Although China produces, and in fact exports rice, it actually also buys rice from neighboring Vietnam.
The two countries share a common land border. Altogether, the boundaries of Yunnan and Guangxi provinces in China and those of Lao Cai and Ha Gang in Vietnam constitute some 1,200 kilometers. The boundaries were mutually agreed upon by the two countries as far back as when Vietnam was still under French colonial rule.
Rice, which is Vietnam’s primary export commodity, passes through these borders, at estimated volumes of 1.5 to 2 million metric tons each year. Similarly, sugar which is Guangxi’s main crop, crosses the borders from Nanning to Quang Ninh. Cheap manufactures from China are also exported to Vietnam via the land borders. Actual cross-border trade figures are difficult to verify.
The same cross-border trade happens between China and Myanmar, China and Laos. Nobody is complaining about what would be considered “smuggling” in other countries. It’s a way of life.
In Sulu and Tawi-Tawi, and parts of Southern Palawan, the proximity by water of the southernmost Philippine islands to Sabah also makes cross-border trade possible. They call it barter, but really, there is little the Philippines barters with Sabah. It really is importation of goods from textiles to canned goods, to rice.
I recall how one Southern Mindanao congressman chided us during budget hearings that his constituents eat much better-quality rice than the NFA provides. And just as cheap, he would add.
What does the Bureau of Customs do, I asked. His answer, with a wink of an eye, “may magagawa ba sila?”
One of Asia’s largest manufacturers of snack foods, Oishi, which is a Filipino company made big and international by the pioneering Carlos Chan, established a factory in the outskirts of Urumqi, the commercial capital of Xinjiang, China’s westernmost province.
Looking at the desolation of the Xinjiang desert and its sparse population, you would wonder why Oishi would locate there, besides being given generous tax breaks by the autonomous region’s government. Xinjiang is also far removed from central China with its bigger market.
But it borders Kazakhstan and Kyrgyzstan, not to mention Mongolia. Think of all the cross-border activity and the numerous market potentials.
Swiss families would travel by car on weekends from Schaffhausen in their eastern border to Neuhausen am Rheinfall in Germany where the Rhine River begins to flow through all of Germany until it empties into the North Sea. They don’t go there just to watch the awesome waterfalls, but take advantage of the lower cost of groceries, because of the VAT difference between the two countries.
Imagine the customs activity among the countries of Europe when they were still disparate countries not bound together by the European Union. Back in 1978, on my first trip to Europe, we stopped at every country border and immigration officers asked to see our passports. With Schengen visas nowadays, that has become a thing of the past.
As far as goods are concerned, produce from Spain and Italy are trucked each day to Paris, and from there to the Benelux countries without border inspections.
Back to Southeast Asia, the countries of which altogether constitute one of the world’s biggest rice granaries, the common denominator is the Mekong River, which flows from the plateaus of Tibet to southern China, Myanmar, Laos, Thailand, Cambodia, and ending up in southern Vietnam before it empties into the South China Sea.
In similar fashion, water flows from the Himalayan regions to Kashmir in India, to irrigate rice fields in both India and Pakistan, the other big rice producers of the world.
The common denominator for rice production is always water, whether it is the Mississippi in the US, or the Amazon in Brazil, the Yellow and Yangtze in China, or the Mekong in Southeast Asia.
It takes 5,000 liters of water to produce 1 kilo of rice. Think of that and wonder why it is so difficult, nay close to impossible for archipelagic Philippines to produce enough rice to feed the 12th largest country population in the world.
Our longest river is the Cagayan River, but that cannot provide enough water to irrigate all of Eastern Luzon, which produces most of our rice and corn. The Agusan River which flows from Davao and Cotabato into the Agusan provinces has not been sufficiently tapped to provide enough irrigation to produce our main staple, aside from the not-too-suitable soil quality in the Agusan and Cotabato provinces for rice production.
Because of porous land borders, loading port capacities and milling capabilities, Cambodian rice is actually bought and marketed by Thai and Vietnamese traders who have mastered the intricacies of rice trading. Who knows how much of the rice we import from Thailand and Vietnam was actually grown and harvested in Cambodia?
Aside from comparative production advantage, logistics is an increasingly big factor in the dilution of country borders when it comes to international trade. Five years ago, rice from Cambodia could not compete with rice from Thailand or Vietnam because of antiquated milling facilities and bad port logistics. I am told that due to massive Chinese aid to the Hun Sen government though, the Cambodian port of Sihanoukville now has better cargo-loading facilities and the harbor has been deepened.
Logistics is also one reason why it is cheaper for Cagayan de Oro to import rice from Vietnam than it is for Isabela-harvested rice to be transported all the way to Northern Mindanao. And of course, rice is a lot cheaper in Vietnam or Thailand than our locally-farmed rice.
Good quality long-grain rice retails in these countries at the equivalent of P26 per kilo. That would cost P38 to P40 in Manila markets.
Will the abolition of the quantitative restrictions on rice importation and the corollary tariffication of the commodity bring down the selling price of rice in our country? Most definitely, yes.
But how can our own palay farmers compete? That is the balance that our legislators and economic policy-makers must seek.
Lifting restrictions and imposing import duties on rice is not a panacea. It is not a one-size-fits-all solution. And with our very long coastline defining 7,100 islands, expect cross-border trading to flourish. What more if we become federal?
But that’s another complication.