The Philippine Star

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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