By ARTURO BOQUIREN
Do we have a food crisis? Several writers and economists wrote on the topic recently and say we do not have a food crisis or a rice crisis — only a price crisis! Government says we do not have a rice shortage but it has dispatched military trucks to distribute rice and adds that the measure is necessary to prevent food riots. Scary and yet it asserts we do not have rice shortage nor a rice crisis.
A number of writers and development analysts also assert that we do not have a rice shortage in the Philippines. We only have a price problem and hoarding. For them, the middlemen are the culprits. However, we have had middlemen since time immemorial. Rice middlemen can only create shortages when there is a real shortage. Rice middlemen are too many (but there are big ones) and, besides, we have solved the problem in the Philippines a time long ago by simply flooding the market with rice stocks good for at least three months.
The difficulties that we are experiencing today indicate that our rice stocks are short of the volume required to avert a rice shortage, often dubbed as “artificial rice shortage.” We are vulnerable to shortages because our supplies are short of the volume to make hoarding ineffective. Rice supply may be sufficient for a week but we do not buy rice everyday because that is inconvenient and costly to do, not mentioning time losses. Many buy rice for several days’, weeks’, or a month’s supply. Rice may be sufficient for a few weeks but the normal stocking pattern would still create shortages even if traders do nothing. Of course, the traders seeing the tight supply situation would respond and exacerbate the shortage.
In general, in the Philippines, rice shortages initiated by traders are only responses to real shortages. In the Philippines, hoarding by traders is not the principal cause of rice shortages. It is not enough that rice is sufficient to avert a shortage. To achieve food security, food stocks and not simply supply must be adequate. In other words, there must be a food surplus so there can be food security. Markets can only be relied on to make supply equal to demand. However, food security requires that supply must be larger than demand. This will have an impact on prices, of course, and government must assist farmers similar to what developed countries do vis-à-vis their agricultural sector.
Inefficiency? Having social unrests can be more costly in the long run. Spending a little bit more today can save us more money in the long run. That is long-term efficiency. One can also call it dynamic efficiency versus the static efficiency promoted by free-marketeer-economics. It is like saving for the rainy days. Inefficient because supply is not equal to demand? Learn from the ants rather than from the grasshopper! To appear sophisticated, one can also call it as making provisions for risks. Making provisions for risks has costs and it is not called inefficiency in capitalism (of course, making provisions too large can be inefficient).
Meanwhile, are we vulnerable to a food crisis? Let data do the talk.
• Flour supply in the world market is only 87 million metric tons versus a demand of 600 metric tons.
• United Nation Food and Agriculture Organization (FAO) data shows that in 2007 alone, dairy prices rose 80% and grain by 42%.
• A 25-kilogram of flour now costs P990 when it used to be only P580 in June 2007.
• International development assistance to agriculture went down to 20% in the early 1980s to less than 3% today.
• China refused the Philippine’s request for an allocation of 200,000 metric tons of milling wheat which is equivalent to 10% of the Philippine’s annual wheat consumption.
• In the world market, rice went up from US$430 per metric ton in January 2007 to US$747 per metric ton today. Reliable sources estimate that if even if tariffs are low at only 10%, the price of rice can be as high as P36 per kilo.
• FAO data indicate that 37 countries face food crises.
• International Monetary Fund Managing Director Dominique Strauss-Kahn says that if food prices remain high, there can be social unrests leading to war that can wipe out the gains of the last several years.
• An emerging biofuels market threatens food security. Even Germany is calling for regulation, not de-regulation, of the biofuels market. De-regulation is a core advocacy of free-marketeer-economists.
The problem of vulnerability to food crises cannot be solved by free-marketeer-economics. Free-marketeer-economics is both an ideological and political imposition of imperialism. Free-marketeer-economics is imposed on developing countries while imperialists practice protectionism in their homelands. Further, while the ratio of exports and imports to overall gross domestic product is low in United States, for example, the ratio is higher in underdeveloped countries. Thus, less developed countries are more vulnerable to fluctuations in the world market. In contrast, the developed countries are protected through economic unions such as that one operating in Europe and through direct protectionism such as through or “voluntary” export restraints (VER) imposed by countries such as the United States. #
(The writer maintains a blog at www.geocities.com/arturoboquiren. Comments can be coursed through www.nordis.net, firstname.lastname@example.org, and +63927-536-8431)