Saturday, March 29, 2008 Ex-Neda chief proposes solution to rice crisis
FORMER National Economic and Development Authority (Neda) director general Felipe Medalla said opening up rice importation and more investments in agriculture is the most feasible-long term solution to the current rice crisis the country is facing.
Speaking during the Manila launch of the "Economic and Social Survey of Asia Pacific 2008" in Ortigas, Pasig City, Medalla said the current programs in place are not feasible to address the issue in the long run even as he questioned government statistics showing growth in the agricultural sector particularly in rice production.
He said opening up the importation of rice to private stakeholders would also eradicate rice cartel involved in the hoarding of the prime commodity.
"The best way to destroy these cartels is to open importation to everybody. The collective wisdom of the market should decide importation," said Medalla, who is also an economics professor at the state-run University of the Philippines (UP).
"The more that the government interferes with the market, including in the rice market, the more the economy is vulnerable to shocks and crisis," he said.
Medalla said these cartels have close ties with some government officials allowing them free hand to continue their activities.
"Private individuals running these cartels are closely linked to government operations," said Medalla although he did not name names.
Recently, the government has been cracking down on traders who are hoarding rice, thus artificially distorting supply and causing panic. Consumers are thus storing more rice at home than their usual.
Medalla said the present set-up wherein the government, through the National Food Authority (NFA), is the sole authority when it comes to rice importation is not feasible in the long run.
He said allowing the present set-up to continue would only results in more losses for the state coffers.
According to him, there are three things that the government could do to alleviate the situation such as continue importing rice, improving productivity and lowering the costs to rice farmers in the countryside.
But Medalla said the government should not rely alone on rice importation to address the issue.
"The main solution right now is for the government to import rice at a loss but hopefully they will phase out this solution and come up with a better alternative," he said.
Recently, the Philippine government, however, was able to ink an agreement with Vietnam to ensure that there is available supply by third quarter this year. The Philippines sources about two-thirds of its rice imports from Vietnam.
The agreement allows the Philippines to import about 2.2 million metric tons (MTs) of rice at US$600 per MT.
Authorities said the imported rice would serve as buffer stocks during the lean season.
July is the start of the lean season in domestic rice production and the government usually augments supply by importing rice. World prices of rice have shot up steeply since the start of the year, triggering rice-exporting countries to limit or restrict their sales to countries like the Philippines, one of the major importing countries in Asia.
To improve domestic production of the prime commodity, Medalla said reforms in the agricultural sector and more investments should be put in by the government.
He said more infrastructure facilities like irrigations, dryers and post-harvest and transport facilities should be made accessible to farmers in the countryside to allow them to bring and sell their produce to the market.
To improve the number of area cultivated with rice, he said the government should slow down the conversion of lands into industrial or residential area in the form of subdivisions.
Medalla also proposed putting up a "Conversion Fee" to those who want to convert their area into industrial or residential lot.
"Conversion can be allowed anytime provided that you (referring to individuals or firms) contribute to nation-building by paying a conversion fee which can be used to upgrade the agricultural sector," he added.
At the same time, Medalla said the current crisis could also be traced to lack of data on the agriculture sector even as he questioned if the statistics being bandied about by Neda, the Department of Agriculture (DA) and the NFA about the sector is correct.
"There are very few analyses or data on this sector and this could be one of the reasons why agricultural productivity is not forthcoming. The agriculture sector is the worst measured part of the Philippine economy," he said.
He said: "Lack of right statistics could result in wrong forecast leading to crisis."
He said if the present government statistics is to be believed showing that agricultural production is outstripping population growth then there is no reason for the rice shortage.
"If rice production is growing higher than the population, then the crisis should be dropping and there would be no need for rice imports. But the present situation alone would belie these statistics," he said.
For Senate President Manuel "Manny" Villar Jr., the country's hunger for rice can only be met if the thirst of farms for water will be quenched.
Villar, a former chairman of the Senate committee on agriculture and food, asked the government to launch a "catch-up plan" on irrigation.
He said while the country has a potential irrigable land area of 3.126 million hectares, only half or 1.427 million hectares is serviced by irrigation.
This year's P8 billion allocation for irrigation would only increase the irrigated area by 22,186 hectares, he said.
"At this rate, it will take the government 64 years to bring water to all of the potential areas. This drought in irrigation funds should not be allowed," Villar added.
The newly irrigated areas, if all will be planted to rice, can produce around 80,000 MTs of palay annually, short of the 236,800 metric tons that two million Filipinos who are added to the population ever year would need, said the lawmaker.
The expansion in irrigation should keep pace with the increase in population "because you can't grow rice without water," Villar said, noting that it takes "5,000 liters of water to produce one kilo of rice." (AH/CPB/Sunnex)
