Unrestricted rice imports to kill small farmers, says rice miller

  • 1 September 2015, Tuesday

Source: InterAksyon
30 Aug 2015

SANTIAGO CITY -- Filipino farmers who cultivate one hectare of land to produce palay will go hungry once the quantitative restrictions (QRs) on rice imports are scrapped, rice miller Herculano “Joji” Co said.

He said the first task of any government is to ensure that its population is fed and fed well but this will not be the case when QRs are eliminated and all exporting countries are allowed to bring in rice.

However, Co warned government not to scuttle the QR as the usual smugglers would bring in their rice in sacks that purport to come from Isabela, Nueva Ecija, the Mindoro provinces, and other rice-growing areas to avoid payment of tariffs.

In one particularly strange instance, Co recalled the case of a Vietnamese vessel bringing in rice sacks purportedly from Isabela rice mills to a port in Mindanao at a time when foreign ships are barred from transporting local products to any domestic destination.

When government economists claim that farmers would gain from the 40 percent tariff to be imposed on imports exceeding the minimum access volume (MAV) for rice, he argued that they are actually saying farmers should not complain since they will have more government subsidy in cultivating high-value crops (HVCs.)

However, HVCs are not staple crops and forcing farmers to disengage from rice culture is like telling them to adjust to a kind of life that is bereft of palay at the storehouse or the pantry.

The longtime president of the Philippine Confederation of Grains Associations (Philcongrains), Co had been pushing not only for self-sufficiency in rice but also for the modernization of the rice milling industry to reduce post-harvest losses.

He pointed out that the annual rice deficit projection of the Department of Agriculture (DA) is pegged at 10 percent, whether the rice sufficiency level is 82 percent, as in 2010, or 98 percent in 2014 as the DA claimed.

When the National Food Authority (NFA) secured 800,000 metric tons (MT) of foreign rice in 2014 but 2 million MT (MMT) more came in via smuggling, the total volume is 17 percent of the total output, thus exceeding the deficit level of 1.844 MMT.

At that import level, the Kilusang Magbubukid ng Pilipinas (KMP) claimed, Filipino farmers lost 956,000 MT of their milled rice to the cheaper smuggled grain from Vietnam and elsewhere.

Liberalization led to more smuggling

Worse, when rice imports were liberalized as the country acceded to the General Agreement on Tariff and Trade (GATT) in 1995 that led to the establishment of the World Trade Organization (WTO), rice smuggling actually skyrocketed.

A study conducted by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (Searca), which was funded by the Department of Agriculture-Bureau of Agricultural Research (DA-BAR) and carried out with the help of University of the Philippines Los Baños (UPLB) experts Dr. Prudenciano Gordoncillo (team leader), Dr. Cesar Quicoy, Prof. Julieta delos Reyes, and Dr. Arvin Vista, showed that smugglers have never had it so good since 1995 and until now.

“We hope that the study’s findings and recommendations will serve as a useful guide for instituting policy reforms toward stringent regulations and remedial options to address this important problem,” Searca Director Dr. Gil C. Saguiguit Jr. said as he released the study findings.

Volume of rice smuggling since 1986

From 1986 onwards, the volumes of smuggled rice, based on local and foreign official documents, are:

  • 1,195 metric tons (MT) in 1986
  • 1,264 MT in 1987
  • 30,988 MT in 1988
  • 71,854 MT in 1989
  • 46,826 MT in 1990
  • 91,333 MT in 1991
  • 456 MT in 1992
  • 26,005 MT in 1993
  • 146 MT in 1994
  • 25,068 MT in 1995
  • 571,417 MT in 1996
  • 271,172 MT in 1997
  • 565,418 MT in 1998
  • 554,133 MT in 1999
  • 41,647 MT in 2000
  • 256,657 MT in 2001
  • 207,600 MT in 2002
  • 110,268 MT in 2003
  • 410,078 MT in 2004
  • 698,575 MT in 2005
  • 50,156 MT in 2006
  • 136,232 MT in 2007
  • 46,039 MT in 2008
  • 126,019 MT in 2009

All told, the smuggled rice shipments totaled 4,349,546 MT from 1986 to 2009, for an annual average of 181,231 MT.

The increase in revenues envisioned by the National Economic Development Authority (NEDA) due to the dismantling of QRs would not come to pass “since smugglers would operate with impunity and commit their crime using the policy recommendations of NEDA economists, the World Bank (WB), and the Asian Development Bank (ADB),” Co said.

“Just think of this: Between 70 percent and 75 percent of poor Filipinos live in the rural areas, mainly farmers and fishermen, according to a study conducted by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (Searca). 42 percent of fisherfolk are dirt poor, and 28 percent of the entire Philippine population are poor. Farming also provides employment to 40 percent of the labor force. Take out the rice industry from the equation due to trade liberalization and the dismantling of tariff barriers and what do you have?” Co asked.

Discouraging farmers

Each day, a farmer earns about P250 compared to the minimum wage of P481 in the National Capital Region (NCR) and discouraging rice cultivation would necessarily create a stream of jobseekers from the countryside to the cities, he warned.

He stressed that as an agricultural country, the Philippines has to produce rice, which is the staple of 90 percent of the entire population, “and we are not like Pakistan, which produces but is mainly a bread-eating country and can have the luxury of exporting bigger volumes of rice.”

Quoting the recent study written by a Searca team led by the late Minda C. Mangabat of the Bureau of Agricultural Statistics (BAS), now a bureau under the Philippine Statistics Authority (PSA), Eduardo B. Sanguyo of BAS and Mercedita A. Sombilla of the National Economic Development Authority (NEDA), Co explained that the rice industry contributed 20.26 percent of the gross value added (GVA) of agriculture.

In their study “Productivity in the Rice Sector in Philippine Agriculture,” the Mangabat team said “rice has been consistently the major temporary crop of the country, accounting for about 2.2 million farms with a combined area of 3.8 million hectares (ha) in 2002. This crop accounted for 44.6 percent of the total farms in the country, whereas the farm area shared 39.4 percent of the country’s total agricultural area.”

Saguiguit said the monograph, part of the series Productivity Growth in Philippine Agriculture (PGPA), was aimed at analyzing the contribution of the rice sector and recommending policies that could improve technical efficiency as well as improve the output through the maximized use of all factors of production in rice culture.

The farm sector, BAS said in 2012, employed 12 million people or 33 percent of the entire labor force.

While the sector contributed about 11 percent to the country’s gross domestic product (GDP) of $14.7 billion in 2011, government investment in the sector was only 4 percent of the national budget, Co said. 

In that year, overall public spending on agriculture was about $1.6 billion, almost 24 percent lower than in 2010, and this shows just how meager the share of farming in aggregate public investment is, Co noted.

“Thus, you can see that the NEDA claim about the bias for rice production is founded on shaky ground. Its claim about pampering rice farmers is out of whack. In the entire solar system, it is only in the Philippines where rice farmers are assessed irrigation fees. What nature gives to farmers to feed the country’s population is taxed by the Aquino administration and some NEDA wise guys even believe that irrigation is a subsidy!” Co said.