Relief in Manila After Japan Agrees to Sell Rice
While Philippines Battles Shortage, Neighbor Has Surplus of Unwanted Imports

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.

Philippine rice farmers said Japanese rice was welcome but would offer only short-term relief for the country's chronic deficit. Local production falls about 10 percent short of local need every year. The country's 92 million people eat about 33,000 tons of rice a day.

"The 200,000 tons of rice is good only for six days. It's a band-aid solution," said Jaime Tadeo, head of the National Rice Farmers Council and a farmer from the province of Bulacan.

Food insecurity, Tadeo said, is largely the result of the government's failure to spend money on infrastructure such as roads and irrigation systems that would allow rice growers to keep up with the demands of the country's fast-growing population. "You cannot rely on other countries to feed your own people, because they would surely let you get down on your knees," he said.

Imports from Japan, Thailand and Vietnam, which would augment the local harvest in October, should be enough to tide the country over until the end of the year, Sen. Angara said.

But he said chronic shortages would continue unless the government invested in long-term solutions. He said the last time the Philippines had a rice surplus was in 1967-1968.

The National Food Authority, the government agency that imports rice, has been selling cheap rice to poor Filipinos at just over half the commercial price. The agency has long been mired in corruption scandals and is deeply in debt, but without the cheap rice it sells, many Filipinos would go hungry.

The government has allocated about $116 million this year to 300,000 poor families in 20 provinces to help them buy rice. It also announced about $1.2 billion for irrigation, road, fertilizers, high-yield seeds and credits to farmers but has not yet released any of the money.

"Funding must be consistent," Angara said, noting that a succession of Philippine governments have had a "haphazard approach to agriculture."

Harden reported from Tokyo.