In­tel­li­gi­bly man­ag­ing our rice prob­lem

Manila Bulletin - - Business News -

y now, a lot of Filipinos must be throw­ing up their arms in des­per­a­tion over the in­tractabil­ity of our rice prob­lem. It has be­dev­iled us all these years and with ex­cep­tion of a year on two in the early 1970s dur­ing the time of Pres­i­dent Fer­di­nand Mar­cos, we al­ways had to im­port rice from our neigh­bors.

Just like with other food com­modi­ties, we have man­aged the de­fi­ciency with im­ports. But some­how, now and then, the na­tional agency re­spon­si­ble for man­ag­ing our rice sup­ply, gets its tim­ing wrong and runs out of sup­ply. With govern­ment out of stock, un­scrupu­lous traders take ad­van­tage and raise prices. House­holds ag­gra­vate the sit­u­a­tion by buy­ing more rice than they nor­mally would thus mak­ing sup­plies even tighter.

The po­lit­i­cal op­po­si­tion sens­ing vul­ner­a­bil­ity takes the ad­min­is­tra­tion to task for in­com­pe­tence and graft, de­mands for the head and the abo­li­tion of the na­tional food agency. Congress obliges, abol­ishes the agency but im­me­di­ately res­ur­rects the agency with the same pur­poses but with a dif­fer­ent name.

The script should be fa­mil­iar to all by now. We have been do­ing these since 1936, dur­ing the Com­mon­wealth pe­riod.

We need not de­spair. Our rice prob­lem is man­age­able pro­vided we are smart about it, take a long-term view and stay the course.

First we need to learn from our mis­takes — ac­knowl­edge them and cor­rect them mov­ing for­ward.

Giv­ing away free seeds, fer­til­iz­ers, farm equip­ment and other in­puts is ex­pen­sive, waste­ful, un­sus­tain­able and prone to cor­rup­tion.

Price sup­port for palay through govern­ment pro­cure­ment has not worked ei­ther. The Na­tional Food Au­thor­ity (NFA) never had enough money with which to af­fect farm gate prices. Thus, only a small mi­nor­ity of farm­ers who have ac­cess to the NFA buy­ing sta­tions ben­e­fit from the sub­sidy. Be­sides most of the sub­si­dies are cap­tured by the traders who by then have phys­i­cal pos­ses­sion of palay.

We have in­vested more than bil­lion in ir­ri­ga­tion sys­tems. How­ever, the ef­fi­ciency of our ir­ri­ga­tion sys­tems leave much to be de­sired. We have not done enough to in­cen­tivize the wa­ter ben­e­fi­cia­ries to man­age the down­stream fa­cil­i­ties, clear the canals and fa­cil­i­tate wa­ter shar­ing and distri­bu­tion among them­selves. We made the prob­lem worse by leg­is­lat­ing free ir­ri­ga­tion which ab­solves the farm­ers from the obli­ga­tion to help them­selves. As if that were not enough, we now have to pay the wa­ter ben­e­fi­cia­ries to clear the canals that con­vey the pre­cious free wa­ter to their pad­dies. How ab­surd in­deed!

Re­strict­ing rice im­ports to pro­tect the do­mes­tic rice in­dus­try has not worked ei­ther. Rice farm­ers are still poor and un­com­pet­i­tive. Filipino con­sumers con­tinue to put up with ex­pen­sive rice which oth­er­wise should mod­er­ate if the do­mes­tic mar­ket were open to for­eign com­pe­ti­tion.

Key to in­tel­li­gently man­ag­ing our rice prob­lem is a paradigm shift from self­suf­fi­ciency to rais­ing farm­ers’ in­comes.

Achiev­ing rice self-suf­fi­ciency is phys­i­cally at­tain­able but will be costly and will re­quire diver­sion of scarce re­sources away from al­ter­na­tive farm en­ter­prises which can gen­er­ate more in­come to farm­ers and greater ben­e­fits to the econ­omy. Some of the re­sources mo­nop­o­lized by rice are bet­ter de­voted to tree crops like cof­fee, ca­cao, rub­ber, oil palm, and trop­i­cal fruits; poul­try, swine and small ru­mi­nants, and fish­eries, es­pe­cially aqua­cul­ture.

This shift in na­tional ob­jec­tive will re­quire 1) fur­ther in­ten­si­fi­ca­tion of rice cul­ture in the fa­vor­able rice grow­ing ar­eas (i.e. with ir­ri­ga­tion), and 2) diver­sion of less fa­vor­able ar­eas (i.e. rain­fed low­land and up­lands) into other high­er­val­ued crops.

With ir­ri­ga­tion; ad­e­quate fer­til­iza­tion mainly with chem­i­cal fer­til­iz­ers but bal­anced with some or­ganic fer­til­iz­ers, and in­creas­ing de­ploy­ment of rice hy­brids, we can pro­duce palay at per kilo­gram or less. At this cost of palay plus 35% tar­iff, our do­mes­tic rice will be more than com­pet­i­tive with im­ports from Thai­land and Viet­nam.

We can fur­ther re­duce cost of pro­duc­tion through di­rect seed­ing tech­nol­ogy, use of me­chan­i­cal rice trans­planters and de­ploy­ment of grain com­bines.

The rain­fed low­lands may still grow rice dur­ing the rainy sea­son when the pad­dies are par­tially flooded any­way. But af­ter the first crop, they should switch to other higher val­ued crops like veg­eta­bles, legumes, fruits and even or­na­men­tals. DA and DTI should work to­gether to help ar­range mar­kets for these pro­duce. These di­ver­si­fied farms may turn out to be more prof­itable than the dou­ble­cropped rice farms.

The diver­sion of rain­fed low­lands and up­lands to other crops will re­duce our na­tional rice out­put. Thus, the need for re­cur­ring rice im­ports. How­ever, the fore­gone in­come from rice will be more than ad­e­quately made up for from the added value from the other crops.

A key fac­tor of agri­cul­tural pro­duc­tiv­ity is avail­abil­ity of wa­ter. We should there­fore con­tinue in­vest­ing in dams, large and small, to in­crease yields and, as im­por­tantly, to dou­ble/triple the ef­fec­tive har­vested area by rais­ing crop­ping in­ten­sity.

We need to har­vest as much rain­fall as we can and pro­tect our wa­ter­sheds for wa­ter se­cu­rity. Large dams in ad­di­tion to help­ing recharge aquifers pro­vide do­mes­tic wa­ter for ur­ban set­tle­ments, ir­ri­ga­tion for agri­cul­ture, and gen­er­ate re­new­able en­ergy. But in the next five years, tac­ti­cally, we should in­vest more in small ir­ri­ga­tion sys­tems (shal­low tube wells and farm–level reser­voirs). The small ir­ri­ga­tion units should be em­bed­ded in the large ir­ri­ga­tion sys­tems to raise wa­ter use ef­fi­ciency as well as in the rain­fed low­lands and up­lands for mul­ti­ple crop­ping. The Na­tional Ir­ri­ga­tion Ad­min­is­tra­tion (NIA) and the Bu­reau of Soils and Wa­ter Man­age­ment (BSWM) should work closely to­gether and be or­ga­ni­za­tion­ally at­tached to the Depart­ment of Agri­cul­ture (DA) for bet­ter su­per­vi­sion and co­or­di­na­tion.

We still need a na­tional agency to keep our na­tional buf­fer stock in case of se­ri­ous global dis­rup­tion of grain sup­plies. This is un­likely but we should be ready. How­ever more real and im­me­di­ate is the need for emer­gency food relief af­ter calami­ties.

All we have to do is amend the char­ter of NFA, re­liev­ing it of the con­flict­ing, im­pos­si­ble tasks of sup­port­ing palay farm gate price to raise in­come of farm­ers ver­sus low­er­ing price of rice to make rice af­ford­able to all Filipinos. In­stead NFA should fo­cus on keep­ing our buf­fer stock and strate­gi­cally po­si­tion­ing sup­plies all over the coun­try for quick food distri­bu­tion af­ter calami­ties.

NFA can be re-en­gi­neered to be­come a lo­gis­tics provider to the na­tional and lo­cal gov­ern­ments. With its many ware­houses, rice and corn mills, buy­ing sta­tions, and ex­ten­sive rice distri­bu­tion net­works, NFA will be a for­mi­da­ble (and prof­itable) lo­gis­tics govern­ment–owned–con­trolled cor­po­ra­tion.

Fi­nally, rice tar­if­fi­ca­tion and lift­ing of quan­ti­ta­tive re­stric­tion on im­ports are the right cour­ses in the long term. But they have im­me­di­ate ad­verse con­se­quences to the rice farm­ers — loss of in­come from lower farm gate prices of palay. Un­for­tu­nately, the two-way tech­no­log­i­cal so­lu­tion de­scribed above will take a while to im­ple­ment.

It is un­fair that the full bur­den of mar­ket lib­er­al­iza­tion will be borne by farm­ers who are al­ready poor as they are. How­ever, the usual ap­proaches of free distri­bu­tion of pro­duc­tion in­puts and price sup­port for palay have not worked be­fore and we see no rea­son why they will work now.

Hence, our pro­posal to ex­plore di­rect pay­ments to farm­ers based on area ac­tu­ally farmed as re­flected in land ti­tles and tax de­duc­tions for a fixed pe­riod, of say, ten years. The sub­si­dies can be sourced from the tar­iffs col­lected from im­ported rice which can amount to bil­lion a year by 2022 based from stud­ies by the Na­tional Eco­nomic and De­vel­op­ment Au­thor­ity (NEDA)-at­tached Philip­pine In­sti­tute of De­vel­op­men­tal Stud­ies.

***** Dr. Emil Q. Javier is a Mem­ber of the Na­tional Academy of Sci­ence and Tech­nol­ogy (NAST) and also Chair of the Coali­tion for Agri­cul­ture Mod­ern­iza­tion in the Philip­pines (CAMP).

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