Rice tariffs to boost local rice farming

27.09.2016

The groundwork to lift the quantitative restrictions on rice importation has started even against the protest of the Department of Agriculture on behalf of Filipino farmers who will definitely be hard-pressed to compete with lower priced rice imports.

Even with tariffs of at least 35 percent, it is estimated that imported rice can still be sold at competitive prices to local farmers’ rice produce – or even cheaper, since one of the goals of the move to lift QRs is to lower the price of rice.

The plan to lift QRs on rice had been on the stove burner since last year in a bid to end almost 20 years of preferential restrictions approved by the World Trade Organization (WTO) on our rice importations.

The WTO first allowed the Philippines to impose a 10-year quota system for rice importation in 1995, and extended this in 2004 for another six years. When the QR lapsed in 2012, negotiations resumed to extend the preferential status starting in 2014 and ending in June 30, 2017.

Actually, it does seem a little embarrassing to ask for another extension, given the number of times the country has implored to be given “more time to prepare its farmers” for trade liberalization, and the two decades – 20 years – that was given.”

Therefore, if you hear Agriculture Secretary Emmanuel Piñol ranting a protest, please just bear with him: it’s a sort of duty thing. Really, if you think hard, it was not exactly his fault, but more of the neglectful agriculture bureaucrats during the last 20 years.

Therefore, it’s now reckoning time. The big question on the minds of many would be a concern for our farmers’ survival in the face of unlimited rice importation from such rice-exporters as Thailand and Vietnam. Will we start to see more Filipino rice farms being abandoned?

In a study by the Philippine Rice Research Institute completed in 2015, Filipino rice farmers were ranked fourth in competitiveness behind Vietnam, Thailand and India. China and Indonesia were the other two of the six countries included in the study.

The same study categorically stated that Filipino farmers when faced with the lifting of QRs, would not be able to survive. This would mean our struggling rice farmers may totally decide to give up their rice farms for other crops – or just abandon the land and find other jobs.

The study shows where Filipino farmers pale in comparison with competitors. Against Vietnam, for example, the Philippines had a higher production cost because Vietnam had “greater volume of paddy, more efficient handling, and higher milling recovery.”

There is also the  contention that there is a huge difference in land productivity. In Vietnam, there are three rice crop harvest in a year, whereas we have only two. Our average rice yields are also much lower, even during Vietnam’s autumn-winter season.

Then, the Philippines has a high labor cost (P3.76 for hired labor to produce a kilogram of paddy in Nueva Ecija, against only P0.46 in Can Tho, Vietnam). Our farmers rely more on hired workers, whereas the Viets mobilize all their family members before resorting to hired hands.

Also, Vietnam uses direct seeding in crop establishment, and combined with the use of harvesters, are able to further bring down labor cost. In the Philippines, transplanting is the preferred route, something that is labor-intensive, plus manual harvesting and mechanized threshing.

The study also pointed out that machine rental and fuel are more expensive in in the Philippines at P1.73 per kg of paddy, while it costs only P0.80 in Vietnam with the use of more efficient machines in land preparation, harvesting and threshing.

There’s more information available, but what is important is understanding where we stand against our more progressive neighbors in terms of rice farming, and for our government to be able to use this knowledge to craft measures that will keep rice farming competitive and alive in the Philippines.
Support rice farms

We cannot afford to lose rice lands for the very simple reason that the excess rice production set aside for export of countries like Thailand, Vietnam, Indonesia, India and China will not be able to supply our needs.

The world’s rice surplus made available for the Philippines averaged at only 2.84 million metric tons a year from 2008 to 2012. Since our yearly total rice requirement is about 14.97 million MT, it is definitely impossible to rely on importations to feed our families without local production.

What to do?

Offhand, it would be safe to assume that imposing tariffs on rice imports would mean additional earnings for the government. Definitely, allocating part of the earnings on some form of cash support for displaced farmers would not be a good idea.

In the first place, cash subsidies for the victims of the QR lifting will be difficult to manage, and in the long run, would be an opportunity for corruption. More importantly, these kinds of subsidies are not productive and will not assure a structural change in the quality of rice farming in the country.

Instead of cash transfers, why not channel all  or a large part of the funds from the rice import tariffs to an agricultural fund that will support a definite set of programs.

First there should be free irrigation water to all our farmers and rice farms. Water is a state resource that should be channeled for the welfare of the nation, and in this case, what better use than water for rice paddies. Vietnam and China are doing this, why not us?

Second, mechanization of rice farms cannot be overlooked. This can help bring rice production to three harvests a year, improve production per hectare, and reduce costs on manpower, which is among the highest in the region. We should also explore better varieties of rice that promise improved yields.

Lastly, the collected tariffs must go to post-farm support: better dryers (not streets) and community storage facilities, more efficient mills, more extensive farm-to-market roads and access to cheaper transportation facilities.

On a parting note, it has been experienced – as with the garlic trade – that free trade without the proper safety nets does not necessarily mean lower prices. It would be a travesty and a tragedy if we will end up with higher priced rice in the years to come, and more importantly, the loss of our rice farms.


philstar

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