POSTSCRIPT / May 3, 2007 / Thursday

By FEDERICO D. PASCUAL JR.

Philippine STAR Columnist

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Amid campaign, who's minding food security?

PRICE RISING: With everybody engrossed with the national sport — politics — is there still somebody in government attending to food security?

The alarm is out that with rising demand, our supply of corn has been dwindling, its long-term abundance is in doubt, and its price creeping up.

There is an upswing in the world’s corn consumption. With oil becoming scarce and expensive, gas-guzzling countries like the United States are turning to alternative fuels like ethanol (an alcohol-based fuel made from crops such as sugarcane, corn and grains) to keep their industries and automobiles running.

The US and Brazil, the world’s biggest producers of ethanol, have formed an alliance to promote ethanol production in the Americas and set global quality standards to allow it to be traded as a commodity like oil.

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BIO-FUEL LAW: The Philippines is itself trying to cut its dependence on imported oil. Early this year, President Gloria Arroyo signed a law requiring ethanol and biodegradable diesel in our fuel mix.

The government estimates that when the bio-fuel law takes full effect years from now, the country — whose total oil consumption is estimated to grow from 128 million barrels in 2000 to 224 million by 2009 — will eventually save $800 million worth of oil imports each year.

To deal with a looming corn shortage estimated at 1.8 million metric tons, the National Food Authority has imported 120,000 metric tons and is ordering another 280,000 metric tons as buffer.

But knee-jerk importation is a lazy, though profitable (for some), approach to the problem.

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BRAZIL BUYING: Related to Brazil’s ethanol needs, the Philippine Phosphate Fertilizer Corp. will export $20 million (P962 million) worth of phosphate fertilizer to the Latin market in the next two months.

Brazil is willing to pay top dollar for its huge fertilizer needs from the Philippines because of its expanded production of bio-ethanol for which it uses sugar cane as raw material. (Sugar cane naman ito.)

Industry experts tell us that this big demand has caused world phosphate fertilizer prices to rise by as much as 25 percent over the previous month’s level!

Starting its alternative fuel production in the 1970s, Brazil is reportedly now the world’s top exporter and leader in renewable energy.

It produced 15.9 billion liters of bio-ethanol in 2005 of which 90 percent went to the domestic market. Ninety percent of all Brazilian cars are flex-fuel vehicles using both gas and ethanol.

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U.S. USING CORN: On the other hand, using corn as raw material (maisnaman ito), the US produced 18.9 billion liters of bio-ethanol last year. It needs 132 billion liters to reach its goal of 20-percent reduction in oil consumption by 2017.

With a third of its corn production being used to produce bio-ethanol, corn prices are continuously rising in the US. This is expected to impact on the Philippines, but we do not seem to bother with it.

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SUPPLY CONTRACTS: Its ethanol alliance with the US in place, Brazil reportedly has been tearing down part of the Amazon forest for conversion to sugar cane fields, resulting in increased need for phosphate fertilizer.

PhilPhos already supplies different fertilizer grades to Vietnam, Thailand, Malaysia and Indonesia. After the additional Brazil demand, there might be less volume left for the domestic market, further contracting the already short supply.

Other manufacturers in the region have been shifting focus to Brazil. The growing scarcity is already felt in the local market. Local producers have agreed to buy their requirements from PhilPhos at current world prices.

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AVARICE: The same upturn in the price of corn, also used in ethanol production, has been noticed. End users, such as livestock and poultry growers, are looking at a farm gate price of P10 a kilo, but the price has been hitting past P12 a kilo.

At this stage, it seems mostly greed and not so much the rising demand that fuels the local price increase. Some big traders and cartels are reportedly hoarding corn to jack up the price to levels that are already influencing food prices.

Unless the activities of these economic saboteurs are checked, the prices of dairy, meat and other products that use corn are bound to go up as well. Government must address this serious problem swiftly.

One quick fix is to let the private sector import corn at zero tariff for a limited period to discourage hoarding and stabilize prices.

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PLANT MORE: The government did right launching an upgraded program to increase yields by allowing corn farmers to use hybrid seeds in at least 132,000 hectares. It has also set up post-harvest facilities to minimize losses and wastage arising from inefficient drying and storage.

But a longer-term and more viable solution is needed. One simple move is to encourage farmers to plant more corn and increase their unit yields.

That solution, btw, is not original — the US is doing just that. American farmers are set to plant 90.5 million acres of corn this year, according to a US Department of Agriculture report, or a 15-percent increase over 2006.

If we are too tired or too preoccupied with politics to sit down and plan, can we try copying na lang what the US is doing, of course with some modifications?

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(First published in the Philippine STAR of May 3, 2007)

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