of rice to discourage people from over-ordering.

“It reminds me of Marie Antoinette, who shortly before the French Revolution famously said if people had no bread to eat, they should eat cake,” said Aquilino Pimentel, an opposition senator, of the government move.

Arroyo’s image has been battered by a kickbacks scandal and although support from the army and from allies in the House of Representatives should allow her to see out her term ending in 2010, a food crisis could alter the situation.

Filipinos have overthrown two presidents since 1986 through popular revolts. Opposition groups, who have been calling for Arroyo to go since 2005, would be quick to seize upon rice shortages as a rallying cry.


The Philippines, which is aiming to produce 17 million tonnes of unmilled rice this year, has a long-term goal of self-sufficiency but rising harvests cannot keep pace with one of Asia’s fastest growing populations.

Three babies are born every minute in this largely Catholic country but Arroyo is unlikely to change her staunch opposition to artificial contraception at a time when the support of politically powerful bishops is so crucial.

The former economist is proud of her financial record with economic growth hitting a 31-year high of 7.3 percent in 2007. But inflation has recently been climbing, undercutting some of the benefits.

Florencio Rutagines, an electrician whose dollar earnings from years of working on a cruise ship are being gobbled up by a rising local currency and inflation, said his family could never cut back on rice.

“A Greek colleague once said to me; I know Filipinos, no rice, no power,” he said as he finished lunch at a Jollibee fast-food outlet in Manila.

And Arroyo knows it too.

Carmel Crimmins


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