Finding solutions to the impending rice crisis

TO ensure a steady supply of rice for Filipinos and avert a rice crisis, President Gloria Macapagal-Arroyo issued an executive order last Tuesday authorizing the release of P5 billion in subsidies to rice farmers. Supposedly the biggest monetary support ever to be provided to food producers, this, experts however say, is a “mere drop in the bucket” given the magnitude of the agricultural crisis the country is facing.

“Five billion is five billion, but it’s a small amount to (be able to) fully address the problem,” says Dr. Teodoro Mendoza, a crop science professor at the University of the Philippines in Los Baños. Filipinos, Mendoza says, consume about 11.9 million metric tons of rice every year but the decline in domestic production and the flawed rice trading system have created a 10-percent shortfall. As such, Arroyo’s move, he adds, has long been overdue.

The bulk of the P5-billion subsidy is reportedly to be channeled by the Department of Agriculture for the irrigation of rice lands to boost production and stabilize supply and cost.

The World Bank, however, recently discouraged the idea of giving subsidy grants to farmers, saying that such a policy is “fiscally ruinous” as it estimated its cost to the government at an average of 1.6 percent of GDP (gross domestic product) in 2000 to 2005. The Bank instead urged the government to reduce the tariff on imported rice.

Mendoza though cannot find any logic in the World Bank’s position unless, he says, the lending institution sees the P5-billion subsidy to farmers as a setback in the government’s efforts to settle its loan obligations with it.

“It’s unfair because other neighboring Asian countries get support from their respective states,” says Mendoza. “The cost of farm inputs has gone up and without any compensation, it would be very difficult to motivate farmers to produce more rice.”

Even Senate Minority Leader Aquilino Pimentel Jr. has questioned the World Bank’s stance, explaining that state subsidies to farmers have greatly helped the United States and other countries attain high production in rice, wheat, and other agricultural products that they export to other countries.

For an agricultural country like the Philippines to experience shortage in agricultural crops is indeed quite an irony. But for years now, the government has been purchasing more than one million metric tons from other countries, making the Philippines the world’s biggest rice importer — a far cry from when it used to be Asia’s top rice-producing country. Last year, Philippine rice imports reached 2.1 million metric tons.

In the main, however, the solution undertaken by the government has been a continued heavy reliance on rice importation. But this is also turning out to be worrisome as a lot of rice-producing countries have recently opted to either ban or limit their rice exports to ensure that they can meet their own domestic need. Such restrictions were reported to have removed a third of the rice traded in the international market.

The curb in imports and the dwindling domestic rice production have in turn been causing the dramatic increase of commodity prices. The price of rice is projected to shoot up especially during the lean months of July, August, and September this year, and may even go between P50 and P60 per kilo once imported rice reaches $1,000 per metric ton and world oil price is pegged at $150 per barrel.

UP School of Labor and Industrial Relations (SOLAIR) Dean Dr. Jorge Sibal insists though that two regions alone dedicated to rice farming, and with the right technology, would be enough to feed the whole nation.

To be sure, science is only half the solution to the rice problem. As former National Economic and Development Authority (NEDA) chief Cielito Habito points out in his latest Inquirer column, “(d)eclining productivity has as much been the result of an institutional environment that gave little incentive nor capability for farmers to invest in productivity improvements.”

Besides the lack of government subsidies, Habito says what further aggravates the situation of Filipino farmers are the fact that they continue to receive farm gate prices that are hardly remunerative, even as rice cartels are also lording over rice trading. “And with farm credit continuing to be dominated by usurious informal lenders and traders themselves, farmers have little capability to spend for productivity enhancements even if they were available,” he says.

At the policy level, incoherence is what Dr. Rene Ofreneo of the Fair Trade Alliance is blaming as subverting efforts to develop the country’s capacity to be self-sufficient in rice and other agricultural crops. A former dean of UP SOLAIR, Ofreneo cites policies pushing for massive land conversion and trade liberalization as having caused the current state of food insecurity.

“The multi-dimensional nature of the crisis in the agriculture sector requires multi-pronged development interventions, which include reforms, job creation, and food programs for both the urban and rural poor to achieve genuine food security,” he adds.

Over the longer term, Habito brings up the need to come up with new approaches to the “age-old failures in the basics like irrigation, farm credit, and addressing the uncompetitive elements in the rice trading system.”