Philippines. Giving up on rice self-sufficiency goal

20.07.2018

Rice is a highly political commodity in the Philippines due to its importance as a staple food for the majority of the population and a source of employment to millions of Filipinos.

Thus, like all the other previous administration, the Duterte leadership had intended to push for self-sufficiency in rice within the first two years of its six-year term.

But that was two years ago. Today, it seems that the Duterte administration has given up on this goal.

President Duterte admitted it would be unlikely for the country to achieve self-sufficiency in rice in the near term.

“I do not believe we can be self-sufficient in rice. If you’d ask me, in the next so many years, we will just have to import rice,” he said in a recent speech.

He said shrinking farmland and a growing population made it difficult to produce enough rice to meet domestic needs.

Self-sufficiency in rice, according to the Philippine Rice Research Institute, means the country must produce the national rice requirement while maintaining a buffer stock that can be tapped in times of need. But the inability to produce enough of the staple to meet these criteria does not necessarily mean putting the nation’s food security at risk.

As the President said, the country can resort to rice importation.

The President has been vocal with his intent to lift the quantitative restriction or quota on rice imports, and to replace it with tariffs. Economic managers believe tariffication of rice imports will result in adequate supply and lower retail prices, while the tariff will translate to additional revenue for the government.

More important is that rice tariffication is expected to lessen the pressure on inflation, which has reached a five-year high of 5.2 percent in June. As a staple, rice makes up 10 percent of a Filipino’s total consumer index, which means that any increase in its price can put a slash on consumers’ pockets.

The depletion of the National Food Authority’s (NFA) rice stocks may have proven the President’s point. In April, the NFA reported that its rice reserves had been completely wiped out, which meant it would not be able to fulfill its mandate to stabilize the supply and price of rice in the market. Its administrator Jason Aquino blamed this on the agency’s low buying price for palay and its council’s decision to defer importation.

Rice imports, he said, would’ve replenished the agency’s stocks. It will enable NFA to meet the demand for subsidized rice.

Three months since the NFA supply shortfall, rice prices have increased substantially. According to the price monitoring report of the Philippine Statistics Authority (PSA), retail prices of the staple have risen for 26 straight weeks now.

Compared to NFA rice variants priced at P27 and P32 a kilo, retail price for regular-milled rice now stood at P41.07 a kilo while well-milled rice is being sold for P44.69 a kilo.

Aside from tight supply given the dwindling stocks of the grains agency, global oil prices have also been volatile since the early part of the year, adversely affecting prices of food commodities. In the Philippines, fuel cost accounts for 30 percent of a farmer’s total production cost, on top of transport costs.

According to NFA spokesperson Rex Estoperez, prices of rice in the market may go down once NFA completes its distribution efforts, which is expected by mid August. Even then, prices may decline by only P1 to P2 a kilo.

The Department of Agriculture, for its part, has remained optimistic about the rice sector. Agriculture Secretary Emmanuel Piñol said he was expecting this year’s rice harvest to exceed last year’s record high of 19.26 million metric tons (MT) as more farmers were encouraged to plant the crop given the prevailing high buying prices of palay.

In March, farmgate price of palay breached the P21-a-kilo-mark for the first time in nearly two years.

Contrary to Mr. Duterte’s remark, Piñol is optimistic the country may still achieve self-sufficiency given his department’s latest strides. For this year, the DA is targeting to reach a rice self-sufficiency rate of 96 percent. It has intensified its credit access and irrigation programs, which have been successful in increasing yields.

Still, with the country’s obligation under the World Trade Organization, the Philippines must open its doors to rice imports in exchange of lower tariff rates for other commodities and more flexible trade pacts.

However, various labor groups, rice retailers, rice distributors and even the agriculture secretary himself are not sold on the prospect of lower rice prices once the administration shifts to a tariff regime.

“The liberalization of the agriculture sector since the mid-’90s saw the dumping of agriculture imports in the country, but it did not help in lowering the prices of most agriculture products,” Samahang Industriya ng Agrikultura chair Rosendo So said.

“Unless they allow private traders to import rice with a condition that they can sell these imports only at a certain price, it won’t work. Until then, nothing is going to change,” Piñol said.

Ultimately, both economic managers and industry stakeholders are banking on a better safeguard for local farmers against tighter competition with the unregulated entry of cheaper rice.

With Mr. Duterte’s upcoming annual address, the industry is hoping to get a clearer picture of the rice situation and on what would be done to prevent any adverse impact on Filipino farmers and the public of a tariff regime.


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