All rice

posted April 18, 2017 at 12:01 am
by  Gary Olivar

A hot topic last week was the Presidential firing of Helman Valdez, one of the undersecretaries reporting to Cabinet Secretary Jun Evasco. She had tried to implement her boss’s instructions to extend the validity of a number of rice import licenses by a couple of months, over the vehement objections of National Food Authority head Jason Aquino who preferred to do a government-to-government import deal instead.

It should be noted that Evasco is no ordinary CabSec, who normally (as the title implies) simply oversees the work of the different Cabinet members. In addition to that, he’s been given oversight over half of the agencies that enjoy direct reporting lines to the Office of the President. It’s a measure of his closeness to his boss.

Since taking office, though, Evasco has been taking his broom to try and sweep out some pretty high-profile subordinates of his, such as the heads of NFA (rice), NIA (irrigation), and PCA (coconuts). These were men who were very close to him, if not to Duterte as well. They joined government the same time as he did, and yet, so soon after, they were already being shown the back door out.

These divorces usually don’t happen so early. On balance, I’m inclined to give the benefit of the doubt to Evasco—a former rebel priest—and assume that he was simply an early practitioner of the zero tolerance for corruption that Duterte has more recently also been showing us with his treatment of errant Cabinet members.

Unfortunately, it was the hapless Ms. Valdez—a rehire from the previous administration—whom the President booted out. I’ve heard that her aggressiveness may have rubbed him the wrong way. But the stated reason is that her support of those rice importers was considered a disservice to the country’s rice farmers.

***

Now that’s a policy issue worth sinking teeth into, and not just because rice is so important to our diet—perhaps overly so, according to nutritionists who worry about all that carb intake. Rice also happens to be a powerful part of our national mythology, rooted in our self-image as a bucolic nation of rural innocents. If we can’t grow all the rice we want to eat, we’re practically traitors to our heritage.

In that self-imagining, rice importers and traders are conveniently the bad guys, transplanted Filipinos who hoard the crop, charge exorbitant prices, and exploit the brown-skinned locals. By comparison, rice farmers are our pre-OFW heroes, feet firmly planted on vast paddies of shimmering green stalks, patient like their carabaos as they eke out the hardest of livelihoods to put that coveted grain on our dining tables.

Riding on that populist trope, Agriculture Secretary Manny Piñol, a media man turned practicing farmer, has placed himself firmly on the side of his fellow men of the soil. He has assured everyone that his reform agenda will eventually lead us to substantive self-sufficiency in rice as well as the economic betterment of our rice farmers.

That agenda, he says, has already borne fruit even this early. Satellite data shows that the rice harvest for first quarter 2017 was 4.14 million metric tons across 997,687 hectares of farming area, compared to only 3.93 million MT across a larger area of 1.08 million hectares in first quarter 2016. That translates to 4.15 MT of palay per hectare this year versus 3.63 last year, an impressive improvement of 14 percent year on year.

After a 16-percent factor for post-harvest losses, the first-quarter rice harvest this year would total 3.48 million MT. At the current buying price of P21 per kilo, compared to the “previous” low price of only P14, this puts an extra P24 billion in the pockets of our rice farmers.

Piñol maintains that the extra P7 per kilo was possible because the President ordered the delay of rice imports until after the harvest season, thereby preventing a flood of cheaper imported rice from driving down local rice prices. He says he is not against rice imports in principle, only against bad timing that puts our rice farmers at a disadvantage.

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The big problem with this argument, of course, is that the longer you delay rice imports, the bigger becomes the risk of rice shortage and higher rice prices caused by completely unforeseeable bad weather—be it droughts or typhoons—in today’s era of climate change.

At the same time, you’ll end up paying more for your emergency rice imports—usually from Thailand or Vietnam—if you place your order the day after your emergency, instead of three or six months earlier. Don’t go looking for altruism in the marketplace.

There’s an alternative solution that’s been proposed by Piñol’s colleague in the Cabinet, National Economic and Development Authority head Ernie Pernia. It’s a straightforward prescription:

First, remove quantitative restrictions on rice imports, which NFA enforces as the sole authorized rice importer and issuer of import licenses to rice traders. This is something we’ve already committed to do by international trade agreement, but repeatedly sought waivers from.

Second, replace QR with an import tariff of, say, 35 percent. If Vietnamese rice production cost is reportedly 50 percent of our own cost, this allows us to recover most—though not all—of their cost advantage via increased tariff revenue collections by our government. Effectively, that cost advantage goes into the public purse instead of traders’ purses.

Third, use those tariff collections to fund subsidies to our rice farmers to improve their productivity, move out of rice farming if they wish, and provide safety-net social services. Pernia’s people estimate an annual subsidy size of some P20 billion. That is pretty close to Piñol’s P24 billion figure, plus it ensures that we’ll always have enough rice to eat, no matter how bad the weather.

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Haven’t we learned enough yet to trust the market to provide what we need at the right quantities and prices? From telephone service to water and power supply to air travel and toll roads, the story is always the same: Private providers of goods and services, if properly regulated by an impartial and transparent government, always do better than government itself.

Will this capitalist success story be remembered when we talk to the communist insurgents about socioeconomic reforms for our country, the next and most crucial stage of the ongoing peace talks? It’s really up to us to make sure that our government negotiators have long memories.

Readers can write me at [email protected]

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