The maldistribution of rice

Though I rarely mention being a one-time rice economist, I put it in my biodata this week for a seminar at the International Rice Research Institute (Irri), on “The most rapid survey-based tracking of hunger and poverty in the world.” The title is an assertion I have made about the SWS surveys many times, here and abroad, that has never been challenged.

(In 1964, I was sent from the University of the Philippines faculty to Irri, for a UP master’s on “The response of Philippine rice farmers to price.”  By 1970, I had a University of Chicago PhD, by writing on “The diffusion of new varieties of rice in Central Luzon.” Later, I was consultant of Rafael “Paeng” Salas when he was Ferdinand Marcos’ “rice czar,” and of the Rice and Corn Administration, the forerunner of the National Food Authority.)

Subjective measurement.  At the Irri seminar, I touted household surveys using subjective measurement as the most practical way to track hunger and poverty. SWS has demonstrated this in national surveys for nearly three decades now, surveying poverty twice a year in 1986-1991, and then quarterly since 1992; it has surveyed hunger quarterly since 1998. Quarterly surveying synchronizes the tracking of economic deprivation with that of economic growth.

The SWS survey series discovered, and publicly reported, the noninclusivity of Philippine economic growth much earlier than the official surveys of poverty, done only every three years. It found poverty and hunger much more volatile than the official surveys could have anticipated. It discovered that, whereas hunger and poverty are correlated across individuals at any point in time, their relationship is not fixed across time, making it possible for the poverty incidence and the hunger incidence to occasionally move in opposite directions.

Hunger amid “unli” rice? Last Thursday, I was surprised to hear Dr. Bruce Tolentino, Irri deputy director general for communication, cite 120 kg of rice (bigas) as the annual per capita consumption of Filipinos. This is a huge amount, the world average being only 65 kg. I remember average Filipino consumption being between 80 and 100 kg.

Assuming the 120 kg per person is correct—since I am wary of official statistics—the only way for it to jibe with the SWS finding of a “hunger plateau” of 17 to 19 percent since 2007 would be if there was an extremely wide gap between the consumption rates of hungry families and nonhungry ones.

For some to go hungry, while others eat “unli,” shows a very serious maldistribution of rice. It is yet another manifestation of the great economic disparities in our country.

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Position of the Foundation for Economic Freedom against the National Food Authority.  Ever since I can remember, the economics profession in the Philippines has been strongly opposed to the government’s monopoly power over international trade in rice. I support the following statement from the Foundation for Economic Freedom (www.fef.org.ph), of which I am a cofounder:

“To improve the welfare of consumers, to foster agricultural growth, to reduce graft and corruption and truly implement ‘Daang Matuwid,’ we, the Foundation for Economic Freedom, ask the government to abandon its costly, impractical, and discredited ‘rice self-sufficiency’ policy, abolish import quotas on rice and adhere to the country’s commitments to the World Trade Organization, stop the National Food Authority’s monopoly on rice importation, and desist from subsidizing the losses of NFA from the pockets of consumers.

“The government has failed to achieve its much ballyhooed target of rice self-sufficiency in 2013.  NFA is scheduled to import some 1,000,000 metric tons of rice this year, a blatant admission of the failure of the government’s rice self-sufficiency policy.  Instead, the demands of the market have been met by smuggled rice, which deprives the government of much-needed tax revenues, and imports by favored dealers of the [NFA], leading to suspicions of graft and corruption.

“Moreover, the government’s continued reliance on import quotas to attain declared rice self-sufficiency has led to escalating prices of rice, which has made the rice staple less affordable to millions of poor Filipinos. Dean of the UP School of Economics and agricultural economist Ramon Clarete estimates that domestic price of rice is about 40 percent higher than imported rice, a huge penalty being paid for by consumers.

“By resorting to import quotas for rice, the government is violating its commitments to the World Trade Organization, a view shared by the Department of Justice. The country risks being penalized by the WTO, which adds to the high costs of maintaining quantitative restrictions in rice importation.

“We in the Foundation for Economic Freedom believe that we should focus on income and food security and not rice self-sufficiency. We can achieve food security through trade, just as Malaysia has done. Instead of government incurring huge losses in subsidizing NFA, it should channel the funds to rural infrastructure or increased budgets for agricultural research and development.

“The rice that NFA also imports do not find their way to the poor, but are being channeled by favored enterprising importers to the commercial market.  NFA losses are an inefficient way to help the poor.

“Since NFA’s decisions to import are arbitrary, these decisions to import rice end up hurting our rice farmers, who can’t guess when they should plant more or less rice.”

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