The government has unveiled a strategy on rice importation to tame consumer prices, after inflation rate hit a five-year high of 5.7 percent in July. Filipino farmers, however, feel left out.
The Philippine Statistics Authority linked the high inflation to the increase in prices of food and non-alcoholic beverages. Data showed that rice, the biggest contributor to the price index, climbed 5 percent year-on-year in July.
Consumer and farmer groups complained about the high prices of rice in the domestic market despite the government’s apparent efforts to reduce retail prices.
Data from the PSA showed that despite the arrival of rice imports, prices remained high, with the average farmgate price of palay (unmilled rice) reaching P21.60 per kilogram, up by 11.17 percent from a year ago.
“Prices at the wholesale and retail trades of well milled rice are also still on the uptrend,” the PSA said.
The wholesale price of well milled rice was P42.09 per kg, higher by 7.81 percent than P39.04 per kg recorded last year. At the retail level, the average price was reported at P44.81 per kg, also up 7.05 percent from the same period last year. For regular milled rice, the price hikes were observed in the wholesale and retail trades.
The average wholesale price of regular milled rice increased 9.85 percent to P38.80 kg from a year ago’s P35.32 per kg, while the average retail price rose 8.91 percent to P41.21 per kg.
Amid the surge in prices of rice, President Rodrigo Duterte said he would abolish the quota on rice importation by private traders in a bid to make sure the National Food Authority would have enough stock to provide affordable rice to consumers.
The pronouncement was opposed by farmer groups, who insisted that for a rice-consuming country with an increasing population like the Philippines, rice self-sufficiency remained the only viable option.
“Any discussion on the prospect of the rice industry should look into the relatively thin world rice market and, recently the impact of extreme weather situation as major considerations,” the Samahang Industriya ng Agrikultura said.
Sinag executive director Jayson Cainglet expressed concern over the government’s plan to rely on imported rice. “The tradeable rice in the global market is thin. Less than 10 percent is available, 30 percent of which are already reserved for China,” he said.
Cainglet said global rice production was pegged at 622.8 million metric tons annually. Of these, only 45.8 million MT were tradeable, with China securing 30 million MT.
“This means that less than 8 percent of the rice produced globally is available in the world market. This relatively thin market means that rice supply [and rice prices] has tended to be more unstable in recent years,” he said.
Cainglet reminded the government of the 2008 rice price crisis when global prices of rice soared to as much as $800 to $948 per metric ton, from $400 per metric ton in the previous years. This, he said, was due to the imposition of temporary export bans/restrictions of rice exporting countries and the ensuing panic buying of rice importing countries like the Philippines.
“The 2008 rice price crisis should already be a wake-up to us all on the vulnerability of the global rice market. It is ridiculous, if not outright despicable, that a country with the capacity and history of producing its own staple to rely instead on a very volatile and unstable international market. Reliance on imports with thin supply will only increase prices in the long run, not lower it,” said Cainglet.
Cainglet said his group was deeply concerned on the attempt to rely on rice imports in the era of tarrification.
The proposed Rice Tariffication bill is one of the government’s initiative to stabilize rice prices and address the supposedly “artificial shortage” created by rice hoarders and cartels.
House Bill 7735, also known as the “Revised Agricultural Tarrification Act,” aims to protect local farmers and consumers by imposing tariffs in lieu of the quantitative restrictions on imports.
Under the proposed bill, the Philippines’ minimum access volume will go back to 350,000 metric tons from the current 850,000 metric tons. The bill also proposes a tariff rate of 35 percent for imported rice coming from the Association of Southeast Asian Nations.
The bill also seeks to impose a 40 percent most-favored nation tariff rate for in-quota rice coming from non-Asean countries and a 180-percent percent tariff rate for shipments outside the MAV.
President Rodrigo Duterte, in his third State of the Nation Address, urged Congress to immediately pass the bill.
Farmers and consumers under the National Federation of Peasant Women and Bantay Bigas opposed the government’s move. Bantay Bigas spokesperson Cathy Estavillo said that rice farmers and consumers already suffered from the impact of the influx of imported rice with the country’s entry to the World Trade Organization.
“Rice tariffication would only cause bankruptcy and destruction of Filipino farmers’ livelihood,” said Amihan chairperson Zenaida Soriano.
The groups said the genuine approach to food security and self-sufficiency is through genuine agrarian reform and rural development.
The Department of Agriculture, for its part, is ramping up efforts to increase palay production. Agriculture Secreary Emmanuel Piñol said that in 2018, rice output was expected to reach nearly 20 million MT, up from last year’s 19.26 million MT.
As part of the government’s efforts to increase production, Piñol is pushing for the solar-powered irrigation system program which aims to provide water to at least 500,000 hectares of farmlands in the remaining years of the Duterte administration.
“Currently, only 1.2 million hectares of the estimated 3.9 million hectares of rice farms are served by irrigation systems under the National Irrigation System. That leaves an area of 2.7 million hectares which could only produce rice once a year and this is during the rainy season,” said Piñol.
The agriculture chief said that once irrigated, these areas could produce an average of 6 metric tons per harvest twice a year.
“That would mean an additional rice production of 4 million MT every year which if dried and milled with 50 percent recovery would bring in 2 million metric tons of rice,” said Pinol.
He said the DA would need an additional P43.7 billion to irrigate these areas. President Duterte, he said, committed to provide the additional funds.
Sinag said mere irrigation would not be enough. “Our rice development program must be anchored on the development of our capacity to produce our staple and food requirements. The Philippines has a higher productivity per hectare than Thailand – one of our main sources of rice imports. But we don’t export to Thailand. Rather it is Thailand exporting to us,” said Cainglet.
“All major rice exporting and rice self-sufficient countries, including Vietnam, India, South Korea, Japan and the US, continue to support their respective local rice industries. Globally, rice subsidies have actually increased over the last 20 years,” he said.
Cainglet said among the government support that should be provided to local rice farmers are price support to farm inputs, seeds, easy access and terms to credits and insurance coverage, post-production (dryers and storage facilities) and marketing stage.
The group is also pushing for higher farmgate price support and for NFA to buy at least 10 percent of the country’s total palay production. It also asked the government to incentivize the local rice millers to modernize their milling operations and storage facilities.
“Promoting rice self-sufficiency and a significant increase in public spending in critical/strategic segments of the rice industry is the only option viable of the local rice industry given the relatively thin global rice market and the onset of extreme weather situations as the new norm,” said Cainglet.
He said the government should lift the quantitative restriction and make use of the revenue generated from rice import tariffs to implement a comprehensive government program across the whole supply chain of the rice industry that would re-develop the country’s capacity to produce its own staple and food requirements.
“Lift rice QR, and fully implement recently passed laws that would strengthen anti-smuggling efforts and regulations governing our quarantine and food safety regulations and, sanitary and phytosanitary measures,” said Cainglet.