India Kharif season may see normal sowing in rice

The ensuing kharif season may see “normalcy” returning to rice in more ways than one. To start with, assuming a not-too-bad South-West monsoon, production could rebound to 80 million tonnes (mt) or more, from the sub-75 mt of kharif 2009. Last year's monsoon failure did not hit Punjab and Haryana: The near-universal irrigation cover with farmers, in conjunction with dry weather conditions (that helped minimise incidence of pests and diseases), actually led to higher output in the two States. On the other hand, the drought definitely impacted other major rice-growing areas, especially Uttar Pradesh, Andhra Pradesh, West Bengal, Chhattisgarh and Orissa. One could expect all these States to report larger crop sizes this time round. AP, for one, is looking to produce 8.4 mt of rice this kharif, the same as it did in 2008. “Last year, our paddy area dropped from 28 lakh hectares (lh) to 20.63 lh. We hope to get back to 28 lh this time,” the State's Agriculture Minister, Mr N. Raghuveera Reddy, told Business Line. Inclusive of Rabi, the State is targeting a rice output of 14.3 mt for 2010-11, against the previous year's 10.65 mt. Global markets It is not only domestic production that might witness a restoration of normalcy; the same applies to global rice markets as well. Thai rice with 25 per cent broken content, is now quoting at $400 a tonne, having shed roughly $100 since the start of this calendar year and down from the average $600-plus levels of 2008. The same quality rice of Vietnamese and Pakistani origin is selling even lower at $325-330 a tonne. While the current world prices are still higher than their 2007 average of $290-300 a tonne, the bull run of the last couple of years - benchmark Thai rice almost scaled $900 a tonne in May 2008 - seems to have run its course. Rice output The US Department of Agriculture, in its latest May 12 outlook update, has projected global rice output for 2010-11 at an all-time-high of 459.74 mt. Global ending stocks for 2010-11, at 96.6 mt, and stocks-to-use ratio, at 21.3 per cent, are both slated to touch their highest since 2002-03. The agency has forecast record production this year for Thailand (20.60 mt), Vietnam (24.75 mt), Myanmar (11 mt), Indonesia (40 mt), Bangladesh (32.3 mt), Philippines (10.8 mt), Nigeria (3.6 mt), Iran (2.05 mt) and even the US (7.62 mt). Brazil (8.4 mt), China (137.5 mt) and Cambodia (4.95 mt), too, are poised to harvest bigger crops. The takeaway from all this is that the rice trade is re-entering a period of normalcy, if not glut. This is the case not only globally, but even in India, where publicly-held rice stocks are currently at their highest comparative levels, notwithstanding last year's production setback. Price spikes Farmers planting paddy this time are, therefore, unlikely to benefit from any price spikes (unless, of course, there is a repeat of last year's disastrous monsoon). Even a lifting of the ban on non-basmati exports may not help in the face of ample supplies from Thailand, Vietnam, Pakistan and the US. Bulk of the crop – a third or more – would, then, end up in Government godowns.

Rice Losses in Philippines Bigger Than Estimated

Rice production in the Philippines may decline by a more-than-estimated 902,000 metric tons in the first nine months of the year, widening a production deficit in the world’s biggest importer. Output through September will drop 8.3 percent to 9.994 million tons, down from 10.896 million tons a year earlier, as dry weather caused by El Nino parched crops, the Department of Agriculture said today. That compares with the 800,000 tons in losses forecast by the government in a worst-case scenario in February. Higher losses will curb supply in the Philippines after sales from state stockpiles rose to a record 626,254 tons in the first four months of the year as politicians bought unsubsidized grain to distribute to voters during campaigning for the May 10 elections, according to National Food Authority data. Lower supply and a larger-than-expected decline in output may prompt the government to return to the global market to replenish stockpiles, potentially pushing prices higher. The state-owned National Food Authority and private importers bought a combined record 2.45 million tons of rice for this year’s supply, helping drive prices in Chicago to last year’s high of $16.27 per 100 pounds in December. The Philippines lost 1.38 million tons of its September-December rice harvest to storms. ‘Running Low’ National Food may return to the import market in September to buy between 150,000 tons to 200,000 tons to rebuild stockpiles after a firmer assessment of the September-December harvest has been made, Rakesh Singh, a rice trader at New Delhi- based Emmsons International Ltd., said by phone today. “If they feel they are running low on stocks, they may enter the market in small quantities,” Singh said. Rough rice for July delivery dropped 1.1 percent to $11.68 per 100 pounds in Chicago at 11:40 a.m. in Singapore. The most- active contract has slumped 22 percent this year. “The dry spell caused by El Nino pulled down the area harvested and yields in the major producing regions of Cagayan Valley, Western Visayas, Northern Mindanao and Soccsksargen,” the government said in a statement today. The nation’s corn output will likely decline 17 percent to 4.642 million metric tons in the first nine months of the year, from 5.591 million tons a year earlier, the government said.

Philippines to stop Rice purchase for 2009-2010

The government may have completed rice imports for 2010 and its next purchases would likely be for 2011’s needs, given healthy stockpiles and a relatively moderate impact of dry weather on crops, a government official said on Monday. Manila, the world’s biggest rice buyer, has ordered a record 2.45 million tons of rice imports for this year. Shipments of 2.25 million tons are due to be completed by June and the remainder would be brought in by private firms up to Sept. 15. "NFA has no more plans to import for 2010," Rex Estoperez, spokesman for state grain agency National Food Authority (NFA), told Reuters. "We might import but that would already be in preparation for 2011. NFA has enough stocks in its warehouses," he said. Estoperez could not say when Manila would resume imports. The country normally begins buying rice in the final quarter of a year to meet the next year’s requirements.

Vietnam rice price weekly report

Rice price offers from exporters were fairly stable last week in the face of low export demand. Minor price reductions for 15 percent broken and 25 percent broken rice quotations were reported, because exporters wanted to attract buyers of specifically these kinds of rice. Paddy prices were unchanged last week. It is likely that paddy prices will rise slowly, since the Mekong River Delta rice harvest has ended.

Thailand weekly rice price report

Export prices continued to decline slightly by 1-2 percent due to quiet foreign demand. Foreign buyers buyers are waiting to see how the government’s proposed modifications of the direct purchase, which is waiting for Cabinet approval, will play out. The new modifications will provide millers with the necessary incentives to participate in the program by allowing them to swap lower quality second-crop rice with government’s high quality rice stocks at 1:1 ratio, as long as they buy current off-season crop 300 baht/ton of paddy above benchmark prices. Under this scheme, the farmers, in addition to receiving the extra 300 baht/ton for their paddy, will receive full compensation. The government expects that 300,000 tons will be exchanged under this program.

Early Monsoon to Aid India Rice Sowing

India’s monsoon, which accounts for four-fifths of the nation’s annual rains, reached the eastern coast three days early, boosting prospects for planting of rice, cotton and corn. Monsoon has set in over parts of south Bay of Bengal, Andaman and Nicobar islands and most parts of the Andaman Sea and condition are “favorable” for further advance over the next 48 hours, the India Meteorological Department said in a statement on its website. These areas usually receive rain about May 20, according to the bureau. India’s 235 million farmers, the world’s second-biggest producers of rice and wheat, rely on the rainy season to water their crops as about 60 percent of arable land isn’t irrigated. Winter-harvested crops, including rice, corn, lentils, cotton and soybeans, are planted after the monsoon begins. “There’s optimism that a normal monsoon will lead to a rebound in agricultural output, particularly rice,” Viresh Hiremath, head of research at Karvy Comtrade Ltd. said in a phone interview from Hyderabad today. “The key to a good harvest will be the distribution of rains over the season.” Global production of rough rice, the staple for half the world’s population, will rise to a record 710 million metric tons in the 2010 calendar year, as harvests in India and the rest of Asia recover from drought, the United Nations Food and Agriculture Organization said on May 10. Still, India’s rice production may fall 10 percent for the current year to 89.3 million tons in 2009-2010 from 99.2 million tons a year earlier after the weakest monsoon in more than three decades reduced rice yields, according to the farm ministry. “El Nino is on the decline and that’s spreading optimism rains this year will be normal and certainly better than last year,” Karvy’s Hiremath said. Rains this year may be 98 percent of the 50-year average, the India Meteorological Department said on April 23. Showers may reach southern Kerala coast on May 30, the weather bureau said on May 14. The bureau, which failed to predict last year’s drought, considers rainfall to be normal if it is between 96 and 104 percent of the long-term average. Rainfall may increase over south India, Andaman & Nicobar Islands, Lakshadweep and northeastern states from May 21, the weather bureau said.

India Rice output estimated at 99 mt

Ahead of the planting of kharif rice crop from next month, the US Department of Agriculture (USDA) has pegged India’s rice output up by 13 per cent at 99 million tonnes in 2010-11, on higher prices and a normal monsoon. Last year, the country’s rice production had slumped to a five-year-low, at 87.5 million tonnes, because of a poor monsoon, it said in its latest report. About 85 per cent of the country’s total rice output is grown during the kharif season (between June and September), while the rest of the 15 per cent is cultivated during the rabi season (between November and February). “The major factors shaping the 2010-11 crop outlook are both market and weather-related. Rice production is projected to increase to 99 million tonnes (milled), up 13 per cent from 2009-10,” the USDA said. The official forecast of a normal monsoon, which was announced recently, and the higher minimum support price (MSP) for rice are expected to boost farmers’ planting intentions in the upcoming kharif season. Farmers expect procurement prices (MSP) to either improve or remain firm in 2010-11, it noted. Last year, the government increased the minimum support price (MSP) of rice to Rs 1,000 a quintal for the common variety, and Rs 1,030 a quintal for the Grade A variety. The USDA further said, “If the current weather forecast holds, it will be in contrast to last year’s unfavourable monsoon season.” While the monsoon is critical for the rain-dependent kharif crop, it also plays an important role in replenishing irrigation reservoirs vital for rabi (winter) crop irrigation. The area under cultivation is expected to increase by 10 per cent to 45 million hectares from last year, while yields are expected to rise by 3 per cent to 3.3 tonnes a hectare. Punjab, Haryana and Uttar Pradesh produce the most rice during the kharif season.

The Rice Market Report is back

Dear Readers, After 20 days unavailability this blog is again accesible. Blogger, the hosting site, had labeled it as spam and subsequently removed: it has now been resotered and is fully functional. I am going to start posting again very soon. Thanks to all my readers. Alberto Torchio

Philippines Government says yield is up, but 'where's the rice?'

Frisco M. Malabanan, national coordinator of the GMA (Ginintuang Masaganang Ani) Rice Program, says rice production has been rising since President Gloria Macapagal-Arroyo took office in 2001.

This is supported by data from the Bureau of Agricultural Statistics (BAS) that indicate a steady increase in palay production—from 12.95 metric tons per hectare in 2001 to 16.24 MT per hectare in 2007.

The assessment of Estrelita Mariano, spokesperson for the rice price watch group Bantay Bigas, is quite the opposite.

Mariano, who served as secretary general of Amihan National Federation of Peasant Women in the 1990s, believes that the government projects a totally different picture of the agricultural situation.

"Government assistance to farmers is hardly noticeable, and whatever program that Gloria talks about is mainly for show and does very little to help the Filipino farmer," she says.

Ms Arroyo announced in 2001 at the onset of her term her plans to develop the agriculture sector to provide a million jobs.

"We will approach this with a sense of urgency," she said in her 2001 State of the Nation Address. "I do not want the one million new jobs to come in the long term. I want a timetable. I want to identify accountabilities. I want milestones," Arroyo said. "Cheap rice and productive farmers—these are our goals for the people."

Romeo Royandoyan, executive director of the Philippine Center for Rural Development Studies (Centro Saka), says the Arroyo administration has failed to meet its targets, blaming this on its lack of sincerity to promote self-sufficiency.

"A policy conflict exists when the government encourages massive land-use conversion and increased rice production, farmer self-reliance and dependence on foreign-provided hybrid seeds. This only benefits the big shots, the multinational corporations, and is detrimental to ordinary farmers," he says.

In April 2008, the country was engulfed in a global food shortage that sparked tensions in over 30 countries and threatened to drive more than 100 million people in the developing world deeper into poverty.

Causes of shortfall

The shortfall was blamed on climate change, booming population, new-found affluence that has put more food on the table in China and India, conversion of grains into biofuels, natural disasters in the United States, Australia and Bangladesh, and export restrictions by rice producers.

To ease the crisis, the Philippines went on a massive rice importation drive, selling the commodity at subsidized prices.

That same year, the Department of Agriculture launched its FIELDS program at the National Food Summit, focusing on the six most significant points of the agriculture sector: Fertilizer, irrigation, extension and education services, loans, dryers and post-harvest facilities, and seeds.

Part of the FIELDS program entailed a self-sufficiency goal to be attained this year.

However, when it appeared it could not be met, the target was moved to 2013, making it a burden of the next administration to tackle the long-running issue of food security.

Drop in fertilizer supply

One major problem was fertilizer supply.

According to the BAS, there was a drop in fertilizer supply disposition in 2008 that coincided with the Senate investigation of Agriculture Undersecretary Jocelyn "Joc-joc" Bolante in connection with the P728-million fertilizer scam.

Underscoring a major failure in the program to achieve self-sufficiency, the Senate inquiry revealed that the fertilizer funds—distributed to Ms Arroyo's political allies during the harvest season—were essentially used to buy votes in the 2004 presidential elections.

The fertilizers were secured at an overprice of 682 percent, or by P128 million, according to the Commission on Audit.

The development of the agricultural sector has been identified by economists and academics as a key to mitigating poverty in this country.

A 2006 survey conducted by the National Statistical Coordination Board showed that more than 27 million Filipinos live below the poverty threshold, surviving on a dollar a day, according to a World Bank standard.

No longer self-sufficient

The problems in fertilizer are essentially tied to our loss in rice self-sufficiency, says Mariano.

"We are no longer self-sufficient nowadays because of a loss in traditional, regular seeds," she says.

Mariano says that the establishment of the International Rice Research Institute produced hybrid seed varieties that were expensive and required costly fertilizer.

"Increase in expenses forced farmers to borrow money, thus increasing their burden," she says.

For one, the government considers rice importation from Asian neighbors such as Vietnam and Thailand a necessary step in achieving food security, as high a priority as achieving self-sufficiency.

This means that while the FIELDS program is being implemented, the Philippines will continue to import rice.

Imports not an issue

According to Milo de los Reyes, GMA Corn Program Secretariat, food security should not be an issue of importation versus self-sufficiency.

"It's all about management of supply and use. We have to make sure we are food-secured first by improving farmer productivity and increasing farmer's income. Then if necessary, we import," he says.

The government puts a prime emphasis on rice production as a measure of agricultural progress, he says. The higher the output rate, the better.

De los Reyes admits self-sufficiency may be a difficult goal to fully achieve because of the country's burgeoning population. "You can't manage or control resources if you have an increasing population every year," he says.

However, when asked if he thought the GMA Rice and Corn Programs, along with FIELDS, was a success, he unhesitatingly said, "Yes, it is."

Better than global average

Emerson Yago, science research specialist and spokesperson for the GMA Rice Program, points to the DA's positive production levels. They have been increasing over the years until 2009, he said, when Ondoy and Pepeng caused heavy damage to agricultural crops.

Yago says that annual agricultural growth was even higher than global figures, which meant that the country was even doing better than the global average.

According to the Philippine Rice Masterplan for 2009-2013, local annual growth from 2000 to 2008 was 3.07 percent, compared to global growth of 1.45 percent.

This doesn't necessarily mean much for the farmers like Marquez, who does not see improvements in his rice yields.

Cathy Estavillo, current Amihan secretary general, also weighs in on the government's glaring deficiencies in the agriculture sector.

Estavillo believes that above anything else, agricultural reform should encompass agrarian reform as well as the country's withdrawal from the World Trade Organization, in keeping with her rejection of agricultural economic liberalization.

"We understand the government's policies and programs are very good. But the government has done nothing to realize them. The question to ask is: How willing is the government to actually promote agricultural reform?" she says.

One meal a day

"Go to any province in the country and you will see what I mean. Families have barely enough to feed their children. Mothers feed their children porridge in the evening, the only meal of the day, and water for breakfast, because that's all they can afford to eat. It's very sad," she explains.

Royandoyan has spent years battling it out in agriculture hearings in Congress, trying to convince bureaucrats to reverse the government's market-oriented approach to agriculture.

He is especially concerned with the country's stubborn insistence on depending on the world's rice stock, which he explains is shockingly less than 7 percent.

"When another rice crisis looms, 5 to 6 percent of that figure will go to China's supply. What will the Filipinos eat then?"

Thai weekly price update

Domestic and export prices declined slightly by 1.0 percent as the government direct purchase program has not been fully implemented to mitigate the downward pressure of new supplies. Meanwhile, some quotations remained unchanged due to concerns over the exchange rate. The weekly benchmark prices for March 29 – April 4 were higher than the previous week's and remain higher than market prices.