Philippines Drought Concerned

Philippines ‘Concerned’ Drought May Cut Rice Supply

The Philippines is “concerned” that low rainfall forecast through June may delay rice planting, curbing supplies in the world’s biggest buyer for a second year, a government official said. Rice futures rallied.

“What we are concerned about is the second half, if the rains don’t come in,” Agriculture Undersecretary Joel Rudinas said in an interview. “The way things are shaping up right now, it could have an impact on supplies” next year, he said.

Dry weather in the Philippines since June 2009 has depleted soil moisture levels and heavy rains are needed to prepare the land for the next crop, Rudinas said.

Depending on the size of the area affected, “that could figure in our import plan for next year,” he said.

Declining production in the Philippines may force the country to increase imports, potentially boosting prices. Rice futures traded in Chicago jumped to a 13-month high of $16.27 per 100 pounds in December as the Philippines rushed to secure supplies for this year after storms wiped out 1.38 million metric tons of the September-December harvest.

Futures have tumbled 11 percent since the country’s National Food Authority, which buys grains and maintains stockpiles, completed tenders for 2010 supplies, securing 2.25 million tons from exporters, the second-highest on record. Thai rice export prices, the benchmark for Asia, dropped 14 percent in the same period.

Rice for May delivery on the Chicago Board of Trade gained as much as 0.4 percent to $12.54 per 100 pounds, reversing an earlier 1.1 percent loss, and was at $12.505 at 3:30 p.m. Singapore time. The price of 100 percent grade-B Thai white rice declined 3.2 percent to $510 a ton on
April 7, the most recent available price from the Thai Rice Exporters Association and the lowest in at least a year.

El Nino

A one-month delay in the onset of the rainy season in the Philippines, which typically begins in the middle of May, “could influence our supply scenario,” Rudinas said. Dry weather caused by El Nino has destroyed 300,000 tons of the rice crop for harvest between March and May, Rudinas said, citing the latest reports. The decline in yields in affected areas may deepen as dry weather persists, he said, without citing an estimate.

Losses from El Nino, the phenomenon caused by a warming of the eastern Pacific Ocean that can lead to drought in parts of Asia, may be as much as 800,000 tons, Rudinas said in February.

The nation is targeting an output of 10 million tons of unmilled rice from this year’s September-December harvest, which will be planted beginning in June, Rudinas said. Output from the harvest plunged to 8.88 million tons last year.

Government officials involved in securing the nation’s food supply will meet by the end of this month to review the output forecast, he said.

By Bloomberg

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President Arroyo Signs Organic Agriculture Act

President Gloria Macapagal Arroyo Signs Organic Agriculture Act of 2010

President Arroyo has signed into law Republic Act (RA) 10068, the Organic Agriculture Act of 2010, which provides for the development and promotion of organic agriculture in the country through a comprehensive program to be executed by a newly created National Organic Agricultural Board (NOAB).

Signed on April 6, the law is a state policy to promote, propagate and further develop the practice of organic farming in the Philippines which is expected to increase farm productivity; reduce environmental degradation and prevent the depletion of natural resources; further protect the health of farmers, consumers and the general public; and help cut expenses on imported farm inputs.

The new law establishes a comprehensive national agricultural program which will promote, commercialize and cultivate organic-farming methods through farmers’ and consumers’ education, and the extension of assistance to local government units, peoples’ organizations, nongovernment organizations (NGOs), and other stakeholders.

The program will be carried out by the NOAB, a policymaking body that will provide the direction and general guidelines for the implementation of the national program.

The NOAB will also identify funding sources to expand organic agriculture; monitor and evaluate the performance of programs for appropriate incentives; undertake measures for the international recognition of local certification of organic products; and call upon any government agency to carry out its identified programs and projects.

It will also promulgate rules and regulations and exercise other necessary powers and functions to effectively carry out the objectives of RA 10068.

The NOAB, to be attached to the Department of Agriculture (DA) with an initial budget of P50 million, will be chaired by the agriculture secretary or his duly appointed undersecretary and have as vice chair the interior secretary.

The members are the secretaries of science, environment, education, trade and health or their duly appointed permanent representatives; three representatives from small farmers’ groups; and a representative each from NGOs involved in sustainable agriculture for at least three years, agricultural colleges and universities, and the private sector or agribusiness firms.

An existing NOAB created prior to Executive Order 481 will continue to function until the new NOAB is constituted.

Within 60 working days from the effectivity of the law,  national organizations of small farmers, NGOs, and agricultural colleges and universities must submit their respective nominees to the secretaries of agriculture and science, who shall evaluate the nominees’ qualifications and appoint the most qualified to the NOAB.

The new law strengthens and empowers the DA’s Bureau of Agriculture and Fisheries Product Standards (BAFPS) by establishing functional divisions and incremental staffing to serve as the national technical and administrative secretariat of the NOAB, with the member-agencies providing additional staff support as the need arises.

The BAFPS will implement NOAB-approved organic-agriculture programs and projects; create “effective networking” with stakeholders in organic production; submit to the NOAB for approval a plan to bring the program to the grassroots; and provide a schedule of short-, medium- and long-term targets on research and development, marketing and trade promotion, among others.

The BAFPS is also authorized to grant official accreditation to an organic certifying body or entity—at least one each in Luzon, Visayas and Mindanao—and to formulate the necessary accreditation rules and procedures.

Local chief executives are tasked with establishing, as far as practicable, one trading post for organic inputs for every local government unit in their area of jurisdiction. 

The law provides for tax incentives limited to “purely organic” agriculture entities subject to BAFPS accreditation and periodic monitoring, and only to micro, small and medium enterprises as defined under Section 3 of the Magna Carta for Micro, Small and Medium Enterprises.

The incentives include duty-free importation of agricultural equipment, machinery and implements as provided under RA 9281, which amends RA 8435 or the Agriculture and Fisheries Modernization Act; value-added tax exemption on transactions involving the sale or purchase of bio-organic products; and preferential rates and special window for organic-input producers and users from the Land Bank of the Philippines.

Qualified entities may also avail themselves of a seven-year income-tax holiday from the date of registration of organized food and organic-input producers on all income taxes levied by the national government; and subsidies for certification fees and other support services to facilitate organic accreditation.

The NOAB is also authorized to solicit and accept assistance or facilities through grants from individuals and entities here and abroad, and to utilize these for purposes of the Act, subject to the usual budget, accounting and auditing rules and regulations.

Those who violate RA 10068 face one to six months’ jail time or a fine of not more than P50,000 or both. Offenders in government service will be dismissed from office.

Violations include willfully and deliberately obstructing the development or propagation of organic farming or the manufacture, sale or use of organic agricultural inputs; refusal without just cause to extend the support and assistance required under the law; and mislabels or claims that the product is organic when it is not.

By Business Mirror


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Global Rice Output May Drop Due To Drought

Rice Harvest Production

Rice production in Thailand and Vietnam, the two largest exporters, may be hurt by drier-than- normal weather that’s parched farms and cut water levels in the Mekong River, according to the Food and Agriculture Organization.

The Thai harvest that begins this month, which accounts for about 25 percent of annual output, may drop to 7 million metric tons from 8.4 million last year, said Concepcion Calpe, a senior economist at the United Nations’ agency. Output from Vietnam’s end-of-year harvest “may be affected,” Calpe said.

Drought linked to the El Nino weather pattern has affected a swathe of Asia from southern China into mainland Southeast Asia, prompting a warning from the Thai prime minister that rice prices may gain as output declines. Lower production of Asia’s most important staple may cut global stockpiles.

“For the time being, Thailand is the only country that shows a decline in rice production,” Calpe said yesterday in a phone interview. Still, “the decline will not have a dramatic impact on international trade as Thailand has lots of stocks.”

Rough-rice futures in Chicago, which have slumped about 12 percent this year, gained as much as 1.3 percent to $13.14 per 100 pounds recently, rising after the FAO forecast to the highest level in almost a month. Thai weekly export prices, a benchmark for Asia, have fallen 14 percent this year to $510 a ton for 100 percent grade B rice.

The prospect of lower output “underpins the market,” Ben Barber, a futures adviser at Bell Commodities Ltd., said today from Sydney. The “lower supply provides a fundamental support to the price,” said Barber.

Coffee, Palm Oil

The dry weather may also hurt coffee output in Vietnam, officials and growers said last month, including Huynh Quoc Thich, the head of the cultivation office in Dak Lak’s agricultural department. Palm oil production in Malaysia, the second-largest grower, may drop between 2 and 3 percent on the El Nino, the Malaysian Estate Owners Association has said.

“I don’t really see prices dropping any further,” said Samarendu Mohanty, a senior economist at the International Rice Research Institute in the Philippines. The water shortage may limit the expansion in rice output and, as demand rises, that may push stockpiles lower and help support prices, Mohanty said.

Water levels in the Mekong, which flows from China through Myanmar, Laos, Thailand, Cambodia and Vietnam, are at the lowest level in 90 years, the Mekong River Commission said March 5. Thai rice production may drop and the price may jump because of dry weather, Thai Prime Minister Abhisit Vejjajiva said March 2.

Global Stockpiles

Global rice stockpiles may total 90.925 million tons this year, the U.S. Department of Agriculture said on March 10, paring its estimate from 92.497 million a month earlier. That compares with a global inventory of 91.219 million tons last year, and a record 146.714 million tons in the 2000-2001 season.

The level of global stockpiles is “still much lower than it used to be,” Mohanty from the rice institute said by phone yesterday. “If we have some problem with water supply, then that will affect the yield,” he said.

Rice stockpiles maintained by the Thai government are 5 million to 6 million tons, according to the Commerce Ministry. The authorities have said they plan to sell some to exporters and other countries, without giving a timeframe. The nation accounts for about a third of the global rice trade.

Officials have linked the drought to the El Nino weather phenomenon, characterized by warmer sea-surface temperatures in the eastern Pacific that can cut rains in Asia. Virapan Tipsuna, a farmer in Thailand’s northeastern province of Nongkhai, said last month it was “the driest period” he’d ever seen.

The drought may also affect the next season’s main rice crop in Thailand “unless there is rainfall by May or June,” said Calpe at the FAO. “What is more worrisome is the water in Mekong River affects more than one country.”

By Bloomberg

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Cassava Banana Production Boost in Ormoc Leyte

Ormoc City Leyte - Various stakeholders gathered at the Philippine Rootcrops Research and Training Center here for the signing of memorandum and marketing agreements to implement a component of the Agrarian Reform Communities Project Phase 2 (ARCP2) of the Department of Agrarian Reform (DAR).

Leading the signing were private investors Early 7 Marketing (E7M) and SC Coco Global Products Inc. (SCCGPI). Both entered into marketing agreements with cooperatives that will serve as financial conduits on organic cassava and banana production.

E7M entered into an agreement with Sto. Niño Visares Multipurpose Co-op (Savimco) of Capoocan town, while SCCGPI forged an agreement with Omaganhan Farmers Multipurpose Co-op Inc. (OFMCI) of Tabango town and Zaragosa Agrarian Reform Co-op (Zarc) of Matalom town.

Under the agreements, E7M will purchase from Savimco fresh cassava tubers at a floor price of P2 per kilo delivered to the buying station, or P1.75 per kilo if picked up at the assembly area. It will also buy processed (chopped and dried) cassava at P6 per kilo. E7M will also assist Savimco in sourcing a good variety of seeds, fertilizers and pesticides on a “plant now, pay later” plan.

E7M is an agricultural product consolidator, processing and trading company based in Ormoc and contracted by San Miguel Corp. (SMC) to supply dried cassava chips. It supplies the cassava needs of the BMEG feed mill, operated by SMC in Tacloban 100 kilometers away.

SCCGPI has agreed to buy from Zarc and OFMCI fresh (not too mature nor too young) bananas (cardava, aldaba and enaldaba varieties). The company, which produces and exports banana chips, buys only organic raw materials in compliance with European Union organic regulations and the United States Department of Agriculture Natural Organic Program.

DAR information officer John Colasito said they chose Savimco, Zarc and OFMCI for being millionaire co-ops with farmer-beneficiaries identified by the Comprehensive Agrarian Reform Program as members. ARCP2, which covers 16 towns in Leyte, has three components: rural infrastructure, agricultural enterprise development and community development.

By Business Mirror

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