Oct. 29 (Bloomberg) -- The Philippines, the world's biggest rice importer, cut its production target for next year after the deepening credit crunch made it difficult for farmers to secure loans for buying seeds and fertilizers. 

Rough rice harvests will probably yield 17.8 million metric tons next year, lower than the 18.5 million ton target set in the first quarter as higher fertilizer costs forced farmers to use less soil nutrients, state-run Philippine Rice Research Institute Executive Director Ronilo Beronio said. Demand for rough rice may rise to 20 million tons, he said, without giving a comparison.

The old target is no longer realistic,'' Beronio said in a telephone interview from Manila. ``Limited access to credit is one of the reasons we're adjusting the numbers. Another reason is higher fertilizer prices.'' 

Rice, the staple food for 3 billion people worldwide, rose to a record $25.07 per 100 pounds in Chicago in April, as Vietnam and India curbed exports to protect domestic stockpiles and cool prices. Rough rice for November delivery in November rose 0.5 percent to $14.95 at 4:43 p.m. in Singapore. 

The nation's rice production will meet 88.5 percent of demand next year, Beronio said. That will mean the Southeast Asian nation will have a shortfall of about 1.5 million tons of milled rice, according to Beronio's presentation to officials of the International Fund for Agricultural Development in Manila today. 

Rising Stockpiles 

Philippine rice imports may drop 35 percent to 1.5 million tons next year, as domestic stockpiles surged after the government boosted overseas and local purchases, Finance Undersecretary Jeremias Paul said on Sept. 23. He oversees spending by state companies including the National Food Authority, which handles government rice imports. 

Rising costs may also prompt the government to delay completion of rehabilitation work on irrigation facilities, limiting farmers' capacity to expand output, Beronio said. 

President Gloria Arroyo had planned to expand agricultural land with access to irrigation by 300,000 hectares through 2010 to attain rice self-sufficiency, the government said in January. 

"If credit is not available for infrastructure, such as maintaining irrigation, the long-term impact is very negative,'' Robert Zeigler, director-general of the Laguna, Philippines-based International Rice Research Institute, said yesterday. ``If fertilizer remains expensive and importers are unable to get credit to buy it, that has an immediate impact on production.''

 

By Luzi Ann Javier