Saturday, October 11, 2008 Oledan: Inverse proposition By Radzini Oledan
WHY does the government insist on importing rice? Despite report of losses, government is still bent on rice importation, making the country as Asia's largest rice importer.
Agricultural trade liberalization coupled with state neglect is threatening our country's food security and sufficiency. Data from the National Food Authority (NFA) showed that from 1984 to 1994, the country imported an annual average of 151,588 metric tons (MT) of rice. But from 1995, when the Philippines became a member of the World Trade Organization (WTO) to 2006, rice importation shot up to an annual average of over 1 million MT, a 587 percent increase.
The Department of Finance (DOF) has predicted that losses of the NFA may reach P43.1 billion ($925,786,703 at the September 19 exchange rate of $1=P46.555) if the price of rice in the world market increases to more than US$1,000 per MT.
Rice importation is done at the expense of local procurement. The NFA-EA revealed that from February 1999 to October 14, 2007, the NFA bought palay at only P10 ($0.216 at the 2007 average exchange rate of $1=P46.148) per kilogram even as the actual farm gate price then reached P11.21 ($0.24). The NFA buys local palay at low price.
Small-scale rice farmers have complained of low support. They also continue to be saddled by high production costs, low rice prices, inadequate irrigation and facilities, and inaccessible credit.
There are proposals being broached to privatize the rice trading function of the NFA. As the argument goes, the private sector would do a better job in stabilizing rice prices and in the long run eliminate corruption, hoarding, and smuggling.
This is a losing proposition. I have heard of abuse of discretion among private traders suspected of repacking NFA rice that are mixed with commercial rice and sold at a higher price. This only shows that they have the opportunity to dictate the prices of rice as they also control the supply from domestic sources.
The government's rice importation program is in compliance with its commitment to the World Trade Organization (WTO). Under the WTO's minimum access volume (MAV), the country is obliged to import a certain volume of rice whether or not there is a supply shortage.
Local farmers are simply harmed by competing rice supply from importation. Rice is a staple food and the lack of self-reliance to produce it brings into question government policy on importation and the subsequent lack of support to local supply.
Instead of reactive and short-term feeding programs, the government should address the problems of farmers and other food producers in order to increase productivity and ensure the country's food security.
Self-sufficiency in domestic production is the best way to attain food security. Importation is only an alternative if a country cannot produce its own rice, which is not the case with the Philippines which is capable of producing and even exporting rice, as shown in the past.
With current and expected shortages in grains, it's getting more and more expensive for a cash-depleted government to import rice. Still, it is headstrong in meeting its commitment to WTO at the expense of local farmers and the country's food security.
Time would show whether government can really afford to continue importing rice at a loss. All indication shows the reverse. How many more years should government buy rice at high prices before it bleeds dry our public coffers?
