First steps in building consensus for a new rice sector road map

  • 3 November 2018

Source: Manila Bulletin
3 Nov 2018

Rising inflation had been very much in the news lately, with a marked increase in the retail price of rice often cited as one of the major culprits. Indeed, our rice sector has a long way to go to produce enough to meet our national requirement at a cost competitive with imports.

However, in fairness to the Department of Agriculture (DA), our national rice production had been increasing steadily during the last 50 years (1968–2018) at a respectable rate of 3.18%. In fact, our average palay yield is higher than that of Thailand from whom we import rice. But Thailand has three times more riceland and 30 million less people to feed.

Still and all that growth rate in rice production while commendable was not enough to match our population growth and increasing per capita consumption that goes with increasing income Thus, during the last two years, our rice self-sufficiency score is only 91%.

For so long our domestic rice sector has been shielded from foreign competition with restrictions on volume of rice that may be imported. That protection had been costly as manifested by the much higher price of rice Filipino consumers had to bear.

That cost is reflected as well in the huge losses incurred by the National Food Authority (NFA), the national agency tasked with providing price support to increase income of the producers while selling rice at a loss to make rice affordable to the poor.

With the lapse of the exception granted to the Philippines regarding quantitative restrictions (QRs) on rice imports, we have no choice now but to make good on the liberal market conditions we have voluntarily acceded to when we joined the World Trade Organization (WTO) i.e. lifting QRs but imposing reasonable tariffs.

Thus, the imperative for a new rice industry road map to take into account the new market circumstances.

Last Tuesday, we had the opportunity to take a first look at the new rice industry road map drafted by a DA multi-agency panel tasked by DA Secretary Emmanuel Piñol and chaired by Flordeliza Bordey of the Philippine Rice Research Institute (PhilRice).

The presentation was made at a policy forum convened by the Asia Rice Foundation, Inc. (ARF), the Philippine Council for Agriculture, Aquatic and Natural Resources Research and Development (PCAARRD-DOST) and the Coalition for Agriculture Modernization in the Philippines (CAMP) to get an immediate feedback from stakeholders from the science community, the operating units of DA itself and a few farmers.

The plan is very much a work in progress and the purpose of the Forum precisely was to harvest comments and recommendations and buy-in to the plan by significant stakeholders.
Here are the significant impressions:

Overwhelming support to road map key targets

A detailed plan is yet to be developed so what was presented was the road map in broad strokes. Basically the draft road map was very well received. There was overwhelming support for the key targets, namely: 1) increasing average yield to six tons per hectare through more use of certified seeds and hybrids, and appropriate level of fertilizers, 2) reducing cost of producing palay to P8–P10 per kilogram, a big part by more mechanization, 3) reducing postharvest losses by 12%, with more drying facilities, 4) reducing marketing margins by P1.00 per kilogram of rice, and 5) assisting rice farmers and farm workers in low priority provinces in the transition to open market.

The fact that the plan was bold enough to express targets in absolute but doable numbers reflected well on the rigor that went into the deliberation of the drafting panel. That the plan was disaggregated into provinces to take into account big differences in growing conditions was also well-received.

Paradigm shift from rice self-sufficiency to raising farmers' incomes

This issue had been the core of the debate all along. To the relief of many, the draft road map without explicitly saying so, proceeds on this premise. The first four technical objectives which address increasing yield and reducing costs will raise farmers' incomes and enable domestic rice to be able to compete with imports.

But the 5th target is revealing. Assisting rice farmers and farmworkers in low priority provinces in transition recognized the fact the farms that are unproductive for rice due to lack of reliable water supply will not be able to compete and are better off cultivating something else. It goes without saying that this diversion of the less productive rice farms will reduce total national output and effectively preclude self-sufficiency.

No to free distribution of production inputs

Another key issue raised was whether the plan involves the free distribution of seeds, fertilizers, and farm equipment to go along with free irrigation. In response it was made clear that Secretary Piñol's intention was to facilitate access of farmers to formal credit with which to acquire the needed production inputs.

This will be achieved by 1) making affordable credit more easily accessible, 2) by expanding insurance coverage to protect farmers from catastrophic losses, and 3) providing more guarantee funds to protect the rural finance institutions and encourage them to lend more. However, this should not rule out the opportunity to assist rice farmers to turn around quickly after typhoons and floods with freely available seeds.

Re-engineering NFA as a logistics service provider

Conspicuously absent in the road map was the absence of mention of what to do with the NFA. However, there was a consensus that abolishing NFA does not make sense. The proper direction is to limit NFA's mandate to 1) maintaining our grain reserves, and 2) emergency food distribution after calamities. With all its trained people, distribution networks, and physical assets, NFA could be re-engineered into a profitable grains logistics service provider as proposed by former NFA Administrator Romeo David during the forum.

Operational plans and budgets

The crowd in attendance most of whom were operating technical personnel of the DA regional offices and DA agencies as well as senior scientists and administrators from CAMP, PhilRice, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), Philippine Center for Postharvest Development and Mechanization (PhilMech), Philippine Crop Insurance Corporation (PCIC), UP Los Banos and other SUCs were basically supportive of the draft road map. Unfortunately, there were only a few rice farmers from Batangas in attendance.

As the rice road map gets firmed up, collectively, they look forward to getting clarity on the operational plans and exactly how, by whom, when, where, and most importantly, how much it will cost.

Additionally, more forward looking reforms in land markets, basic data gathering, new institutional arrangements and innovative business modalities applicable not just for rice but also for the entire agriculture and fisheries sector were contributed by a distinguished panel which included Lourdes Adriano (ADB), Leo Gonzales (formerly with IRRI and IPPRI), Leocadio Sebastian (former PhilRice executive director), Fermin Adriano (World Bank consultant), Senen Reyes (University of Asia and the Pacific) and Ernesto Ordoñez (Agriculture and Fisheries Alliance).

Provided the DA takes heed, these first steps in building consensus for a new rice road map should prove meaningful.