Ample rice to temper local consumer prices

Prospects of a bumper harvest of rice this year would help keep Philippine consumer prices stable for the rest of the year, economists and officials said on Wednesday.

They said the resilient farm sector would also help the economy compensate sluggish Philippine merchandise exports due to a slowdown in demand from its major markets in the United States and Japan.

Gregorio Tan, deputy administrator of state trading firm National Food Authority, said he expected rice and other food prices to remain stable for the rest of the year with ample supplies.

But on Monday, other NFA officials said they expected local rice prices to drop as the country entered its main rice harvest.

Rice, the main staple of Filipinos, accounts for about 12 percent of the consumer price index.

"The sheer weight of the main rice harvest coming in the fourth quarter and current excess supplies should keep prices stable," Tan told Reuters by phone.

On Tuesday, the government said it expected a record unmilled harvest of 12.7 million tons this year against last year’s 12.4 million because of good weather.

The government also said that in the fourth quarter alone, the country was expected to harvest between 4.7 and 4.8 million tons of unmilled rice against 4.5 million in the same period last year.

Economists agree that a bumper harvest in rice would enable the Philippines to keep prices in check.

"It has a positive effect on the cost of living index," Leonardo Gonzales, economist and agriculture policy consultant of World Bank, told Reuters by phone from Indonesia. Buffer rice stocks coming from domestic harvests also give the country a "semblance of food security," he said.

The Philippines has been importing rice since 1983 to fill annual shortages.

Socio-Economic Planning Secretary Dante Canlas said last week he expected annual inflation in September to be at 6.3-6.4 percent from the annual increase of 6.3 percent in August.

The Bangko Sentral ng Pilipinas said the direction of its benchmark rates would hinge on inflation levels from this month and prospects in the fourth quarter.

Good harvest

Officials said good crop harvests this year would keep the local economy afloat.

"We continue to be confident that for this year, for 2001, we will be able to attain our own (growth) targets because there is strength in our domestic economy," Trade and Industry Secretary Manuel Roxas II told a television interview.

"In the beginning of this year, we have already foreseen a softening in the foreign markets… and so the government focused on the domestic economy," Roxas said. He said the government aided the farm sector by setting aside an additional budget to build more irrigation facilities and for the distribution of higher yielding seeds to farmers.

Roxas said he expected gross domestic product growth to meet the government’s growth target of 3.3-3.8 percent in 2001 even if the US economy slipped into a recession.

"From January to June, we had a 3.3-percent GDP (growth year-on-year)and we are confident that at least up to the fourth quarter we will be able to attain the same level if not better," Roxas said.

The government expects agriculture, which accounts for a fifth of total domestic output, to record an annual growth of 3.0-3.5 percent this year from 3.52 percent in 2000.