Increase in returns from higher rice prices eaten up by soaring costs of fertiliser and fuel
Alastair McIndoe, Straits Times 17 May 08;
MANILA - FOR many Filipino rice farmers like Andres Canoza, the rising rice prices mean nothing as they have to cope with soaring fertiliser and fuel costs.
For Mr Canoza, 83, the price of the unhusked rice that he sells to millers has risen 40 per cent since last month, thanks to a government-mandated price increase.
But strong global demand for fertilisers, spurred by rising populations, and higher food consumption has seen prices soaring.
'In my life, I've never seen these costs rise so fast,' said Mr Canoza who, like other rice farmers, is bracing himself for further increases in fertiliser prices as he prepares for the next planting season in July.
At Mantri Trading, a farm supply store a few kilometres from Mr Canoza's rice fields in Bulacan province, a 50kg bag of fertiliser costs 1,700 pesos (S$55), more than double the average price in 2006, according to the National Rice Farmers' Council (NRFC), an advocacy group for small-scale rice farmers.
The group added that around 60 per cent of the revenue from a hectare of padi field goes to fertiliser, fuel and other inputs, calculating the yearly income in a two-crop season at just S$1,100.
According to the International Fertiliser Industry Association, world production of the three main fertiliser nutrients - potash, nitrogen and phosphate - is now running at or close to capacity.
Earlier this month, China, a big fertiliser supplier to the Philippines, raised export tariffs by more than 100 per cent to shore up local supplies.
Adding to the woes of the rice farmers is the soaring fuel prices.
'Fertiliser prices in the Philippines have risen a lot more than farm-gate prices in recent years,' said International Rice Research Institute spokesman Adam Barclay.
'So along with higher fuel costs, farmers are taking a significant hit.'
Though hurting from rising costs, better-off rice farmers like Mr Canoza could use their bags of milled rice, instead of cash, to buy fertiliser when needed.
But the majority of the country's 3.5 million rice farmers are small-holders working on around 1.5ha of land, with no ready cash to buy fertiliser.
They thus have to rely on middlemen for credit guarantees to traders.
Once their crops are harvested four months later, the middleman is paid in rice, but the interest on the credit guarantee is a hefty 30 per cent.
Mr Lacsamana Simplicio, 54, who rents a 1ha padi field that has to support a score of his relatives, said: 'Because of the increases in fertilisers and other costs, we will not benefit much from the higher rice prices.'
NRFC national director Jaime Tadeo believes that hard-up small farmers will continue to switch to more lucrative cash crops or sell out altogether.
'The temptation to sell is especially high in this region because it's close to Manila and land is needed for urban development,' he said.
However, some relief is on the way, as a large chunk of a S$1.4 billion government programme to boost production will be allocated in soft loans to farmers.
