Rice Crisis Looms

Rice is the staple food of Filipinos.  Ironically, the country is now one of the top importers of rice grains from being a net exporter in the 1980s. With only six percent of world rice production available in the international market and with the projected increases in imports to China, the Philippines will have to compete with the limited supply by buying at higher prices. This will be a situation that the Philippines can hardly afford.   

BY AUBREY SC MAKILAN  
Bulatlat

Prices of rice, the Filipinos’ staple food, threaten to shoot up as the country, dependent on grains imports, competes for the limited supply in the world market PHOTO BY TAMMY DE CASTRO

Despite the Philippine government projection of self-sufficiency in rice by 2009, the country remains among the world’s top importers of rice grains, being among the top three in 1999 and fifth highest in 2004. With the potential increase in the importation of rice grains by China, the Philippines, which is dependent on rice grain imports since the 1980s, might be in trouble, said Duncan Macintosh, spokesperson of the International Rice Research Institute (IRRI). Worse, Rex Estoperez, Director for Public Affairs of the National Food Authority (NFA), admitted that the only way the country could cope with this situation is to contract more loans to be able to purchase enough grains for local consumption.

Limited supply

For the last six years, Macintosh said, China has been experiencing a decrease in its production of rice grains. Urban development, liberalized policies, which resulted to diversified farming, and measures instituted by China to protect its environment were some of the factors that affected its rice yield.

As a result, China had to import rice grains.

“And this is a bad news for the Philippines and good news for the exporters,” he said.

In an interview with Bulatlat, Macintosh said that in 2004, China imported only one percent of its domestic demand. But given the population of China, this was already equivalent to 10 percent of the world’s demand, said Macintosh, or five times the imports of Indonesia or 10 times that of the Philippines.

Also, the prices in the international market of rice grains increased by 40 percent in 2004. Only six percent of world rice production is traded, said Macintosh. Thus, supply in the world market is limited. Because of this, Macintosh said, prices tend to react quickly to changes in demand. Prices will continue to rise as China increases its imports. Wit the upward trend in grain prices, importers tend to hoard their supplies thereby triggering more price increases.

If China increases its imports and prices increase, Estoperez admitted they have no other choice but to contract more loans in order to compete with other importers. This, he said, is nothing new anyway.

The NFA is in charge “of ensuring the food security of the country and the stability in the supply and price of the staple grain-rice.”

Aside from its imports, the NFA also counts on the imports of private corporations for its 15-30 day buffer stock.

Estoperez however said they could not force private corporations to import rice if prices shoot up in the international market. If that happens, the government needs to further increase its imports by contracting more loans, he said.

Unfortunately, additional volume in imports would only mean additional tariff payments and losses for the department, he lamented.

Even the P900 million budget of the agency is not enough, he said.

He said that tariff payments alone cost them about P13 billion, excluding the three to four percent interest payments on loans for paying tariffs. If the loan was made from commercial banks, higher interest rates of seven to eight percent per annum are charged.

The NFA is currently monitoring the importation of China to be able to prepare for the stiff competition

From being exporter to importer of grains

Twenty years ago, the Philippines was a net exporter of rice grains. During the Marcos administration, the country was still able to export a portion of its total produce while leaving the country with sufficient supply.

However, the slowing growth in farm output has made the Philippines one of the world’s top rice importers in 2005.

Agricultural output last year rose only 2.24 percent, missing the official target of three to four percent due to drought, said the Department of Agriculture (DA).

The annual consumption of rice per capita has also risen from 90 kilos in 2001 to 115 kilos at present. This is because, Estoperez said, many have shifted to rice since the price of corn increased.

Last year, rice grain yield was 14,603,000 metric tons. Despite a not so very significant decrease in palay (rice grain) production, the NFA almost doubled its imports from 983, 975 metric tons in 2004 to 1,849, 843 metric tons last year.

The agency normally imports rice every March. But the NFA has already started importing December last year, to maintain its 15-30 day buffer stock. On Feb. 7, it again imported 400,000 metric tons of rice grains and is anticipating the 438,000 metric ton imports of the private sector. Early importing, Estoperez said, could also prevent competition with other importers.

The country is basically dependent on rice importation especially from Thailand and Vietnam. Whenever there is a rice shortage in the world market, the food security of the country is also endangered.

And even with the planned importations, Willy Marbella, Kilusang Magbubukid ng Pilipinas (KMP or Peasant Movement in the Philippines) secretary general, revealed that the country still experiences rice shortages. He said that in 1995 the NFA had to import more as the expected yield decreased by one percent thereby affecting the buffer stock.  The rice grains yield continues to decrease annually and the shortage has already hit seven percent last year.

Land conversion

The KMP and the NFA both agreed that one of the main factors that led to the decrease in rice grain yield is the land-use conversion policy of the government.

“While the population increases, area cultivated to rice get smaller,” Estoperez said.

Based on the November 2004 report of the National Census and Statistics Office, land area planted with rice in the seven provinces of Central Luzon, the rice granary of the country, have dropped by 12.7 percent from 1991 to 2002. Worse, Estoperez added, most fields in Nueva Ecija are prone to flooding.

Marbella said that land conversion intensified during the Ramos administration, in accordance with its Philippines 2000 or the Medium Term Philippine Development Plan (MTPDP).

The 2003 data from the Presidential Agrarian Reform Council showed that about 40,000 hectares have already been converted for eco-tourism purposes.

Meanwhile, Marbella also said that there are 2,383 cases involving land use conversion filed before the Department of Agrarian Reform Adjudication Board (DARAB) from 1988-2001.

Self-sufficiency

Despite being a net importer of rice grains, the Philippines still expects to produce all the rice its growing population needs by 2009, when output is projected to hit a record 16.7 million metric tons. The government plans to boost rice grains production by expanding the area planted to hybrid rice and improving the delivery of irrigation services.

The area planted to hybrid rice is expected to reach 500,000 hectares this year from around 330,000 hectares last year. The Philippines plants 4.1 million hectares to rice. But, Marbella said, planting hybrid rice increases the costs of  farmers.  Hybrid rice are terminator seeds. Unlike traditional seeds, Marbella said, terminator seeds can be used only once. Farmers need to buy seeds every planting season.

Estoperez said achieving self sufficiency “depends on the political will and policy” of its implementors.

But Marbella argued that the goal of self-sufficiency in rice is “far from reality” unless “genuine land reform” is  implemented. The country, Marbella said, can achieve self-sufficiency only if lands are distributed to the farmers; a moratorium on land use conversion is enforced; and the country gets out of the World Trade Organization (WTO).

Marbella said that prior to the WTO, the country had an agricultural trade surplus of around US$1.2 billion. But in 1999, the country’s trade in agriculture resulted in a deficit of US$3.1 billion. In 2001, the deficit ballooned to US$5.2 billion.

Estoperez admitted that the policy of contracting more loans to secure the country’s rice grains supply is not sustainable.   

“It high time for us, the Congress and the common tao (common people), to come up with a better policy,” he said. “’Di pwedeng taun-taon ganyan e.” (We cannot implement the same policy every year.)

Meanwhile, Marbella cited how Thailand was able to remain as a net exporter of rice. In an international conference, he asked a Thailander how they are able to provide for the country’s needs while at the same time export rice grains. The Thailander shared that their government subsidizes the needs of rice farmers and has an efficient policy governing the export of rice grains.

On the other hand, Estoperez said, the Philippine government has no financial capacity to subsidize farmers. Bulatlat

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