An expensive bowl of rice

  • 23 May 2014, Friday

Source: Manila Bulletin
23 Mar 2014

The Philippines has always protected its rice farmers against foreign competitors by controlling the volume of rice imports entering the country. And it obtained such special treatment even under the World Trade Organization (WTO) restrictions that liberalized and opened up competitive trade.

The consequence is that Filipinos pay more for their rice than others. Worse, it’s a large contributor to an inefficient industry and rampant corruption.

In 2012, the Philippines produced 18 million metric tons of rice, compared to Thailand’s 37.8 million and Vietnam’s 43.7 million. On a per capita basis, paddy farmers in the Philippines produced roughly 186 kilograms of rice a year (kg/yr), way below their Thai and Vietnamese counterparts, with 566 kg/yr, and 481 kg/yr respectively.

An ongoing comparative study among top rice-producing Asian countries shows that while it costs farmers in Nueva Ecija up to P10.66 to produce a kilo of rice, it only costs P8.84 in Suphan Buri, Thailand, and P5.75 in Can Tho, Vietnam.

Because of the glaring price disparity, smuggling cheaper foreign rice into the Philippines is clearly irresistible. The Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) estimated that up to 961 tons of milled rice, valued at US$393 million, illegally entered the country in 2012.

Vigorous efforts at curbing smuggling should continue. But smuggling is only a symptom of a dysfunctional system. Low productivity remains to be the real cause of our farming woes.

Despite the country’s phenomenal 7.2 percent GDP growth in 2013, the agricultural sector grew only by 1.15 percent last year and by 2.89 percent the year before. In fact, agriculture’s economic contribution has continuously dwindled through the years — from as much as one-third of the economy in 1945 to as little as 11 percent in 2012.

That farm workers are among the least paid underscores how underperforming the sector is, which in 2011, accounted for up to 10.8 million Filipino jobs or one-third of the total workforce. Our farmlands need to produce more and liberate the farmers and fisher folks from perpetual poverty.

Government ramped up the budget of the DA from P52.9 billion in 2012 to P68.5 billion this year, allocated across different agencies to support projects under the Agriculture and Fisheries Modernization Act (AFMA) — including farm-to-market roads, post-harvest facilities, agricultural financing and irrigation projects.

That’s commendable. Spending however should be targeted and more support directed towards research and development (R&D) and mechanization. Utilizing new technologies and high-yielding and climate-resilient planting materials is paramount.

As public attention is focused on rice smuggling and the extension of quantitative restrictions, the spotlight might turn away from the more important issue — the productivity of our farmers. Policy concerns maybe overly paid to the consequence, and not the real cause of the malaise.

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Source: Manila Bulletin
23 Mar 2014