Gantallan Plorensio's farm is a paradox at the heart of Asia's growing rice crisis. The fields that get enough water have never been more productive, contributing to a five per cent annual increase in rice production over the past two years.

"We have a lot of rice fields, but no irrigation," he says. "They're just sitting there."

As a regional rice crisis looms, threatening political instability and social unrest, the idle fields in Plorensio's village underscore a failure of policy and foresight repeated across the region: For decades, governments have been encouraging a boom in services and skyscrapers, but not the capacity to grow more rice. Financing in agriculture has stagnated, and fewer farmers are expected to produce more rice for exploding populations.

That neglect is one of the central causes of what some analysts call the "perfect storm" - including rising global oil prices, drought in Australia, and inclement weather - behind the rice crisis.

"It's a failure to recognise the importance of agriculture," says Duncan Macintosh, a spokesman for the International Rice Research Institute, based in Laguna, about 40 miles from Manila, the capital of the Philippines. "Agriculture is becoming a very unfashionable industry."

At the epicentre of the storm is the Philippines, the world's largest importer of rice. The island nation annually imports between 10 per cent to 15 per cent of its rice. But because global rice supplies are so tight - causing India, China, Cambodia, and Vietnam to restrict exports - the Philippines is having a hard time fulfilling an import order of around one million tonnes.

The country is paying exorbitant prices for whatever rice it can get its hands on, driving up prices around the world to double last year's.

A shortfall of 10 per cent is expected for 2008, causing fears that food riots could erupt here as they have in countries such as Haiti, Egypt, Mexico, Burkina Faso, and Senegal.

Those are just concerns so far in the Philippines, but the government of President Gloria Arroyo - like the governments of Haiti and Malaysia, among others - has been shaken by the growing crisis and faced with public calls for her ouster.

At the centre of the storm lies a simple question: Why can't the Philippines, and other countries in Asia, produce enough rice to feed themselves?

Some reasons are beyond the direct control of the Philippines and other Asian archipelagos like Indonesia and Malaysia. Because their farmland is spread over thousands of miles and different islands, production, maintenance, and transportation make rice cultivation expensive and difficult.


"Thailand, the world's largest [rice] producer, has 9.82 million [hectares of rice fields]. The Philippines has four million hectares of productive farmland. And those four million hectares are spread over 7,000 miles," says Macintosh, adding that the Philippines also lacks a river delta, which by providing an easy and abundant water source, allows Asian countries like Vietnam, India, and Cambodia to produce higher rice harvests.

Other factors in the rice crisis are also beyond the Philippines' control. Rising oil prices have made rice more expensive to produce, by increasing fertiliser and transportation costs; pests in Vietnam, one of the world's largest producers, have wiped out as much as 200,000 tonnes; and the collapse of Australia's rice production due to drought has eaten away at global rice stocks.

But many other factors are directly a failure of foresight here, as in the rest of Asia. Although government spending on agriculture accelerated in the 1960s and '70s, pumped into irrigation systems, fertiliser, and rice breeding that spawned the Green Revolution, it slowed by half throughout the 1990s, according to one study.

In 2002, the Philippines invested only $0.46 for every $100 of agricultural output, a level consistent with the rest of Asia, according to a study by International Food Policy Research Institute (IFPRI) in Washington. It means that Asia is a slacker when it comes to investment in agriculture compared with the rest of the developing world, which spent $.053 for every $100 of agricultural output, and the developed world, which spent more than $2.0. The global average was around $.070.

Instead, Asia is increasingly transforming farmland into office parks and suburbs. In the Philippines, half of irrigated land has been transformed into urban development in the past two decades. While this fuels new economic engines such as services and industry, it also undercuts resources needed to grow food.

"Manufacturing is demanding more and more water. Asia expects to grow one per cent more rice every year - but they're supposed to do that on less water, less land, and less labour," says Macintosh.

Perhaps most important of all, there are simply more mouths to feed.

The population in the Philippines has grown by roughly one per cent a year since 2000, one of the highest rates in Asia, leading to a corresponding leap in rice consumption. And across Asia, exploding middle classes with more money and bigger appetites are eating more rice - and more meat. Meat production requires huge amounts of water, labour, and grains to feed cattle, which in turn diverts resources away from rice production.

And yet, despite this obvious population growth, governments throughout Asia have assumed they could always import more and more food, according to analysts. Global stocks of rice, as with other grains, are at their lowest since 1976, depleted by a combination of population growth, less farmland, poor planning, and bad weather.

"There's been no incentive for rice self-sufficiency in the Philippines. It was always so easy to buy rice from your neighbour," says Angelito Banyo, director of PR Politik, a thinktank in Manila.

The current crisis has exposed the fallacy of thinking that supplies are in abundance, analysts say. It has also underscored a need for better coordination in Asia's rice trade, they add.

Instead of coordinating policies to respond to a problem that is affecting all of Asia, India, China, and Cambodia, among others, have imposed strict export restrictions, leaving countries like Malaysia and the Philippines to scramble for any deals they can grab. That will only cause prices of rice to climb higher in the open market, analysts say.

Filipino officials said last week that the country is spearheading a regional meeting of 10 Asian countries to discuss the crisis, tentatively scheduled for this summer. Some analysts, however, don't expect much to come out of it. "Rice is such a politically sensitive issue. Countries are not going modify their rice prices to satisfy others. They're going to pursue prices that they believe are in their national interest," says Nicholas Minot, a senior research fellow at IFPRI.

Reactions inside Asian countries have not helped, either. Hoarding has become a problem in India and Bangladesh, and caused such domestic price spirals in the Philippines that the government has threatened life imprisonment to prevent it.

Way out

Solutions, analysts warn, will not be immediate, but could take the form of food-for-work programmes, targeted school feeding programmes, and conditional cash transfers (where poor households are given cash assistance if they attend health clinics and keep their children in school).

"These types of programmes are more effective in helping people adjust to the high prices than price controls or universal food subsidies," says Minot.

In the Philippines, Arroyo's short-term response has been to flood markets with highly subsidised rice, broker a quick deal with Vietnam for 2.2 million tonnes of rice, and call for a halt on converting farmland into development space. Observers say they're all steps in the right direction. "The Philippines is a relatively positive situation, where the government is taking very productive steps," says Paul Risley, a spokesman for the World Food Programme in Thailand.


But as the crisis mounts, observers agree that Asia needs a second Green Revolution, a movement launched in the 1960s that resulted in double rice yields through better irrigation and investments in rice technology. Money has to be put back into the science of feeding, they say.

"In the long term, developing countries and the international community need to increase investment in agricultural research and development to develop new disease resistant, higher-yielding varieties," Minot adds.

The Philippines looks to be doing just that: Last week, President Arroyo announced a $1 billion investment to improve rice production. The money would go toward seed production and training and loans to farmers, as well as updating irrigation and transport systems. "We must work harder to grow and breed what we need," President Arroyo said recently at a national food summit.

Small farms like Plorensio's in Bohol, meanwhile, show that investments can pay off. Four years ago, the local government introduced a plant-now pay-later scheme, allowing farmers to buy seeds from a bank, rather than planting their own. Production is way up over the past few years, Plorensio says.

A few weeks ago, Plorensio and other farmers in his town petitioned their local congressman for a $12,000 loan to fund an irrigation system. If the loan comes through, he says, those rice fields won't be idle any longer.

Why have rice prices surged to record highs?

Asian rice prices have almost trebled this year and prices on the Chicago Board of Trade have risen more than 80 per cent to hit successive record highs as export restrictions by leading suppliers fuel insecurity over food supplies.

With only 30 million tonnes traded annually, government supply curbs such as those from New Delhi and Hanoi have spooked importers such as the Philippines and Bangladesh, at a time when global stocks have halved since hitting a record high in 2001.


October 2007 - India, which was the world's second-largest rice exporter last year but is set to lag behind Thailand and the United States this year, bans exports of non-basmati rice to rein in prices and control inflation, but later in the month eased the ban on some superior varieties of the grain.

March 2008 - India bans exports of non-basmati rice again as inflation hits a 14-month high, alarming policymakers.

March 2008 - Egypt bans rice exports from April 1 to October to hold down local prices. The country normally produces about 4.6 million tonnes a year of white rice, leaving a domestic surplus of about 1.4 million tonnes for export.

April 2008 - Vietnam, due to regain its position as the No. 3 exporter this year, extends a ban on rice sales until June to help stabilise domestic food prices as it tries to tame double-digit inflation. Prior to that, it had curtailed exports for March and April.

April 2008 - Brazil temporarily suspends rice exports to safeguard domestic supply and keep prices of the basic foodstuff stable. Brazil, which is not a major global rice supplier, exported 313,000 tonnes of rice last year.

April 2008 - Indonesia, Southeast Asia's largest rice consumer, says it would curb medium-grade rice exports to combat inflation. Under Indonesia's new rice export rules, state procurement agency Bulog is allowed to sell medium-grade rice overseas only when national stocks are above 3 million tonnes and domestic prices are below a government's target price.


January 2008 - Bangladesh signs deals and starts importing 180,000 tonnes of white rice from neighbouring Myanmar. The Bangladeshi government and private traders started importing rice after crop losses caused by flooding last year.

March 2008 - The Philippines says it aims to import up to 2.2 million tonnes of rice this year to meet a domestic shortfall, in what could be the biggest overseas purchase of the staple in a decade. Local harvests have failed to keep up with expanding population, lifting inflation to a 16-month high.

March 2008 - Costa Rica expects its rice imports to jump 31 per cent to 190,000 tonnes in the 2008/09 crop year, which begins in July, as farmers replace some rice fields with other crops such as sugar cane and pineapple. Bad weather in the remaining rice-growing areas also has cut yields.

March 2008 - Bangladesh says it would import 400,000 tonnes of rice from India to cushion the country's dwindling stocks. The imports, allowed under a government-to-government deal, would not be subjected to the rise in rice export prices.

April 2008 - Singapore says it would allow rice importers to bring in more stock to meet increased demand amid consumer fears of a rice supply crunch and higher prices.


World stocks have fallen by nearly 50 per cent from a record high of 147.1 million tonnes in 2000/01, although they have already recovered slightly from a low in 2004/05. They are expected to rise marginally by the end of this crop year.