PLANTING/BUYING RICE IS NEVER FUN
Grade schoolers used to sing, “Planting rice is never fun, bent from morn till the set of sun, cannot stand and cannot sit, cannot rest for a little bit.” With price shooting up lately, eating rice is no longer fun either.
Millennials won’t believe this but rice farming was once okay. Nanay had a tamburin of tiny gold beads, an heirloom that made semestral trips to Monte de Piedad to pay her tuition fees, redeemed when the rice harvest came in. The family’s Bulacan rice fields yielded enough for my lolas to buy property and build a house in Manila, to see Nanay through college, and allow Mang Inggo, their tenant, to build his own house.
Bad weather in 1934-36 caused poor harvests and high prices. The outcomes were a policy to keep rice price low, the creation of NARIC (NFA’s predecessor), and rice imports to stabilize price and supply. The old equilibrium was disturbed, making urban dwellers content but keeping farmers poor and production low. Rice farming is not what it used to be, even with agrarian reform’s good intentions.
News stories report some prescriptions: “rice tariffication” (control rice imports through tariffs rather than through import quotas), increase cash allowances to the poor, import more rice, keep prices low through subsidies or regulation of jeepney fares, cooking oil, galunggong,
and other necessities. These will produce immediate results but at a cost.
Rice imports are paid in foreign exchange—from export proceeds, OFW remittances and/or BSP dollar reserves. This means less will be available for infrastructure, raising manufacturing capacity, improving agricultural efficiency, exploiting the West Philippine Sea and Benham Rise, whatever.
If current priorities— health, education, and welfare, for example—are to be maintained, any increased government subsidy programs would mean more taxes and/or higher debt-financed deficits.
Additional taxes mean higher production costs, lower disposable incomes, and business activity slowdown.
Increased Treasury borrowing means higher interest rates and less credits for the private sector, thus also tending to depress employment, production, and income. Money supply will increase if the Treasury or the banking system taps the BSP as the ultimate funding source (it prints money). Without any increase in available goods, prices will tend to rise across the board, i.e., inflation.
Foreign debt is a possibility when conditions are favorable, but foreign exchange will be needed for interest and principal amortization as they fall due. Rice imports and subsidy programs don’t generate dollar receipts and debt servicing will compete with other priorities.
My columnist colleague, ambassador Jose Zaide recently wrote about a 65-year-old incident. Concerned about rice price, the newly elected President Ramon Magsaysay sought the advice of his predecessor President Elpidio Quirino. The latter replied, “It’s caused by the Law of Supply and Demand.” Magsaysay’s immediate response (action agád), supposedly was, “I’ll have the law repealed immediately.”
Alas, the Law still exists. It provides that for rice to be cheaper: (a) supply has to increase (grow more rice) and/or (b) demand has to fall (eat less rice)—anyway, we eat more than is healthy.
Notes: (a) Monte de Piedad was a church-owned pawnshop before it became a bank (now closed); (b) a tamburin is a Spanish Regime gold bead necklace; (c) The National Rice and Corn Corporation (NARIC) is the original National Food Administration (NFA); and (d) Elpidio Quirino was President from 1948 to 1953. Ramon Magsaysay succeeded him and was President from 1953 to 1957.
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