"Fungibility is the property of a commodity that makes it interchangeable or indistinguishable from another of its kind."
In the continuing debate on the merits and demerits of the country’s new rice policy, people and media will need to understand that rice is basically a fungible commodity.
Fungibility is the property of a commodity that makes it interchangeable or indistinguishable from another of its kind.
Strictly speaking though, there are different types or grades of rice. Easily visible to the naked eye is polished white rice as against unpolished brown rice. Just like many Filipinos have been consumers of refined white sugar which is unhealthy compared to brown or unrefined sugar, brown unpolished rice is a lot healthier than polished white rice.
But eating habits cannot change easily. What we mostly consume is long-grain polished rice, although this is again to be distinguished from the highly-priced basmati which has longer grains. What the Japanese and Taiwanese prefer is short grain, which is rounded along the tips, and rather softer and stickier.
But other than these obvious differences, the average consumer can hardly distinguish between one or the other kind of rice they see in the markets. There was a time when our mothers would smell the grains of rice before buying, the fragrance distinguished between “mabango” being newly harvested, and “medyo ma-anta” being laon or from an old harvest.
Some of the world’s poorer nationalities prefer old rice, not only because it is cheaper to import, but because it expands better when boiled. Most Filipinos, however, prefer newly harvested rice, which is more fragrant. Long gone and remembered with nostalgia are the days when one could buy the fragrant and oh-so-yummy milagrosa or when dinorado was genuine instead of ersatz.
Big local millers have started “branding” their rice years ago to command better prices. Some have actually been protective of the quality of their produce, and even proudly tout the provenance, whether Nueva Ecija or Isabela or from the highlands of Luzon.
But marketing practices are such that types and grades of rice are pre-mixed, either on the wholesale or retail levels, such that consumers who go to the wet markets for their daily or weekly purchases are never sure of the quality of the rice they are getting, fancy brands notwithstanding.
Though the practice is unfair and reeks of profiteering at the expense of consumer ignorance, the reality is that rice is basically fungible.
Whether among local millers or distributors, or private importers, there is a prevalence of mixing, for instance, 5 percent broken rice with 25 percent brokens and getting a better price in the process, passing the mix as 10 percent broken rice, when it should be 15 percent brokens.
Broken grains are called “binlid,” either because the grains are of poor, chalky quality that break easy when polished, or the milling process is inferior. But would the average consumer sift through the rice grains to determine quality vis-à-vis the price he is being charged with?
Unless you are from the NFA quality control department, or a taal na Novo Ecijano like the Dos por Dos broadcast couple Tunying and Gerry who grew up amid rice fields, you will likely be unable to distinguish.
To the city-bred C, D and E income classes, basta bigas. Lamang tiyan.
And so, when we are told to patronize locally-grown rice to help our poor, struggling farmers, how would we know the difference between local and imported, or mix-mix? We are left to the tender mercies of the market.
Some farmers’ groups assail the Rice Tariffication Law and claim that palay has gone down to the ridiculous depths of P5 to P7 per kilo ex-farm. Well, unless the farm is so inaccessible that buyers will spend too much to reach a few sacks of palay, the claims are quite exaggerated. But definitely, buying prices of palay have gone down by as much as half of last year’s when we mismanaged our rice economies.
NFA is being tasked to buy as much rice from farmers, but has anyone bothered to do the math? With a P7-billion budget, at the adjusted price of P20 per kilo, that can buy only 350,000 tons. Now that the DA has re-calibrated buying price at P17 per kilo, still a subsidized prize, the P7 billion Congress has allocated can only buy some 418,000 tons.
What does that represent? Only 2 percent of the total palay production of the country.
Converted to rice, 418,000 tons of palay is equivalent to only 272,000 tons, or eight days of national consumption.
Assuming NFA sells what it stockpiled by way of imports before their “monopoly” was removed by RA 11203 last March, that inventory is only good for 11 days of the national consumption. Assuming further that NFA bought this at roughly $400 per ton, or about P1,100 per sack of 50 kilos each, add distribution cost, and at P25 wholesale price, the agency could only eke out a slim gross profit, domestic logistics factored in, of at most P2 to P3 per kilo. So how will that help NFA get the wherewithal to buy more palay?
Will Congress add to NFA’s procurement budget subsidy and by how much? Will the Department of Finance allow the debt-saddled NFA to borrow more from LandBank and DBP?
And then again, since the buffer stock is supposed to be 30 days, and what NFA has in its warehouses is good for 13 days (11 days imported, 2 days milled palay) what happens when a really strong typhoon hits us in the “ber” months which just started? Recall that Ondoy and Pedring came in October; Yolanda in November, and Sendong in December. How will we have enough rice for calamity-stricken provinces, just in case?
And how will the “usual suspects”—the cartels, the traders—take advantage of the situation? Government cannot import in a jiffy.
While this writer does not advocate going back to the just-abolished era of the NFA monopoly on rice imports, nor can we wiggle out of WTO commitments now that we have lifted quantitative restrictions, surely we need hard answers to most of the questions raised herein.
And it’s not going to be easy.