Freeman Cebu Business

Rice shortage: Revisit what we taught to the Thais

FULL DISCLOSURE - Fidel Abalos - The Freeman

As has always been, among professionals and businessmen, whether in the board room, coffee shops or barbershops, the dollar’s strength (hovering around P58 to a dollar), oil prices (near US$90 per barrel), the inevitable price increases of basic commodities and food insecurity concerns will either top or end their discussions. Same is true among peddlers and street vendors as they try to think and argue to justify their existence in sidewalks and gutters. Amusingly, almost everyone has become instant economic pundits brandishing their in-depth analysis on the nation’s current financial health.

Indeed, we can’t help but agree on that aphorism that Filipinos have very short memory.  To recall, a few decades ago, whether in the same informal talks or discussions or economic briefings, we didn’t hear anything but complaints about the strength of the peso. As if, nobody is happy, not anyone gained. In fact, when it was at its strongest on February 28, 2008 at P40.40460 to a dollar, calls for civil disobedience were even floated.

Likewise, just about a year and seven months ago, (on October, 2022), when the monthly average exchange rate was a seemingly uncontrollable P58.825 to a dollar, both educated and unschooled critics became instant prophets of doom. Doomsayers, as they have always been, were trumpeting here and there that the country was holed into a bottomless pit, a hopeless situation.

Yes, inflation rate then was high (5.82%). Gasoline prices seemed unreachable. Fares then went up. Basic commodities appeared as valuable as gold for the underprivileged Filipinos.  Poverty-stricken, most of our brother Filipinos settled for crumbs just to fulfill their modest desires to half-fill their empty stomachs.

The truth though is, whatever direction the peso goes, certain demographics will always benefit. Exporters, outsourcing companies and OFWs rejoice when it depreciates and importers cheer when it appreciates. Sadly, the rest will just have to navigate or simply bear the consequences of it.

However, we can find some solace in the fact that while the US dollar is strengthening, the U.S. Energy Information Administration expects that the voluntary OPEC+ crude oil production cuts and ongoing geopolitical risks will just keep the Brent crude oil spot price near US$90 per barrel for the remainder of 2024.” They are expecting though that it will fall to an “average of US$85 per barrel in 2025 as global oil production growth picks up.”  Therefore, whatever increases will be purely attributable only to the US dollar’s strength.

What is worrying really is the fact that we import some of our very basic needs.  Here, the impact will be badly felt. No.1 on the list is rice. Remember, according to the US Department of Agriculture, with a projected volume of 3.8 million tons, we will remain as the world’s biggest importer this year.

What makes the situation worse for us is the recent development from our traditional sources of rice imports, Thailand, India and Vietnam. Notably, exports from Thailand and Vietnam (due to the ongoing dry spell) and India (due to its export restrictions) dropped by a total of 5.5 million tons.  Simply put, globally, supply will reduce significantly. Thus, the higher probability that global prices will increase. Now, as we cover our rice supply shortages through imports from these countries, this development (coupled with the US dollars strength), will make prices of this commodity unreachable to most of our brethren.

Indeed, gone are the days when rice import was just a temporary solution. A temporary solution for our rice supply shortages. Shortages that only occurred when there were severe droughts or when devastating typhoons came in rapid successions.

As importation has become the country’s default, our current situation begs an answer to that nagging question. As to whether our shortage is, indeed, permanent or just temporary. If it is temporary, then, importation is the most appropriate solution. If it is permanent, then, we have to do something else. Remember, rice exporting countries have their own share of these calamities too. Therefore, that should not be an excuse.

In squarely addressing it, probably, we can start by revisiting what we taught to the Thais when they were still our tutees. Lest we forget, we always bragged about training them on rice farming. Didn’t we? We can, therefore, safely assume that we did everything right in teaching them.

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