Making farmers profitable

“DA targets 100 percent rice self-sufficiency in 2 years,” ran the headline of a recent news story. “Oh, no, not again,” I thought to myself, getting a sense of déjà vu. Six years ago, the Department of Agriculture also boldly declared that we will achieve rice self-sufficiency in three years. Since around then, I have been calling attention to paradigm shifts that the DA leadership should consider if it is to be effective. One shift is to refocus its goal from rice self-sufficiency to food security.

“But aren’t they the same thing?” many tend to ask. Well, not quite. The best answer to that question lies in data I wrote about in this space just a few weeks ago (“Boosting our food security,” 4/26/16). The Global Food Security Index (GFSI) had named Singapore as the world’s second most food-secure country in 2015, next to the United States. The GFSI, as explained by the Economist Intelligence Unit that issues it, is built from 28 indicators and “considers the core issues of affordability, availability, and quality and safety across a set of 109 countries.” It ranked Malaysia 34th with a score of 69 out of a possible 100, while Thailand came in 52nd in the rankings, Vietnam 65th, Indonesia 74th, and the Philippines 72nd. Singapore had zero undernourishment, while 5.8 percent of the population was undernourished in Thailand, 5 percent in Malaysia, 8.3 percent in Vietnam, 9.1 percent in Indonesia, and 16.2 in the Philippines. While we ranked higher than Indonesia overall, we’re much worse in terms of access to (i.e., affordability of) food.

Singapore, the second most food-secure worldwide and most food-secure in Asia, imports nearly all (over 90 percent) the food it consumes. Malaysia, second most food-secure in Asean, imports about a third of its total rice requirements. Lower-ranking Thailand and Vietnam, on the other hand, are among the biggest rice exporters in the world. Even within Asean alone, it is evident that food self-sufficiency, or even having exportable surplus, does not necessarily make a country’s people more food-secure. What counts is that people have the ability to obtain food, which means prices and incomes are key.

Former socioeconomic planning secretary Arsi Balisacan, also a former agriculture undersecretary and a top expert on poverty, was branded an “import lover” by self-sufficiency advocates when he pointed out how our dogged pursuit of that goal inadvertently hurts our poor. Secretary Ernie Pernia, the National Economic and Development Authority’s new chief who has health and nutrition among his research interests, may be headed for the same fate. He has written actively on trade openness, and his research findings showing trade openness to be beneficial to economic growth and poverty reduction are bound to put him in the traditional collision course between the Neda and the DA.

Too many people seem to think that when economists argue how openness to trade benefits people in general (including farmers and other producers themselves), they are being less than patriotic, and “putting foreigners above fellow Filipinos.” It’s as if the dichotomy is about self-sufficiency versus dependence on imports. But this is not the idea at all. Even as we cite food-secure Singapore to be importing nearly all of its food requirements, no one is arguing that we should import most of our food needs, particularly rice, for which we do have large areas of suitable lands. The economic argument simply is that we must have more open trade in rice—both inward and outward—so that the price Filipinos pay for the commodity won’t be so much more than what Thais, Vietnamese and other Southeast Asians do. In the long run, our rice industry must be competitive, with productivity comparable with that in rice-exporting countries like Thailand, Vietnam, Cambodia and Myanmar (Burma). This will not happen for as long as we keep shielding our domestic market through the National Food Authority’s import monopoly that is inherently prone to mismanagement and corruption, as many years of experience have consistently shown.

The experience of our manufacturing sector in the 1990s should be instructive. When government deliberately liberalized trade in manufactured products (via simplified and reduced import tariffs), alarmists predicted the death of manufacturing in the country, with dire predictions that we will be reduced to a trading economy. Instead, our manufacturers shaped up and turned into exporters, from being mere domestic-market-oriented producers selling to a highly sheltered but limited market. We can expect the same natural consequence if we move away from the NFA’s import monopoly and let others import rice, but at import tariffs initially set at a level high enough to induce domestic prices that our more productive farmers can live with (and shift less productive farmers to more lucrative crops).

Meanwhile, a corruption-free DA should finally get its act together on productivity support for our rice farms that are well-suited for the crop, with the aim of bringing our costs down toward the Thai and Vietnamese levels. As we do, we can further bring down the import tariff to levels that will make the staple much more affordable to the Filipino poor.

Done this way, rice self-sufficiency may yet be achievable without penalizing our poor rice consumers (including rice farmers themselves). But it will take much more than two years, and I’d advise the DA not to be in a hurry. Finance Secretary Sonny Dominguez, as President Cory Aquino’s agriculture secretary in the late 1980s, actually had it right: It’s not just about production; it’s about productivity and incomes. His mantra then was “Making farmers profitable.”

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