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THERE is no rice shortage. There is a food shortage.
In fact, there will be shortages of almost every commodity on earth.
Rice, corn, wheat, oil, metals, minerals, and, yes, water.
The main reason is China. It
wants to buy everything it can buy on earth. It must feed its
billions. It must feed its industries. But it doesn’t produce
enough. So what does it do? Buy overseas. It has the money. It has
$1.4 trillion, the largest cash hoard in the world. Since supply of
most products and most commodities is short, naturally prices are
going up.
The other reason is global
warming. The earth is on fire and it is turning the world upside
down. Places that used to have ice will see the ice melting or not
showing up at all. Places that used to be dry will be flooded.
Places that used to be flooded are drying up. That situation affects
agriculture and food production. A ten-year drought caused a sharp
drop in Australia’s wheat output and the ouster of its prime
minister who was pro-Bush.
The third reason is waste. Food
used to be so cheap that much of it was wasted. Between 1974 and
2005, according to The Economist, food prices on world markets
actually fell in real terms, by three-quarters.
The fourth reason is supply
disruption. Places that have plenty of food cannot deliver the food
to places without or with little food. It costs more for Cotabato to
send rice to Manila than for Bangkok to ship rice to the Philippine
capital. So profiteers and speculators take over to even up the
supply.
The fifth reason is diversion of
food to produce ethanol. A third of America’s corn production will
be used to produce ethanol. The Economist estimates a full tank of
ethanol in your SUV is equivalent to one man’s corn consumption
for one year. That’s how outrageous and immoral the thing is.
The result? What The Economist
calls “agflation,” a sharp rise in prices of agricultural
commodities. Since spring, says the magazine, wheat prices have
doubled. Prices of all other commodities are in their record highs,
in nominal terms and by 75 percent in real terms since 2005. The
rice that the Philippines used to import for just $300 a ton is now
available at more than $700 a ton.
And no sellers. That’s scary.
Especially for an unpopular government like Gloria Arroyo’s.
Imagine, people believe you are stealing billions and now you’re
telling them they have no rice to eat. And yet the rich have just
tripled their wealth since 2001 and have all the money to buy all
the rice they don’t need. You are going to cause a riot, a
revolution, and this time, it is going to be bloody.
The shortage of rice (by at least
two million tons, by my estimate) will exacerbate poverty. Food is
55 percent of an average Filipino household’s basket. Of the 55
percent, 15 percent is rice. But then rice is bellwether product.
You jack up the price of rice and you jack up the price of almost
everything.
What do we do then? Well, cut
back on consumption. Agriculture Secretary Art Yap makes sense when
he says Jollibee and Mcdonald’s should serve only half of the rice
servings they used to. He also makes sense when he suggests that
people should begin eating red rice. Remember brown sugar? It used
to be hoi polloi to use brown sugar. It was for the poor. Today, the
rich prefer brown sugar for their coffee. It makes health sense.
White sugar is about half chemicals.
The Arroyo government will ration
if not give away rice to the poor. Smart move. The government anyway
is awash with cash—from huge tax collections and from large gains
from sale of government assets. Lucky, this government.
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