Fields of agony
Rice farmers already consistently rank among the poorest in the country, and they stand to get even poorer because of the downward spiral in palay prices — a consequence of the deluge of imported rice ushered in by the “game-changing” rice tariffication law.
Signed by President Duterte in February this year, Republic Act No. 11203 or the Rice Tariffication Act opened wide the country’s doors to the unimpeded importation of rice.
That meant no more government import monopoly through the graft-ridden National Food Authority (NFA), which has since been limited to procuring rice for buffer stocking.
The impact of the shift in import policy on the heavily burdened rice farmers has been swift and painful.
Data from the Philippine Statistics Authority (PSA) showed that palay prices have been falling consistently since the law took effect. In the second week of August, the national average farmgate price of palay dropped to P17.62 a kilogram, a 20.9-percent slide from P22.28/kg in the same week last year.
The farmers’ profit margin has thus been cut by around half, forcing them to earn just P5 for every kilo of the staple sold, from P10 last year; it costs about P12 to produce a kilo of palay, compared to just P6 a kilo in Thailand and Vietnam.
And what does a profit of P5 a kilo mean? Barely enough for survival. According to Raul Montemayor, president of the Federation of Free Farmers Cooperatives, a farmer with 1 hectare will earn a mere P111 a day, based on the national average of 4,000 kilos’ output per hectare per season for irrigated farms.
At these falling rates since import liberalization in March, rice farmers have less incentive to plant the staple, contributing to “substantial cutbacks” in rice production and yield in the second quarter.
Not surprisingly, the PSA’s palay and corn quarterly bulletin from April to June showed that total palay output dipped by 5.8 percent to 3.85 million metric tons from 4.1 million MT last year. More worrisome, the total area planted to rice shrank by close to 2 percent.
Yield likewise declined by 4 percent to 4.21 MT a hectare from 4.38 MT in the same period last year, further reducing the country’s ability to locally produce enough rice to feed its people.
Economic managers and technocrats have touted the rice tariffication law as something of a magic bullet that would, according to Finance Secretary Carlos Dominguez III, “make quality rice more affordable and accessible to Filipino families.”
But the numbers so far show a vastly different picture.
While prices of palay have gone down dramatically, retail prices of well-milled rice have not budged as much. Retail prices in the second week of August down just 7.3 percent to P42.71/kg from P46.06/kg last year. Week on week, retail prices even bafflingly went up from P42.59/kg.
Clearly, some are profiting from the vast price differential, and it’s unfortunately not the farmers, who have been criminally neglected over decades. “It is the trader who is making profit at the expense of both the farmer and the consumer,” lamented Alyansa Agrikultura chair Ernesto Ordoñez.
The rice tariffication law, enacted as the government was hard-pressed to respond to spiking rice prices last year that accelerated inflation to nine-year highs, does provide safety nets such as the Rice Competitiveness Enhancement Fund (RCEF), sourced from the Bureau of Customs’ collection of the minimum 35-percent tariff on rice imports by private traders.
However, government officials admit that the programs to protect the farmers, such as input subsidies to lower production cost and increase yield to the tune of P10 billion a year, would only kick into gear in the first quarter of 2020, and even then, the benefits would be felt much later.
The price shock on the farmers has been immediate, however, and they are desperately crying out for help.
The government is sticking to its stance that the new rice policy is ultimately for the benefit of the industry and the public, and should be given enough time to bring about its desired benefits.
“For the long haul, the RCEF facility under RA 11203 will help sharpen the global competitiveness of our farmers by way of an array of programs providing them with access to farm machinery and equipment, high-yield seeds, cheap credit and skills training programs on farm mechanization and modern farming techniques,” said Dominguez.
Perhaps all of that would happen. But at this point, the farmers need immediate aid. They face appalling hunger, displacement and loss of livelihood. They cannot afford to wait for the law’s silver lining, when they are on the brink of extinction today.
