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Monday, December 17, 2018

Villanueva: Of rice, life and an ailing society

“RICE is life.”

Filipinos are known for their love of food, and meals are incomplete without rice. This just shows how important rice is in the lives of Filipinos.

Then President Aquino declared the 2013 as the National Year of Rice (NYR) aims for rice self-sufficiency by promoting the RICEponsibility of Filipinos for better health, reducing rice wastage, and valuing farmers’ hard work. As a result, the Philippines achieved the highest rice harvest that year, and according to the Philippine Rice Research Institute (PhilRice), the country achieved 97 percent rice self-sufficiency then.

At the start of 2018, news spread that the buffer stock of rice of the National Food Authority (NFA) is reaching its depletion. Warehouses of the NFA across the archipelago were reportedly already almost empty. This resulted to the shortage of the cheapest rice in the market. The remaining stocks were rationed. Consumers can only purchase a maximum of three kilos at a time.

Consumers are forced to buy the more expensive commercial rice, where the cheapest is sold at P40 per kilo, compared to price of NFA rice sold as low as P27 per kilo.

Considering that the family’s budget is essentially the same weekly, semi-monthly or monthly, with the more expensive goods, the family would feel poorer because their purchasing power is lesser. They would either lessen their consumption of rice or would spend less on other necessities.

Consequently, commercial rice became more expensive as a reaction to the decrease in the supply of rice in the market and the reduced competition from a cheaper type of rice. Note that the demand for rice did not change significantly from this price increase because rice is considered as a demand inelastic good (a good of which the consumption is not significantly affected by a price change).

Last February, NFA’s policy making council approved the importation of 250,000 metric tons of rice from Thailand for P24,000 per metric ton (or P24/kg), which was expected to arrive three months after.

The Philippines is rich with land resources used for agriculture, thus, still considered as an agricultural country (although a greater portion of the GDP is attributed to the output of services sector). A lingering question is that as an agricultural country, why is the Philippines considered as the second largest importer of rice worldwide?

Surprisingly, the Philippines has been importing rice for over a century already. Prof. Davidson (2016) of the National University of Singapore notes that at the latter part of the 1800s, the Philippines was already experiencing rice deficit, due to Spain’s trade constraints, loss of China as a trading partner to Siam, and effects of years of El Nino occurrences since 1870s.

While waiting for the imported stocks to arrive, NFA in its effort to beef up their stocks, chose to buy from domestic farmers at a price no higher than P17 per kilo. Another question in mind is, “If NFA can buy rice from Thailand for P24 per kilogram, why is it that NFA cannot buy rice from our farmers for no more than P17 per kilogram?”

Unfortunately, NFA cannot directly compete with private rice traders who can buy rice at a higher price. The budget of NFA just cannot match the farm gate prices offered by traders. Although President Duterte ordered the increase of the buying price by as much as P3 per kilo so that NFA can compete with the private traders, NEDA expressed their concern as this would lead to relatively huge inflation. I have no idea if this even push through.

Even if the government can match that of the traders, the reality is that farmers would still end up selling their produce to the traders whom they are deeply indebted to. The traders are the people that the farmers run to for their farm needs. They would borrow funds from the traders to buy seedlings, fertilizers, pesticides, and for other farm-related expenses and, of course, interest is charged.

Come harvest time, the traders collect from the farmers. The farmers are forced to sell their produce to the traders, who will deduct the farmers’ loan and give back the excess to the farmer, which they would make do until the next harvest season.

The poor farmers are left with no choice but to avail of these oppressive facilities even if government financial institutions like LandBank, cooperative and rural banks aim to assist them. Hazel Tanchuling of Rice Watch and Action Network in an interview in 2014 disclosed that about one percent of small farmers have access to these formal credit facilities, mainly due to their stringent documentary requirements.

PSA reported that prices of rice in April have risen by about 4.5% from January. The higher price of rice contributed to inflation bloating further. Aware of this pressing problem, President Duterte last April ordered private rice traders to help the government augment cheap rice supply in the market by selling rice by as low as P39 per kilogram.

Honestly, I don’t have any idea if there were traders who actually heeded the President’s call.

According to Celia Reyes, et. al. (2008) of CBMS Philippines, the impact of rising price of rice (and fuel) differs among various groups. Urban households are more affected by the price increases compared to those in the rural areas. The poorest households are the most vulnerable and the most adversely affected by increase in the price of rice. These households are coping by modifying their consumption patterns, increasing amount spent on food, and health or education would take the burden.

Sacrificing these two necessities would definitely have long-run effects on the households.

Rice is not just food; it is life. The problem on rice does not only denote the prospective nutrition and hunger problems that are experienced by Filipinos. It is a reflection of a deeper, systemic problem in our society nowadays.

Firstly, despite the natural resilience of Filipinos and the constant reminder of, “kapag maikli ang kumot, matutong mamaluktot.” I truly believe that this problem could have been avoided if the government officials were responsible enough to ensure food security in our country.

They had to wait until their warehouses are almost empty before they had to do something. This with the naiveté that all matters are in order. No shady deals and the like.

Secondly, our country is rich in natural and human resources. The Philippines is considered as an agricultural country yet we are the second largest importer of rice at present.

In the 1960s, our competency in rice production and research was recognized with the establishment of the International Rice Research Institute (IRRI). I believe we have a lot of potential in rice production. However, brain drain is happening. The best and the brightest scientists leave the country for greener pastures. If they were given enough incentive and competitive compensation, they would choose to stay and work towards sustainable rice self-sufficiency.

Thirdly, the poor farmers are left without support from the government, and are pushed to go to oppressive lenders. It is ironic that those who toil for our food are the ones experiencing hunger. Make agricultural credit accessible to those who need it the most.

I was able to prove in my master’s theses that agricultural credit has no impact on the agricultural output, where it should be one variable that could increase output exponentially. However, this support for the farmers has not been handled properly, e.g. Fertilizer Scam and Jocjoc Bolante, which until now the embezzlers have not yet been punished.

Support the farmers and this will ensure our self-sufficiency.

Finally, the impact of the rising price of rice may differ whether one is an urban or rural dweller, and the poorest households may be the most vulnerable, however, the fact is everyone is affected by this problem.

Due to these price increases, we are forced to forego of other important needs in order to suffice the need for food. Some may have foregone health when instead of buying medicines for a sick member of the household, rice was bought. Others have foregone education, children from the household dropped out of school because it was a choice of buying food or buying pencil or paper.

The long-run effects when these two are foregone are unimaginable. I am afraid that we will have a sick and illiterate society in the future if the government fails to install safety nets for this problem. It is about time for the people at the top of bureaucracy to focus on what is more important. Stop wasting government resources in addressing resultant problems. Drugs is a result of a more complex problem which is hunger, poverty. When the root of the problem is addressed, solutions to all other problems will follow.


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