Rice market’s stability threatened by rising input costs

Soaring prices of farm inputs and the effects of climate change are threatening the stability of the rice market, which is a main concern for countries like the Philippines, according to the OECD Development Center.

The think tank said in a report, which covers Southeast Asia, India and China, that while the price of rice has remained relatively stable since the pandemic, higher fuel and fertilizer costs along with adverse weather conditions threaten to disturb long-lasting stability in the rice market.

In particular, droughts and heatwaves due to climate change hamper the yields of rice fields, especially those that lack access to irrigation and depend extensively on rainfall and groundwater.

The OECD unit added that when rainfall is low during the planting season, farmers may be forced to compete for a limited amount of groundwater, which has become less affordable due to soaring diesel costs and currency depreciation.

In a bulletin dated March 9, the United States-based Climate Prediction Center declared that the La Niña phenomenon that brings greater than normal rainfall to the Philippines has ended.

However, the consensus among climate forecasters is that there are “elevated chances” that its opposite—the El Niño phenomenon which brings lower than normal rainfall—might develop in the Philippines in the second half of this year.

“Rice, one of the most important staples in Southeast Asia [which includes the Philippines], plays a vital role as the source of nutrition for the region’s increasing population,” the OECD DC noted.

“Given the crucial role of rice as both a food and an export product in emerging [economies in] Asia, boosting its production is essential,” the report said.

The group added that efficient use of scarce water resources and improved irrigation systems to alleviate the adverse effects of droughts will be vital for food security in Southeast Asia.

Also, safeguarding the availability of high-quality seed and ensuring the affordability and optimal usage of fertilizers and pesticides can also boost the supply of rice and mitigate food shortages in the region.

According to the Philippine Statistics Authority, the increase in prices of rice accounted for 0.2 percentage point of the 7.6-percent inflation recorded in March.

On March 7, President Marcos approved the creation of the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) as an advisory body on strategies to alleviate inflation and ensure food and energy security, while balancing the interests of domestic food producers, consumers and the broader economy.

Since then, the IAC-IMO has convened to establish coordination mechanisms for data gathering, assessment and monitoring of supply and demand conditions that exert inflationary pressures.

“By streamlining data collection, the government can share a common understanding, particularly regarding data that can inform public policy and aid in the monitoring and management of inflation,” said Arsenio Balisacan, Secretary of the National Economic and Development Authority.

Balisacan said that the committee’s objective was to offer proactive policy recommendations regarding emerging threats to food supply, such as the potential escalation of African swine fever and the weather disturbances linked with the El Niño. INQ