Aquino warned of rice crisis Intel body cites threat to national security By Tony S. Bergonia
The report, prepared on Feb. 20 and a copy of which was furnished President Benigno Aquino III, said one of the possible flash points being watched by the local intelligence community was the supply and prices of rice worldwide. Soaring prices of cereals due to production shortfalls led to food riots in several countries and toppled a government in 2008, while prompting the Philippines to buy huge volumes of rice, which it sold to the poor at a discount. A top security analyst, who helped prepare the NICA report, said early signs of unrest as a result of the price increases this year were being watched closely. Pockets of protesters have been holding rallies against price increases and a nationwide strike called by the transport sector is a cause for concern, said the security analyst, who asked not to be named because of the nature of his work. “The sources of unrest are not just terrorist movements or political conflicts, but also issues of the stomach. The most vulnerable of people are the ones who are hungry,” he said. In March, the average price of rice in the international market was a little over $500 a ton, according to United Nations’ Food and Agriculture Organization (FAO). The agency said recently that food prices worldwide this year were about 37 percent higher than last year’s. In the country, the average retail price of rice ranged from P30 to P35 a kilogram, the Department of Agriculture’s Bureau of Agricultural Statistics (BAS) reported on April 9. The NICA report came a few days before Social Weather Stations released the findings of its survey on poverty that said at least two out of every 10 Filipinos had experienced hunger this year and more than half of the country’s population rated themselves as poor. Unusual weather The NICA report, tagged as confidential, said unusual weather patterns brought by climate change and upheavals worldwide were exacting a heavy toll on food supply and costs in many parts of the world, including the Philippines. Some of the writings on the wall that point to a potential crisis in rice supply, according to the report, are the following: • Weather disturbances—flooding and drought—“have greatly affected food production worldwide.” • Rice-producing countries, “without any exemption … experienced overall reductions in production.” These are the Philippines, Thailand, Vietnam, Pakistan, India, China and Cambodia. • Massive losses in wheat production due to flooding and a cold spell in Australia, Russia, Ukraine and countries in Eastern Europe are likely to force wheat consumers to shift to rice, further straining worldwide supply. “Wheat affects rice importation because rice and wheat are reciprocal alternatives, being similarly the world’s most important staple food,” the NICA report said. • A warning made by the FAO of a worldwide food crisis as a result of sharp declines in international food production.
In its latest World Economic Outlook, released ahead of the IMF and World Bank’s spring meetings in Washington this weekend, the intergovernmental organization said Asia would still outpace other regions even as growth moderates to "more sustainable rates." Its 5% forecast for the Philippines, unchanged from December, is lower than the government’s 7-8% target but is identical to the 2011 projections of the Asian Development Bank (ADB) and the World Bank. The ADB and the World Bank, however, see Philippine growth picking up to 5.3% and 5.4%, respectively, next year. Rising consumer prices are the major downside risk for the region, the IMF said. "[I]nflation is expected to continue increasing this year across much of developing Asia," it noted. The IMF forecast inflation to average 4.9% this year in the Philippines, higher than 2010’s 3.8%, before moderating to 4.3% in 2012. Both estimates are at the upper bound of the central bank’s 3-5% target range for both years. The ASEAN-5 region of which the Philippines is a part will see growth ease to 5.4% this year from 2010’s 6.9%, to be led by Indonesia whose economy is expected to expand in 2011 by 6.2%, up from last year’s 6.1%, and by 6.5% next year. Economists agreed with the IMF forecasts and said they continued to expect sustained growth for the Philippines. Standard Chartered economist Simon Wong, in an e-mail, said risks would come from "rising CPI (consumer price index) and Japan’s quake in the near term..." "[B]ut we continue to expect a stronger global recovery fuelled by the US and Europe will help to sustain PH (Philippine) growth this year, through stronger remittance and exports," he added. University of Asia and the Pacific economist Cid L. Terosa said, "Rising prices will dent growth this year. They will cut growth by 0.5-1%." Asia, the IMF said, will see export growth "moderate from last year’s very rapid pace but will remain robust as gains in market share and increased intraregional trade partially offset the weakness in final demand from advanced economies." "Capital flows to Asia are likely to continue, driven by both cyclical and structural factors," it added. "Autonomous private consumption growth should remain strong, supported by still-rich asset valuations and improved labor market conditions." |
U.S. Stocks Decline as Energy Shares Slump Amid IMF Forecast; GM Retreats U.S. stocks fell, sending the Standard & Poor’s 500 Index down for a third day, after oil dropped from a 30-month high as theInternational Monetary Fund cut its growth forecast for the world’s largest economy. Occidental Petroleum Corp. (OXY) and Anadarko Petroleum Corp. (APC) slumped at least 3.1 percent as crude oil fell 2.5 percent.General Motors Co. (GM) retreated 2.4 percent after China said 2011 car sales may trail forecasts. Tyco International Ltd. (TYC) rise 3.3 percent as three people with knowledge of the matter told Bloomberg News that Schneider Electric SA (SU) is weighing a takeover offer for the maker of security systems. The S&P 500 dropped 0.3 percent to 1,324.46 at 4 p.m. in New York. The benchmark gauge had the longest losing streak in almost a month. The Dow Jones Industrial Average rose 1.06 points, or less than 0.1 percent, to 12,381.11. “There’s clearly a defensive tone,” said Bruce McCain, who oversees $22 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “The IMF report got people concerned,” he said. “The stock market is stuck, trying to break the previous high. There’s hope that the first- quarter earnings season will be good and that we’ll see more takeovers. That would be good for stocks.” The S&P 500 has risen 5.3 percent in 2011 amid government stimulus measures and as corporate profits beat analysts’ estimates for an eighth straight quarter. Earnings for S&P 500 companies rose 12 percent in the first quarter and will increase 17 percent this year, according to analyst estimates compiled by Bloomberg.
Yields on 10-year notes traded at almost a seven-week high as the U.S. prepared to sell $32 billion of three-year notes, $21 billion of 10-year debt and $13 billion of 30-year bonds in three auctions starting tomorrow. Federal Reserve policy makers William Dudley and Janet Yellen said the economy isn’t strong enough to ease stimulus. “The judgment of millions of investors can’t be overlooked, and that’s what the Treasury and TIPS market reflects about investors’ beliefs about inflation,” Anthony Crescenzi, a bond strategist at Newport Beach, California-based Pacific Investment Management Co., said in an interview on Bloomberg TV. “The Fed needs to worry that others are worried about it.” The firm manages the world’s biggest bond fund. The difference between yields on 10-year TIPS and comparable Treasuries, a gauge of trader expectations for consumer prices over the life of the debt known as the break- even rate, was 2.66 percentage points at 5 p.m. in New York. Earlier it widened to 2.67 percentage points, the most since March 2008. The average for the five years before the onset that year of the financial crisis was 2.42 percentage points. It touched 2.74 in May 2006. Ten-year yields rose less than one basis point, or 0.01 percentage point, to 3.58 percent, according to Bloomberg Bond Trader prices. The 3.625 percent note due in February 2021 fell 1/32, or 31 cents per $1,000 face amount, to 100 11/32. |
Oil Falls for a Second Day After IMF Cuts Growth Forecasts for U.S., Japan Oil declined for a second day after the International Monetary Fund cut its growth forecasts for the U.S. and Japan, saying high crude prices pose a risk to global economic expansion. Futures tumbled from a 30-month high yesterday as the IMF said in its World Economic Outlook that the U.S. economy will expand at a slower pace than in 2010 amid an unemployment rate above 8 percent and a drop in consumer confidence. Oil also fell as the African Union tried to negotiate a cease-fire in Libya. The IMF “clearly engendered some downward price pressure across a number of financial markets, including crude oil,” said Jason Schenker, president of Prestige Economics, an energy advisory firm in Austin, Texas. “We’re looking at pretty solid global growth, it’s just a deceleration of growth.” Oil for May delivery slid as much as $1.21, or 1.1 percent, to $108.71, in electronic trading on the New York Mercantile Exchange, and was at $108.83 at 8:44 a.m. Sydney time. Yesterday, the contract fell $2.87, or 2.5 percent, to $109.92, the biggest decline since March 15. The threat of further oil-price increases has become a “key downside risk” for global growth, according to the IMF report. Oil will rise 36 percent in 2011 to $107.16 a barrel, based on the average prices of U.K. Brent, Dubai and West Texas Intermediate crudes, the IMF said. The January forecast was for oil at $89.50 a barrel this year. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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