No Free Lunch

Reinventing the rice policy

THERE’S SO much more to our rice policy than the rice industry itself. What we have persisting to the present harms not only consumers and the rest of our agriculture, but the industry and services sector along with it as well. And that means the entire economy.

What’s this rice policy I refer to? It’s much more complex than meets the eye, but stripped to the bone, it’s everything we do that ultimately makes rice so much more expensive to Filipinos than it is to our Southeast Asian neighbors. This traces largely to how we restrict rice imports (which we can’t even do right as large amounts consistently get smuggled in, anyway) by putting imports under the strict control of the National Food Authority—all in the name of pursuing rice self-sufficiency. While this would seem a noble objective, it’s not only impractical but even harmful to us Filipinos at this time.


I must say at the outset that I have no doubt we can attain full rice self-sufficiency. The scientists have always been right: We can produce all the rice we need if we “do it right”—i.e., use the right combination of hybrid seeds, fertilization, irrigation and crop care. The question is whether we should pursue it the way we’ve been doing, keeping it more inaccessible (translation: unaffordable) to poor and food-insecure Filipinos than it needs to be. For sure, we can even produce well beyond our needs. But if we do, could we even export it without losing money on it, given international prices? Here’s where we need to listen to the economists and social scientists, too, because it’s not just about production. It’s about productivity, incomes and prices. As one writer recently put it, “[of] what use is a bumper stock if our people cannot afford it?”

Consider these facts: Thailand has 11 million hectares of rice land to feed 66 million Thais. Vietnam has 7.5 million hectares to feed 90 million Vietnamese. But we only have 4.5 million hectares to feed 102 million Filipinos. Thailand and Vietnam have the Mekong River naturally irrigating their rice areas and permitting up to three crops a year. The Philippines (like Indonesia, the other major rice-importing country in the neighborhood) is an archipelago with no massive rivers running through it—and 20 or so typhoons hitting it every year. Our own river systems, like the Pampanga River and Cagayan River, irrigate our best rice lands in Central and Northern Luzon, but these are puny in comparison to the great Mekong River that runs across six countries. Any surprise that the two are the biggest rice exporters in Southeast Asia, while we and Indonesia are the top importers? That’s why Malaysia never aspired to produce all the rice it needs, and put its money in things Malaysian farmers could get rich with—so they could buy whatever rice they need to make up for what they can’t competitively produce.


The only way for us to go, then, is to achieve much higher productivity, at comparable cost, with emphasis on the latter. Otherwise, it makes no sense to insist on supplying all our rice needs if it means restricting imports, forcing ourselves to pay up to twice what we otherwise would, just so the domestic price will allow the “average rice farmer” to recover his costs. What harm has this longstanding policy brought us? Plenty.

It keeps more Filipinos than necessary below the poverty line, as rice alone is the single biggest item in the average poor Filipino family’s budget (20-25 percent, studies say). When the official poverty rate went up again in 2014 to 25.8 percent, from 24.6 percent in 2013 (an additional 1.2 million poor), then Socioeconomic Planning Secretary Arsi Balisacan traced it, not to falling incomes, but to higher rice prices. It leads us to give higher and less competitive wages so that our workers could afford our primary “wage good,” rice. It makes it harder in turn for us to attract more job-creating domestic or foreign investments, labor costs being higher than what they could otherwise be. Hence, we continue to have 2.5 million jobless workers, even as millions have left to seek their fortunes overseas, away from their families. Meanwhile, it renders too many Filipinos food-insecure, making our malnutrition rate twice as high as in our comparable neighbors. In turn, this affects our children’s educational outcomes, ultimately leading to an inferior human resource pool with lower productivity. And there’s much more. In sum, the effects are much more far-reaching than meets the eye, hurting the whole Filipino economy and society—all because of our distortive rice policy.

What do we do, then? Open up the floodgates to rice imports and forget about producing rice? Of course not! We do have many rice farmers whose productivity and costs allow them to compete even at international prices. But we must strive to have many more, and that’s precisely what the government ought to be pursuing and targeting, not simply to produce more rice at all costs. The fact is, we only have until 2017 before we must open up rice trade and shift to import tariffs as our mode of protecting rice farmers. We are the last holdout still restricting rice imports, and are on the third and final extension on this from the World Trade Organization.

Meanwhile, we managed to set the highest rice import tariff of 35 percent in the Asean Economic Community, which takes effect once we open up. Agriculture Secretary Manny Piñol’s mission, then, is to make sure that by 2018, our rice farmers can compete at a price 35 percent higher than the import price. But we must eventually remove that 35-percent penalty on Filipino rice consumers, especially on our poor, as well—so the homework would not end there.

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TAGS: Agri, agriculture, National Food Authority, NFA, opinion, rice
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