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Philippines Agribusiness Report Q4 2009Published by: Business Monitor International Published: Aug. 11, 2009 - 61 Pages Table of Contents
AbstractDespite the large 2009 rice crop, it is looking increasingly likely that rice imports for the year will onceagain breach the 2mn tonne mark. Demand for the grain has stayed strong despite the slowdown ineconomic growth as consumers have cut out more expensive foods such as meat. The National FoodAuthority (NFA) admitted in July that rice imports could potentially even surpass the record 2.3mntonnes imported in 2008, though we do not think this is likely.Most of the year's rice exports have come from a huge government-to-government deal struck withVietnam back in January for the import of 1.5mn tonnes of rice. At the beginning of Q309, the dealjumped back to the top of the nation's headlines when Reuters published a report claiming that thePhilippines had paid up to 45% more than the market price for the rice when the deal was made. ThePhilippines Department of Agriculture rushed to refute suggestions that it paid too much for the rice. Despite this, there is now a definite cloud over the deal, which at the time looked like a prudent move tomake sure the scramble for supplies seen in 2008 was avoided. With the status of the nation's rice supply is such an emotive issue in the Philippines, we doubt the lasthas been heard of this story. There are likely to be more calls for a public investigation into the deal. Thenews is sure to mean that any future deals of such a large magnitude will come under far closer scrutiny. This is to be welcomed to a point. Crops sold through such large government-to-government deals areoften subject to a price premium with the buyer paying extra for the security of knowing the nation's foodsupplies are covered. While close scrutiny in large procurements will help make sure the government getsthe best deal and prevent any suggestions of corruption, if future deals are subject to too muchinterference and political point scoring, the country's food supplies could be put in jeopardy. There is also controversy brewing with the Philippines' other major grain crop, corn. In July 2009, AFPreported that South Korea's Jeonnam Feedstock had signed a contract to lease a 95,000 hectare (ha) plotof land in Oriental Mindoro province. The company is reportedly hoping to grow corn to feed SouthKorea's livestock sector. The company said that it wants to begin production on a 1,000ha test plot asearly as this year. The move is part of a growing trend of rich food deficit countries, led by the Gulf statesand South Korea, buying up agricultural land in poorer countries with the aim of increasing their foodsecurity. With the Philippines itself a major food importer - though it is often self-sufficient in corn - any such dealis bound to be controversial. When the news broke, the national and provincial authorities in thePhilippines rushed to deny any knowledge of the deal. The Department of Agriculture said that any suchdeal would have to be done in partnership with a domestic company and permission for exports wouldneed to be granted by the NFA. When considering whether to approve such a deal, the authorities need tomake sure that it will be beneficial to the wider agricultural sector. We generally welcome wholeheartedlyoverseas investment in agriculture as an important source of capital and technology transfer. However, alarge intensive project with all the product aimed for the export market such as this could easily see thebenefits accrue mainly to the foreign investor, local politicians and a few select businessmen rather thanbenefitting the country as a whole. Get Full Details About This Report >> |
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