Rice and the Filipino
The International Rice Research Institute (IRRI) is warning that rice prices are likely to rise sharply in 2009. In 2008, the price of rice had risen to a record high of about $1080 per ton. By the end of 2008, the price had fallen to around $575 a ton.
This steep drop in the price of rice has caused losses among farmers that stepped up production to take advantage of the higher prices. By harvest time however, the price had fallen leaving farmers earning much less than expected.
These losses will make it hard for farmers to buy seed and credit is said to be getting tight in the Philippines. At the same time, the Philippines central bank, Bangko Sentral ng Pilipinas (BSP), has hinted it will lower interest rates. That is the rate at which banks can borrow money. BSP appears to be waiting for the final number for Philippine GNP for the last quarter of 2008. before making a final decision. Inflation has fallen to 8% in December of last year. Down from 9% in November.
Lower growth will likely hurt poor Filipino who will then be forced to give up higher priced foods and rely more on rice to feed their families. With production down due to losses of last year and the credit crunch which also will decrease planting at the same time demand goes up could push prices for rice up sharply.
This seems especially cruel. Just as Filipino families are hit by the global recession causing their incomes to fall, a staple food price is likely to go up at the same time. This price rise with rice will mean Filipino families have less money to spend on other goods which will further weaken the Philippine economy.
My Experiences with Rice
While I don’t personally eat very much rice, my family here in the Philippines does. There are six of us, five rice loving Filipino eating about 20 kilograms of rice each month. Jessie, my GF, often reminds me the family needs a rice “helper.” That is they need something to go along with their rice. At least with my family, the Filipino do not enjoy eating rice alone. Rice is very much a part of the Filipino culture. Rice cookers are far more common than microwave ovens in the Philippines.
Doubling of the rice price will not impact me in a massive way but rice expenditures are not as high a percentage of my income as it is for the average Filipino. The cost of rice for our household is budgeted at about P1300 per month or about $27.00 while my total food budget at around P28,000. There are likely more indirect cost to me though. With rice such a prevalent commodity in the Philippines there are bound to be factors that effect me that I am not yet aware of. Perhaps, some expats that have been longer than I can help me better grasp that.
An interest rate cut by BSP would put downward pressure on the Philippine peso giving me more spending power and that would be quite the stimulus to my economy. The recent fall in the dollar to the peso has already cost me about $50 a month. That fall seems to have leveled out for now. There has been very little movement in the value of the dollar to the peso since the middle of December.
Filed under: Living In The Philippines
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