Relief in Manila After Japan Agrees to Sell Rice

Marlon Ventura spreads harvested rice on a tarpaulin to dry in Nueva Ecija in the Philippines, which is the world's largest rice importer.
Marlon Ventura spreads harvested rice on a tarpaulin to dry in Nueva Ecija in the Philippines, which is the world's largest rice importer. (By Enrique Soriano -- Bloomberg News)
By Carmela Cruz and Blaine Harden
Washington Post Foreign Service
Tuesday, May 27, 2008

MANILA, May 26 -- The Philippines has been panicking for months about the soaring cost of rice, even as Japan feeds its surplus rice to cows and pigs. So a Japanese pledge last week to ship surplus rice to the Philippines has been greeted here with relief.

"The supply of rice is so scarce that any amount is welcome," Sen. Edgardo J. Angara, chairman of the Philippine Senate's Committee on Agriculture, said of Tokyo's plan to release 200,000 tons of rice. He said Japan would sell the rice to the Philippines and not send it as food aid.

With increasing world prices for rice and a tight supply, the Philippines government has been struggling since March to secure enough of its all-important food staple.

The government, however, has gained ground in recent days. Besides a promise of rice from Japan, the Philippines has received a qualified commitment of rice from Thai Prime Minister Samak Sundaravej.

If the Philippines has a shortage in coming months, Thailand will make a government-to-government sale "at a friendly price," he said Sunday. The Philippines is the world's largest rice importer.

The commitment marked a major turnaround by Thailand, the world's leading rice exporter. This month it proposed forming a Southeast Asian rice cartel to take advantage of world prices. The proposal has since been abandoned. The Philippines has also contracted in recent weeks with Vietnam for 1.5 million tons of rice.

The deal with Japan, though, is substantially different from the purchase agreements Manila is making with Southeast Asian countries. Japan is selling off imported rice that its people do not eat and that its government imports only because it must -- under international trade rules.

Although Japan grows far more rice than it needs, it has to import about 700,000 tons of the grain a year under the terms of a 1993 World Trade Organization agreement, which obligated Tokyo to open its protected rice market to foreign competition.

The stockpile of imported rice peaked two years ago at 1.9 million tons, when Japan began using about 25,000 tons a month to feed livestock.

The emergence this spring of an acute rice shortage seems to have provided Japan with a way of unloading the unwanted rice in a way that is both acceptable to its international trading partners and good for its image.

Under WTO rules, Japan needed the approval of the United States -- principal supplier of the rice it reluctantly imports -- before it could reexport the grain. The Bush administration said Friday that for the sake of easing world rice prices it would back the plan to sell the stockpile.

Japanese consumers, for the most part, do not like the taste of imported rice. Even if they did, they could not buy it in Japan. Their government, to protect local rice growers, keeps it off the market and stores it in refrigerated warehouses. Japanese-grown rice costs at least double the price of imported rice.

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