Drought destroys P8.4b worth of crops

THE damage wrought by El Niño to crops amounted to P8.4 billion, Agriculture Secretary Bernie Fondevilla said Friday. Verified reports showed standing corn crops sustained most of the damage, he told reporters at the sidelines of the Agriculture Guarantee Fund Pool awarding rites at the Bureau of Soils and Water Management. The government could not yet say if the damage would go beyond P11 billion as reported earlier. “We'll see. Should the episode worsen, we can estimate the extent of the damage and determine if there will be a need to import additional rice,” he said. The government is monitoring 14 provinces greatly affected by the drought, including Cagayan, Isabela, Nueva Vizcaya and Quirino in Northern Luzon, Bulacan and Nueva Ecija in Central Luzon, Occidental Mindoro, Oriental Mindoro, Marinduque and Romblon in the Mimoropa area or Region IV-B, Masbate in Bicol, and Antique, Guimaras and Negros Occidental in Western Visayas. Still, the department has no numbers yet for the total size of farmlands affected by the drought as well as the volume of crops that were destroyed. Over 200,000 metric tons (MT) of paddy rice was destroyed, Fondevilla estimated. The department’s Central Action Center earlier placed the damage to crops at P11.2 billion, with damaged paddy rice nearing 300,000 MT. Despite the center’s numbers for rice crops, Fondevilla said the department is sticking to its projection that paddy rice output in the first half would total 7.2 million metric tons. Paddy rice production for the second quarter will reach 3.463 million MT or 0.8 percent higher than the 3.435 MMT produced in April to June 2009. In crop survey for January, the Bureau of Agricultural Statistics said that paddy rice output in the second quarter would grow with the 1.11-percent expansion of harvested areas. It projected a harvest in 868,000 hectares of irrigated and rain-fed farms in the country. “With the demand (for palay) expected at 3.03 MMT in the second quarter, the 3.463 MMT projection is more than enough to cover our national requirement for the period,” Agriculture Secretary Salvador Salacup said. This year the Philippines will import up to 2.4 MMT of milled rice, mostly from Vietnam, to fill a possible gap in production, cover the crops damaged by typhoons late last year and the current crops felled by the drought.

Thai Rice Output May Drop on Drought as El Nino Parches Region

Rice production in Thailand, the world’s largest exporter, may decline as drier-than-normal weather curbs yields, adding to signs that an El Nino may be hurting farm output across the region. “Unmilled rice output in the next crop year may fall below the average production level of 31 million tons if El Nino puts off rainfall,” Prasert Gosalvitra, head of the nation’s Rice Department, said today by phone from Bangkok. Thailand accounts for about a third of the global trade in rice. Lower production of rice from Thailand and palm oil from Malaysia caused by the dry weather may drive commodity prices higher, spurring food inflation. Asian agricultural companies including Wilmar International Ltd. may benefit from the surge, BNP Paribas SA told investors in a note today. “We’re worried that delayed rainfall will probably hurt output,” Apichart Jongskul, secretary-general of Thailand’s Office of Agricultural Economics, said today by phone. “The impact on the next crop has yet to be evaluated,” Apichart said. Thai output of unmilled rice in the year that started Oct. 1 may be between 27 million and 29 million tons, said Apichart. That’s unchanged from a forecast on Jan. 13, and 15 percent lower than the previous year’s 31.7 million tons, he said. The El Nino weather phenomenon, characterized by warmer sea-surface temperatures across the equatorial Pacific, can cut rainfall in Asia. Among the expected impacts from this month to May are drier-than-average conditions over Indonesia, according to a March 4 report from the U.S. Climate Prediction Center. ‘Driest Period’ “It’s the driest period I’ve ever seen,” Virapan Tipsuna, a 42-year-old farmer in Thailand’s northeastern province of Nongkhai, said yesterday in an interview. “It is so dry that the water supply is not enough for rice farming.” Palm oil, about 90 percent of which is produced in Indonesia and Malaysia, may surge this year as the El Nino curbs yields, analysts and traders including Prudential Bache Commodities LLC and Godrej International Ltd. warned this week. The commodity, trading today at 2,700 ringgit ($813) a ton, may jump to 3,200 ringgit, Godrej’s Dorab Mistry forecast. “Mistry’s expectations are similar to our own thesis of an extended El Nino and lower” palm oil production, BNP’s Michael Greenall wrote in today’s note, including among his top picks Indonesia’s PT Astra Agro Lestari, that country’s largest publicly traded plantations company. Astra Agro stock has almost doubled in the past year. Drought Spreads Drought is spreading in 36 of Thailand’s 76 provinces, mostly in the North and Northeast, which are major planting areas of rice and sugar, according to a statement on the government’s Web site. Water in reservoirs that can be consumed has dropped 15 percent this year, according to the Royal Irrigation Department. The Mekong River, which flows from China through five countries in Southeast Asia, is at its lowest level in 30 years near Thailand’s border with Laos, Thailand’s Department of Water Resources said yesterday. A drought in southern China, including Yunnan province, has left rivers at record lows, the Ministry of Water Resources said yesterday. Dry weather from El Nino has damaged 200,000 tons of rice in the Philippines, the world’s largest importer, Agriculture Secretary Bernie Fondevilla said on the same day. In Thailand’s Northeast, the water shortage, coupled with plant infestations, has damaged half of the rice crop, said Virapan, the farmer. “We just hope that it will rain soon and we don’t have to suffer again next year.”

Philippines May Lose 400,000 Tons Rice Output, Official Says

The Philippines, the world’s biggest rice importer, may lose as much as 400,000 metric tons from its first crop this year as an El Nino event reduces rainfall in some provinces, a government official said.

Some farmers may switch to other crops if water flows to regions distant from dams are restricted “under extreme conditions,” Joel Rudinas, acting agriculture undersecretary for operations, said in a phone interview from Manila today. The Philippines has two rice crops a year, with the 2009 first harvest yielding 7.4 million tons.

Imports by the Southeast Asian nation may jump to a record 3 million tons this year, from 1.78 million tons, if El Nino parches crops or another typhoon hits the country, National Food Authority Spokesman Rex Estoperez said in November. The country has so far secured 2.2 million tons from overseas suppliers for delivery this year, he said Jan. 8. The Philippines advanced purchases after storms slashed production in 2009.

“I think they will return to the market only in June when prices have softened,” Rakesh Singh, a trader at Emmsons International Ltd. in New Delhi, said by phone today. “It doesn’t make sense for them to enter the market at this moment because prices are already high,” he said.

El Nino, the weather pattern that can reduce rainfall or prolong the dry season in parts of Asia, also threatens to curb output in Thailand, potentially limiting the capacity of the world’s biggest rice exporter to boost shipments to meet additional demand.

The export price of the 100 percent grade-B Thai white rice, the benchmark in Asia rose 16 percent to $609 a ton in the week of Jan. 13 from last year’s low.

Rice Futures

Rice futures in Chicago rose to a record in April 2008 and the Asian benchmark export price reached its highest level a month later as the Philippines boosted imports and exporters including India and Vietnam curbed shipments, adding to concerns of food shortages that sparked protests from Haiti to Egypt.

Rough rice has jumped 25 percent in Chicago from last year’s low as the Philippines advanced imports after storms wiped out 1.3 million tons of the nation’s crops. The March- delivery contract closed at $13.975 per 100 pounds on Jan. 15. Trading is suspended today for a public holiday.

Acting Philippines Socioeconomic Planning Secretary Augusto Santos said El Nino may cause a “water crisis,” curbing the nation’s agricultural production and hurting the domestic economy, the Manila Times reported today.

Northern Luzon’s Isabela province, the nation’s second- largest rice producer, is most at risk from production losses because of the dry weather, Rudinas said.

Cloud Seeding

El Nino “at its worst” would definitely affect the Philippines rice shortfall, he said. Still, steps such as cloud seeding are being planned to boost water supply in rice areas, he said.

The water level in Angat dam, which supplies 97 percent of water in the capital region dropped 5 percent to 201.43 meters as of Jan. 13 because of El Nino, the Manila Times reported. If the decline continues, water supply from the dam to farms in Bulacan and Pampanga may be cut, the newspaper said, citing the Metropolitan Waterworks and Sewerage System.

Rice output in Bulacan and Pampanga is “sizeable,” Rudinas said, without citing volumes.

Drought hits rice harvests in Thailand, Philippines

EL NIÑO threatens to parch rice crops in the Philippines, the world’s biggest importer, and in Thailand, the largest exporter, according to officials in both countries.

“Between 20 and 30 percent of the areas planted to rice in provinces hit by El Niño are at risk of damage due to the dry spell,” Agriculture Undersecretary Emmanuel Paras said.

“That’s why we’re planning measures to counter the effects,” including spending P2 billion.’’

Thailand’s rice output might drop 15 percent to as low as 27 million metric tons in the year that began Oct. 1, from 31.65 million tons a year earlier, Apichart Jongskul, secretary general of the Office, said in Bangkok Thursday.

Lower output in Thailand may limit its capacity to boost shipments to meet additional purchases from importing countries including the Philippines, helping support global prices.

Rice futures rose to a record in April 2008 in Chicago, and the Asian benchmark export price reached its highest level a month later as the Philippines boosted imports and exporters including India and Vietnam curbed shipments, adding to concerns of food shortages that sparked protests from Haiti to Egypt.

While the US Department of Agriculture increased its estimate for this year’s global rice stockpiles, the extra supply was seen coming from India and China, which it did not forecast to increase exports.

“Unfortunately, most of these additional stocks, with the exception of Thailand, will not be available to the market in case prices start to rise,” an economist in Manila said.

Is The World Set for Another Rice Crisis?

"This year, I will not have enough rice to eat for the whole year," says Kong Chanthorn, a rice farmer in Srayov Kharng Tbong village in Cambodia's Kompong Thom province. "I am afraid I cannot earn the money to buy rice to support my families because this year its price is too high."

Chanthorn is not alone. The global price of rice, a staple for half the world's population, is rising inexorably again, up more than 25 percent in recent months, stoked by Philippine and Indian import demand although not to the stratospheric levels of late 2007 and early 2008. At that time the price rose from about US$300 per metric ton to as much as US$1,100. Prices later fell back to about US$400 as government panic subsided across the region and bans on export were lifted, and as planting pushed up stocks.

Cambodia's rising prices were precipitated by the onset last September of Typhoon Ketsana. On Wednesday Pov Samy, the secretary general of Cambodia's National Committee for Disaster Management, said Ketsana had caused flooding in eight of the country's 24 provinces and damaged public and private buildings to the tune of US$153 million. A further US$131 million is needed to restore the buildings' hardware, he said.

But the cost to rice farmers suffering lower production yields and higher food prices remains unknown, not only in Cambodia but in other areas of Asia as well. The damage from the typhoon, plus the potential of falling stocks from a recurrence of the El Nino weather phenomenon, raises the risk of skyrocketing prices.

Chanthon, 33, says he lost half the annual yield from his rice paddy from Ketsana. And although villagers in his area have received seeds and food help from non-governmental organizations, they have not been enough. "Some villagers have to catch fish to earn some money to buy milled rice," he said. "My daughter's rice field is all gone and my son-in-law has had to fish."

"Flooding from Ketsana has pushed the price of rice up in our community," Chanthorn. "Last year during the same period rice only cost 9000 riel [$1.75] for a basket. Now the price is near 13,000 riel [$2.10]."

Food security has become a major political issue in Asia in recent years due to imbalances in the demand-supply chain and hoarding by national governments. In response to the problems, the World Food Program has initiated a number of emergency projects, and the International Rice Research Institute (IRRI) last month launched a US$300 million fund-raising campaign for the region.

"Rice is fundamental not just to Asian economies but also Asian culture," IRRI Director General Dr Robert Zeigler said in a statement at the launch of the fund. "There is no doubt that rice research can help. For four decades, rice production has steadily increased in Asia, pushed ahead by new varieties developed through research that has helped ensure enough rice for all Asians.

"What we need more than anything is to make the necessary investments, especially with the looming threat of climate change," he added. "After all, in Asia, rice is life."

New statistics released by HSBC show that rice production could fall 20 percent this season due to a rage of mainly weather-related factors such as typhoons, flooding and droughts. As a result, global rice prices have surged to US$610 per metric ton. Along with the anticipated return of El Nino in 2010, the drop in yield could spell trouble for a region increasingly important to world economic growth although there is some debate over stocks.

Typhoon Ondoy, as Ketsana was known in the Philippines, severely damaged Filipino rice production, resulting in record buys of 202 million tons to build adequate stockpiles for 2010. Reuters reported on Jan. 13 that Philippines unmilled rice output is expected to hit a record this year, however, and that the El Nino effect expected to be mild. Bloomberg, however, quoted Philippine Agriculture Undersecretary Emmanuel Paras as saying as much as 20 to 20 percent of the country's rice growing regions could be affected by the weather phenomenon.

Some 1.5 million people affected by food shortages are beneficiaries of a $56 million WFP project in the Philippines. Running through June 2010, the program will attempt to trigger recovery through agricultural projects and support. However, the Philippines program is facing a funding shortfall of $33 million. Further emergency donations are needed in Cambodia, where 25,000 households received 1,250 tons of rice for the month of September to avoid starvation, but have been left to fend for themselves since.

"Food assistance provided by [UN programs] during crises is aimed at saving lives and ensuring people do not exhaust their meager resources to survive the ordeal," said Mike Huggins, WFP spokesperson for Asia. "By supporting people during tough times, they are better able to recover their livelihoods and get back on their feet when conditions improve."

In his December report for HSBC, "What's Cooking with Rice?," economist Frederic Neumann noted that the US Department of Agriculture (USDA) forecasts that global rice production in 2010 will be below global demand for the first time in five years. At the same time, stocks among major exporters are running about 20 percent below normal, he said — adding that the numbers may even underestimate the problem.

In 2008, continually low stocks and steadily growing demand "set up the market for a price spike that ultimately became self-perpetuating," Neumann wrote. "In a major review of the episode, the USDA recently concluded that hoarding and emergency trade restrictions imposed by governments were the main driver for the run-up in rice prices."

None of these underlying agricultural problems have disappeared in the past year. Following its driest monsoon season for 37 years, the Indian government is expecting its summer-sown rice output to fall by some 18 percent, forcing it to become a net importer for the first time in nearly two decades in order to cope, the USDA said.

"Rising rice prices should generally be positive for rice farmers across the region as it raises their income," Neumann said in an email exchange. "However, lower income groups tend to be more negatively affected. In a sense, therefore, rising rice prices represent a redistribution of income."

After two devastating typhoons and some of the heaviest rains in almost 40 years, the Philippines is also suffering massive production shortages that are expected to increase the country's import demand by 25 percent. The government was forced to revise up its emergency operations budget to provide for an additional 44,628 metric tons of food aid and extend the emergency operations plan through June of 2010.

The problem of food security and pricing is expected to increase hoarding by individual countries that could put at risk the consumption driven economic recovery of the region. This would exacerbate an already precarious situation for developing countries weathering the global economic recession.

El Nino May Curb Thailand, Philippine Rice Output

El Nino threatens to parch rice crops in the Philippines, the world’s biggest importer, and in Thailand, according to officials in both countries.

“Between 20 to 30 percent of the areas planted to rice in provinces hit by El Nino are at risk of damage due to the dry spell,” Philippine Agriculture Undersecretary Emmanuel Paras said in a phone interview from Manila today. “That’s why we’re planning measures to counter the effects,” including 2 billion pesos ($43.7 million) of spending, he said.

Thailand’s output of unmilled rice may drop 15 percent to as low as 27 million metric tons in the year that began Oct. 1, from 31.65 million tons a year earlier, Apichart Jongskul, secretary general of the Office, said in an interview in Bangkok yesterday.

Lower output in Thailand may limit its capacity to boost shipments to meet additional purchases from importing countries including the Philippines, helping support global prices.

If the Thai government decides to hold on to its 6 million ton stockpile, “we could see a supply shortage,” said Kiattisak Kanlayasirivat, director of Novel Commodities in Thailand, which trades about $600 million worth of rice a year.

Rice futures rose to a record in April 2008 in Chicago and the Asian benchmark export price reached its highest level a month later as the Philippines boosted imports and exporters including India and Vietnam curbed shipments, adding to concerns of food shortages that sparked protests from Haiti to Egypt.

Price Jump

The export price of the 100 percent grade-B Thai white rice, the benchmark in Asia, rose 16 percent to $607 a ton in the week of Jan. 13, from last year’s low. Rough rice futures are up 26 percent to $14.10 per 100 pounds in Chicago from last year’s low.

Importers will have to rely on exports from Thailand, the biggest shipper, after cheaper supplies from Myanmar and Pakistan dry up at the beginning of March, Rakesh Singh, a rice trader at New Delhi-based Emmsons International Ltd. said today.

Vietnam, the second-largest rice exporter “is already sold out for this crop because whatever they have, they have committed to the Philippines,” he said.

While the U.S. Department of Agriculture increased its estimate for this year’s global rice stockpiles by 1.2 million tons from a month earlier to 90.66 million tons on Jan. 12, the additional supply was seen coming from India and China, which were not forecast by the USDA to increase exports.

Philippine Provinces

“Unfortunately, most of these additional stocks, with the exception of Thailand, will not be available to the market in case prices start to rise,” Samarendu Mohanty, a senior economist at the International Rice Research Institute in Los Banos, Philippines, said in a report sent to Bloomberg News by e-mail on Jan. 10, before the USDA released new estimates.

Twenty Philippine provinces, including Nueva Ecija, Bulacan, Pampanga and Sultan Kudarat, received between 20 percent to 59 percent below-normal rainfall in the past three months, Daisy Ortega, senior weather specialist at the Philippine Atmospheric Geophysical and Astronomical Services Administration said in an interview Jan. 8.

Nueva Ecija, the largest rice producing province, Pampanga and Bulacan are located in Central Luzon which accounted for 18 percent of the national output in 2008, according to the Bureau of Agricultural Statistics Web site.

El Nino may cause water supply shortages, hurting rice planting in Thailand March through May, Apichart said. Output may further drop as insect infestation spread to other rice areas, he said.

The reduction in Thailand’s output “is quite a lot,” Chookiat Ophaswongse, adviser to the Thai Rice Exporters Association, said by phone from Bangkok today. “It will drive prices significantly higher.”

Higher stockpiles in Thailand will allow the exporter to meet its sales forecast of 10 million tons this year and keep domestic supplies stable, the government’s Apichart said.

“Until something goes drastically wrong somewhere,” prices should hold, Emmsons’ Singh said.

Thai Rice, Sugar, Rubber Output May Fall on El Nino

Thailand, a key exporter of rice, rubber and sugar, may miss production forecasts for the three commodities this year because of dry weather caused by El Nino weather event, the Office of Agricultural Economics said.

“El Nino is likely to have a severe impact on agricultural production,” Apichart Jongskul, secretary general of the Office, said in an interview in Bangkok today.

Thailand, the world’s top rice exporter, may produce 27 million to 29 million metric tons in the crop year started Oct. 1, compared with 31.65 million tons in the previous year, he said. Sugar output may total 7.3 million tons, less than 7.6 million tons forecast previously, and production of rubber may be 3.1 million tons, compared with 3.33 million tons estimated earlier, Apichart said.

Still, “the decline in production won’t have a significant impact on domestic and export markets,” he said. “Supplies will be adequate.”

Sales of sugar from Thailand, the second-biggest supplier, may rise to 5.52 million tons from 5.30 million tons in 2009, he said. Exports of rubber may rise to 2.85 million tons from 2.7 million tons, while rice sales may be 10 million tons from 8.57 million last year, Apichart said.

El Nino, the weather pattern that creates a warming of the Pacific Ocean, can reduce rainfall or prolong the dry season in parts of Asia, damaging agricultural output.