Funding for rice farm mechanization

The decision to set aside the move to import 300,000 metric tons of rice from Vietnam under a government-to-government scheme will save some ₱8.5 billion that can now be used for more urgent needs of the nation.

The Philippines had planned to buy the 300,000 tons of rice as a reserve in case the country incurs a shortage of the Filipino people’s staple food. It did not want to go through the difficult experience of 2018 when market prices hit record heights – an inflation rate of 6.7 percent – that was stopped only when Congress enacted the Rice Tariffication Law that ended all quantitative restrictions on rice imports. With cheap rice available at a low price, inflation quickly dropped in succeeding months; by June, 2019, it was down to 2.7 percent.

With the decision to cancel this year’s planned importation, Secretary of Agriculture William Dar said the government will have ₱8.5 billion that can be used instead to support the Rice Competitiveness Enhancement Fund (RCEF) under the Rice Tariffication Law. The RCEF calls for a mechanization program to help farmers acquire production and harvest machinery and equipment, promote the development and use of certified seed varieties, expanded credit assistance, and enhanced extension services.

There is now, however, a problem over government budgeting because of the ongoing coronavirus pandemic. The Philippine budget deficit soared in May as tax revenues fell and government spending rose. The budget deficit in May reached ₱202.1 billion, where there had been a ₱2.6-billion surplus in May of the previous year, 2019.

Government expenditures in May reached ₱353.6 billion –up 12 percent from ₱314.7billion in May of the previous year. These included releases under the law on Bayanihan to Heal as One, including cash grants to over 3 million employees of small enterprises affected by the government’s quarantine measures. Primary government spending also jumped to ₱335.3 billion from ₱295 billion in the previous year. At the same time, government income fell by 52 percent in May, due to the closure or suspension of many business operations.

Thus, Secretary Dar may not get his wish that the ₱8.5 billion saved in the decision to scrap this year’s rice importation from Vietnam be used instead to push rice farm modernization. There simply are so many emergency expenses arising from the coronavirus pandemic that that must be funded.

But this should not detract from the fact that the Philippine rice industry needs to rise to higher levels of development as it occupies a central role in the Philippine economy. Whatever happens in the country, Filipinos simply need to have their rice.

We have the needed resources – the land, water, high-yielding varieties developed by our own scientists. Studies have shown that the principal need of our rice industry is increased mechanization – tractors and harvesters. That is why in the Rice Competitiveness and Enhancement Fund, 50 percent of its proposed ₱10-billion annual appropriation is to be for farm machinery and equipment. The balance is 30 percent for rice seed development and propagation, 10 percent for expanded credit assistance, and 10 percent for extension services.

When this coronavirus emergency is over, hopefully within a year, our officials should make an all-out effort to fund the RCEF, especially its mechanization program, so we can become sufficient in rice, our nation’s staple food.