Missing the Point in the Rice Crisis

The root of the problem that led to the rice crisis, rural backwardness, cannot be solved by sporadic solutions and releases of funds. It would necessitate a reversal of the economic programs and priorities of the government.

Vol. VIII, No.9, April 6-12, 2008

Supposedly, if the Arroyo government is to be believed, there is no rice crisis. But last March 19, Pres. Gloria Macapagal-Arroyo approved a P1.5 billion ($35,928,143 at an exchange rate of $1=P41.75) augmentation fund for the Department of Agriculture to boost rice production. Last week, Arroyo approved a P5 billion ($119,760.479) subsidy for rice farmers. And during the recently-concluded food summit April 4, Arroyo outlined a program, which she dubbed as FIELDS, and announced the approval of a P45.5 billion ($1,089,820,359) fund for this purpose. The breakdown is as follows:

Earlier Pres. Arroyo announced a P5 billion subsidy to rice farmers.

If there is no rice crisis, why is there a frantic search for solutions? Why is there a sudden need to allocate funds to boost rice production? If indeed there is a crisis, why did the government act only now? How did we reach this point? Is the government outlining the right solutions?

Agriculture Sec. Arturo Yap said that there is ample supply of rice for the country’s needs up to the first quarter of 2009. But rice prices have already been going up. And the much-touted distribution of cheap rice from the National Food Authority generated long lines. If that is not yet a sign of a rice crisis then, what is?

The problem is that the government defines national food security in terms of supply regardless of the ability of households to buy the rice they need. According to a primer released by the Philippine Rice Research Institute (PRRI) dated September 2006, “a nation could be secure although households particularly those with low income have nothing to eat.”

So food security could exclude the 4.1 million jobless Filipinos and their families. But then again, there is a category in the government’s employment data that refers to unpaid and own account work so the exclusion may be even more. If we are to exclude the poorest 10.4 million families, this would approximate 52 million Filipinos based on the 2006 Family Income and Expenditure Survey. Worse still, this “food security” may benefit a mere 20 percent of families, which excludes 70 million Filipinos who struggle to survive on P110 ($2.63) a day.

But granting for the sake of argument that an ample supply of rice would guarantee food security, since rice is our staple food and a typical Filipino family could do away with a viand just to be able to eat rice. Do we really have enough supply of rice? How did we reach this point?

The same PRRI study entitled the “Economics of Rice” revealed that from 1970-2003 the country’s net import of rice has increased tremendously. It recorded the highest at 2 million tons in 1998, which is being attributed to the El Nino phenomenon. But according to government estimates, the Philippines is expecting to import 3.7 million tons this 2008. Our dependence on rice import has actually gone worse. The PRRI study practically admitted that the growth in average farm yield is not able to cope with the present 2.36 percent annual population increase. And the government finds nothing wrong with the country’s dependence on rice imports. At the height of the current rice crisis, President Arroyo was quoted as saying that it does not matter if we are not able to produce the rice we need for as long as we can obtain it elsewhere. In the 2006 PRRI study, it even asserted that “world rice supply is more stable and dependable.”

Thus, when Vietnam and Thailand decided to reduce their exports to ensure their respective country’s supply, the Arroyo government panicked. And now they are trying to scramble for solutions. It is as if rice production can increase overnight, as the crisis is confronting as now.

Right or wrong solutions?

Are they putting forward the right solutions?

According to the PRRI study, palay (rice grain) and rice prices are one of the highest among developing countries in Asia. Citing data from a study the government did from 1992-2001, it said that palay price in the Philippines is around P8 ($0.19) per kilogram, compared to P6 ($0.14) in Vietnam, Indonesia, Thailand, and India, and P7 ($0.16) in China. Rice prices in the Philippines, on the other hand, are double that of Thailand and Vietnam and almost 30 percent higher than in Indonesia.

The study attributes the high palay prices to the high labor cost of rice production in the Philippines because of the backward state of agricultural production. Post-harvest facilities in the country are so backward that it takes 30 working days to harvest, thresh, and haul palay, a process which takes 5 days in Thailand.

It also said that the average land tilled by a rice farmer, at only 2 hectares, is the reason they are poor.

The PRRI attributes the high rice prices to the price of palay, high interest rates and high marketing costs.

Meanwhile, it stated that the low supply of palay can also be traced to the relatively small agricultural area of the country compared to Thailand, which is 60 percent larger and to the much more land allotted by Thailand and Vietnam to rice production.

All these confirm what militant organizations have been saying all along: that the country is backward, and pre-industrial. We cannot even boast of a single industrial achievement and our agriculture is even more backward than our Southeast Asian neighbors. These problems cannot be solved by sporadic solutions and releases of funds. Not even the solutions outlined in FIELDS are enough.

How many farmers would benefit from the P20 billion ($479,041,916) loan fund and the P8 billion ($191,616,766)seed fund? Merely dividing the P20 billion loan fund by the total agricultural land area of the country devoted to rice, approximately 3.84 million hectares, would give us a figure of a low P5,208 ($124) per hectare loanable amount. This is way below the P40,000 ($958) production cost of rice per hectare per cropping. And who can avail of these loans?

The PRRI study revealed that farmers prefer the informal lending sector (read:usurers) because of the faster and timely releases of loans, less paper requirements, no collateral and flexible loan terms. Also, usurers provide the farmers access to their basic needs in-between cropping/harvesting seasons. What about collateral? Using the Certificates of Land Ownership Agreements (CLOA) as collateral of farmer-beneficiaries of land reform would only make them lose their lands as rice production does not give them much net income because of the backward production processes.

What about the modernization of the whole production process? The fund being made available is only for driers and post-harvest facilities, which was loaned from South Korea.

Added to this, big landowners would rather convert their land to commercial or industrial uses as it raises the value of their land.

The solutions being proposed by the Arroyo government misses three important points. First, food security and rural industrialization is a long process and its economic policies of privatization, deregulation, and liberalization even lead to more bankruptcy and backwardness in the agricultural sector. Second, the reason the marketing costs of rice are so high is because of the monopoly pricing of millers, traders, haulers and wholesalers, who are usually the same people.

The third and most important point is that there can be no food security in the country for as long as land is concentrated in the hands of a few big landlords whose sole interest is to earn more from their land through crop and land-use conversion or through bleeding their tenants dry. And the Comprehensive Agrarian Reform Law of 1988, which has been extended for 10 years already because it did not make a significant impact on the problem of landlessness is definitely not the solution. It is time to take a serious look at the Genuine Agrarian Reform Program being proposed by Anakpawis (Toiling Masses), that is, if the government is serious in addressing the problem of rural backwardness and in finding a solution to the rice crisis. (Bulatlat.com)

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