“There are global clouds on the horizon that are driving up the price of oil and food, particularly rice,” President Gloria Macapagal Arroyo said at a national food summit in northern Pampanga province.

She said the 48.7 billion pesos (US$1.17 billion; euro750 million) farming budget included 20 billion pesos (US$479 million; euro308 million) for loans to farmers and 9.2 billion pesos (US$220 million, euro142 million) for seed production. The rest of the money would be used for fertilizer production, irrigation and infrastructure, technical training, and drying and post-harvest facilities.

“We must work harder to grow and breed what we need,” she said.

The agricultural assistance package was to last through the end of her term in 2010.

The Philippines’ 90 million people consume about 11.9 million metric tons (13.12 million U.S. tons) of rice annually. Most of the rice is grown domestically but dwindling production and corruption in the rice supply chain have created a recurrent shortfall of about 10 percent.

The government has to purchase at least 2 million metric tons (2.20 million U.S. tons) from the international market every year, making the Philippines the world’s biggest rice importer. Philippine farmers’ groups have warned that rice prices could rise a further 40 percent in coming months. On Thursday, Justice Secretary Raul Gonzalez warned rice hoarders they could be charged with economic sabotage, a crime that carries a life sentence.

Arroyo promised to “fix the corruption” in the agriculture sector, and warned officials against conniving with unscrupulous traders.

“Friend and foe alike (will be) brought to account for their actions,” she said.

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