Masagana 99 was a success but could have been better

This article was prompted by the well-publicized exchange between Senator Imee Marcos and Finance Secretary Carlos Dominguez III and the conflicting assertions on the positive and adverse consequences of the Masagana 99 (M-99) rice program during the administration of President Ferdinand Marcos.

Both Senator Marcos and Secretary Dominguez were correct, to varying degrees.

Senator Marcos was correct in claiming M-99 was a success. Records show that M-99 achieved the primary purpose for which it was established. M-99 dramatically raised our national rice output, after the series of devastating typhoons, tungro virus infection, and a killer flood followed by drought in Central Luzon in the early ’70s. Likewise, we attained rice self-sufficiency albeit very briefly. And yes, we did export rice, not much but a welcome reversal from the menacingly increasing annual shortfalls.

But Secretary Dominguez was also correct in pointing out that M-99 was not a TOTAL success. M-99 left the rural banking sector in shambles. Hundreds of rural banks went under for failure to collect the loans they extended to the farmers at the behest of the national government.

The productivity gains achieved by M-99 can be seen in the following table comparing the national average palay yields pre-Masagana 99 versus the first four years of Masagana 99.

The yield advantages of M-99 years versus pre-M-99 years were 10% and 25% for the wet and dry seasons, respectively.

However, the national averages mask the fact that only about one-third (1/3) of the rice farms were enrolled in M-99. If these were factored out, the M-99 yields were 1.98 tons per hectare and 2.76 tons per hectare for the wet and dry seasons, respectively. The yield advantages of M-99 growers versus non-M-99 growers significantly rise to 29% and 75% for the wet and dry seasons, respectively.

With this yield advantage, it cannot be true that the M-99 adopters lost money in their adoption of M-99 technology as claimed by some detractors. Many did not repay the M-99 loans not because their margins were negative but because either they spent the proceeds for their other more pressing family needs e.g. for food, medication, school expenses. Or the farmers simply refuse to repay the loans as a perverse sense of entitlement.

Moreover, destruction of the rice growing environment due to excessive application of fertilizers and pesticides is an exaggeration. The fertilizer recommendations of M-99 were moderate compared with the high levels of fertilizer now routinely applied by the very productive rice farmers in Nueva Ecija, Bulacan and Isabela. And certainly much less than the historical fertilizer usage in Taiwan, China, Japan, South Korea and our neighbor next door, Indonesia.

The levels of pesticide use were initially high but subsequently moderated as the genes for pest and disease resistance were systematically bred into the succeeding recommended rice varieties. Likewise, it did not take long for our rice farmers to become more judicious in the rate and timing of pesticide applications with the successful popularization of integrated pest management (IPM) technology through the joint efforts of the Food and Agriculture Organization (FAO), the International Rice Research Institute (IRRI), the Bureau of Plant Industry (BPI) and UP Los Banos (UPLB).

Unfortunately, the M-99 rice program became a casualty of the regime change after EDSA I together with the children and maternal nutrition, family planning and energy development programs. In the haste to discredit the Marcos regime, the baby was thrown out with the bath water, as the expression goes.

Particularly costly was the mothballing of the Bataan Nuclear Power Plant (BNPP) due to: 1) perceived risk due to volcanic eruption and earthquake, 2) lack of trust in the competence of Filipino nuclear scientists and engineers to safely manage a nuclear plant, and 3) insinuations of graft in the bidding and construction of the plant.

Not known to many was the fact that South Korea had one such Westinghouse nuclear plant built at the same time as ours. The first proved to be very successful that the South Koreans built two more exactly of the same Westinghouse model. Ironically, the BNPP facility which cost us US$2.5 billion to build but out of which we have not generated a kilowatt hour of power remains unscathed after the eruption of Mt. Pinatubo nearby and the many earthquakes that have rocked Luzon the last 35 years. The South Koreans came in 2010 to offer to finance, rehabilitate and manage BNPP for a fee but their offer was coldly received.

I have been cited as objecting to the resuscitation of the M-99 rice program. Yes I did raise the alarm but not against adoption of modern technology but for a specific reason —objection to the manner our rice programs is being implemented i.e. with massive input subsidies in kind, worse through government direct procurement and distribution which had been the bane of our rice programs all these years.

Truth was M-99 never left us. After the Marcos administration, all the succeeding Secretaries of Agriculture continued to promote and popularize the package of modern technology (irrigation, good seeds, fertilizers, integrated pest management, grain dryers) which M-99 was really all about.

However, the problem was our cultural propensity of always starting anew without regard to the gains (and failures) in the past. The Department of Agriculture (DA) rice banner programs of the succeeding administrations were all in the mold of M-99 but were baptized with new names and acronyms. From M-99 under President Marcos, our rice programs underwent cosmetic name changes: Rice Action Program under President Cory; Gintong Ani (FVR); Agrikulturang Makamasa (ERAP); Ginintuang Masaganang Ani (GMA); Agri-Pinoy under BSAII and now Ani at Kita (PRRD).

However instead of rectifying the “fly in the ointment” of M-99 which was non-repayment of loans by farmers for acquisition of the needed production inputs, the common perverse and obstinate solution of the succeeding rice programs was massive direct input subsidies so the poor farmers do not have to take out bank loans (tongue in cheek, with great benefit to the implementors in government and their complicit suppliers and legislators).

The solution from the beginning ought to have been a massive bailout of the rural banks in order to save them from bankruptcy. After all the rural banks extended these loans on behest of the national government. It would have been cheaper, less traumatic and would have kept the rural banking sector intact.

Unfortunately, we have not learned. Forty-five years after M-99, the Rice Competitiveness Enhancement Fund (RCEF) program under the new Rice Tariff Act (RTA) chose the same dubious path of least resistance and provided for massive input subsidies in kind procured by government.

The preferred route ought to have been an overhaul of the Land Bank of the Philippines (LBP) to make loans accessible and affordable to small farmers through: 1) reconstitution of the old cadre of rural finance officers who will closely supervise the lending to farmers, 2) establishment of additional branches and lending centers in underserved areas, and 3) imposition of a second set of metrics of bank performance on actual rural lending, in addition to the CAMELS grading system of financial integrity imposed by the Bangko Sentral.

These, I am happy to note, are now being undertaken by LBP with its new president, Cecilia Borromeo.

Additionally, LBP will need resources to significantly ramp up its rural lending portfolio. However, LBP need not run to Congress each year for supplemental appropriations to offset prospective losses in lending to small farmers because the Bank’s annual income of ₱15 billion is more than enough, provided LBP is exempted from remitting half of its annual income to the National Treasury. It is for this reason, LBP should retain its universal banking license with which to cross-subsidize rural lending.

Dr. Emil Q. Javier is a National Scientist and also Chair of the Coalition for Agriculture Modernization in the Philippines (CAMP).

There are those who look at things the way they are, and ask why... I dream of things that never were, and ask why not?... Robert Kennedy