Dan­gers in re­mov­ing rice im­port re­stric­tions


The multi-bil­lion-peso rice in­dus­try is a ma­jor source of em­ploy­ment, in­come and nu­tri­tion for Filipinos. It con­sists of some 2.5 mil­lion small farm­ers plus sev­eral hun­dred thou­sand farm la­bor­ers and oth­ers en­gaged in the sup­ply of farm in­puts and ma­chin­ery, milling/ pro­cess­ing, ware­hous­ing, trans­port, other ser­vices and re­lated eco­nomic ac­tiv­i­ties. All in all, close to 20 mil­lion in­di­vid­u­als, or around one-fifth of our pop­u­la­tion, de­pend di­rectly or in­di­rectly on the in­dus­try.

Dur­ing the pres­i­den­tial cam­paign, then Mayor Ro­drigo Duterte promised to achieve self-suf­fi­ciency in do­mes­tic rice pro­duc­tion within two years of his pres­i­dency. This com­mit­ment has been re­it­er­ated by Agri­cul­ture Sec­re­tary Em­manuel Pi­nol, who has also ad­vo­cated the com­ple­men­tary pol­icy of ex­tend­ing the quan­ti­ta­tive re­stric­tion (QR) on rice im­por­ta­tions. Lately, how­ever, Na­tional Eco­nomic and De­vel­op­ment Au­thor­ity Di­rec­tor-Gen­eral Ernesto Per­nia and sev­eral other eco­nomic ad­vis­ers of the Pres­i­dent have rec­om­mended the lift­ing of the QR, which action will un­der­mine Pres­i­dent Duterte’s pledge of rice self­suf­fi­ciency.

The pro­po­nents of re­mov­ing the rice QR claim that Filipino con­sumers will ben­e­fit be­cause, even with a pro­posed tar­iff rate of 35 per­cent, cheap rice im­ported from Viet­nam and Thai­land can be sold at prices lower than those of lo­cally pro­duced rice.

Rice trade dereg­u­la­tion, how­ever, will cause a drop in the in­comes of all rice farm­ers. About 60 per­cent, or 1.5 mil­lion farm­ers, whose pro­duc­tion costs ex­ceed their Viet­namese or Thai coun­ter­parts’, will face se­vere cuts in in­come. For the 550,000 who are ex­pected to be dis­placed al­to­gether, they will find the cheap im­ported rice un­af­ford­able! At present, it re­mains un­clear what re­al­is­tic sup­port/ad­just­ment mea­sures will be ex­tended by the cur­rent ad­min­is­tra­tion to af­fected farm­ers and other stake­hold­ers in the rice in­dus­try.

The much bal­ly­hooed boon for con­sumers may turn out to be tem­po­rary, min­i­mal and un­sus­tain­able. Re­cent stud­ies by the NEDA’s Philip­pine In­sti­tute of De­vel­op­ment Stud­ies and in­de­pen­dent economists like Manuel F. Montes es­ti­mate that, with the fi­nan­cial in­cen­tives of bring­ing in cheap rice and the re­sul­tant re­duced pro­duc­tion of the sta­ple lo­cally, Philip­pine rice im­ports may bal­loon to four to five mil­lion met­ric tons an­nu­ally. His­tor­i­cally, the coun­try’s

largest im­port vol­ume in a sin­gle year has been two mil­lion tons. With our limited port, stor­age and ship­ping/trans­porta­tion fa­cil­i­ties, it is doubt­ful if we can han­dle im­por­ta­tions of dou­ble this mag­ni­tude.

Given the ex­tremely limited amount of rice traded glob­ally, Filipino con­sumers will be at the mercy of the profit-max­i­miz­ing spec­u­la­tors in ex­port­ing coun­tries and their coun­ter­parts in the Philip­pines. It may be re­called that, in 2007-2008, the in­ter­na­tional price of rice sky­rock­eted from $300 to $1,200 per met­ric ton, and do­mes­tic re­tail prices in im­port­ing na­tions jumped by al­most 100 per­cent. This was due to short­fall in sup­ply, mar­ket spec­u­la­tions, “panic buy­ing” by im­port­ing coun­tries and im­port re­stric­tions im­posed by ma­jor ex­porters like In­dia, Viet­nam and Thai­land which wanted to se­cure ad­e­quate sup­plies for their lo­cal pop­u­la­tions first.

Re­liance on ex­ter­nal sources of rice should also take into ac­count the ad­verse ef­fects of cli­mate change and more fre­quent, more se­vere and more un­pre­dictable weather events on food se­cu­rity. The In­ter­na­tional Food Pol­icy Re­search In­sti­tute, re­port­ing on the “Im­pacts of Cli­mate Change in Agri­cul­ture,” es­ti­mates that rice prices will in­crease by 32-37 per­cent, yield losses in rice will be 10-15 per­cent, and 20 mil­lion hectares of the world’s rice grow­ing area will be at risk, par­tic­u­larly Bangladesh, In­dia and Viet­nam (the last two be­ing ma­jor ex­porters to the Philip­pines).

In light of the above, we must im­ple­ment im­me­di­ately the nec­es­sary poli­cies and pro­grams (on tech­nolo­gies, prac­tices, mar­kets) that will im­prove the pro­duc­tiv­ity and com­pet­i­tive­ness of our rice farm­ers and their in­dus­try. These mea­sures can also pro­vide fea­si­ble choices to farm­ers in the con­text of an in­clu­sive mar­ket-ori­ented agri­cul­ture that pro­motes crop di­ver­si­fi­ca­tion and prod­uct de­vel­op­ment.

As we seek to en­hance our farm­ers’ ca­pac­ity to meet our do­mes­tic re­quire­ments for rice, we should strike a bal­ance be­tween en­sur­ing de­cent in­come and liveli­hood for our farm­ers and con­sumers’ need for af­ford­able, safe and read­ily available food. A “win-win” out­come to the chal­lenge of se­cu­rity in food in gen­eral and rice in par­tic­u­lar will de­mand well thought out, com­pre­hen­sive and dy­namic so­lu­tions that go beyond the mere text­book ap­pli­ca­tion of the­o­ries of “com­par­a­tive ad­van­tage” and “free trade.”

( Montemayor, pres­i­dent of the Fed­er­a­tion of Free Farm­ers, served as Sec­re­tary of Agri­cul­ture in 2001-2002. Dar, pres­i­dent of the InangLupa Move­ment, was Sec­re­tary of Agri­cul­ture in 1998-1999. Torres, pres­i­dent of the Trade Union Congress of the Philip­pines, was Sec­re­tary of La­bor in 1990-1992 and Ex­ec­u­tive Sec­re­tary in 1995-1998.)

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