Balance between food security and sufficiency

SUPPLY GAP: This rice-eating country, try as it might, still has to import part of its grains requirements  ironically sometimes from neighbors whose farmers learned modern agriculture from the Philippines.

In a memorandum to President Noynoy Aquino dated Sept. 10, 2013, on “palay performance” this year, Socioeconomic Planning Secretary Arsenio M. Balisacan said the country still has to import rice to fill an expected supply gap.

Balisacan said this is despite data showing that the fourth-quarter production may increase by 9.4 percent from the 6.54 million metric tons in 2012 to 7.16 million metric tons. Yield per hectare, he said, may improve by 1.3 percent from 3.83 MT in 2012 to 3.88 MT in 2013.

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IMPORTS: Industry data show that the domestic rice consumption for 2013 is projected at 12,598,430 MT. The total supply, however, is expected to be only 12,068,260 MT.

But the National Economic and Development Authority estimates the total rice domestic production at 7.4 million MT. It places total consumption, on the other hand, at 9.1 million MT. Without buffer stocks, supply would be in deficit by about 1.7 million MT.

Even if rice production recovers in the October-December quarter, deficits are expected from as low as 500,000 MT to as high as 1.4 million MT with a 30-day buffer stock, the NEDA said.

The National Food Authority has contracted rice imports of 187,000 MT (part of the minimum access volume of 350,000 MT). The cereal arrived last July.

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EXTRA INCOME: To be on the safe side, the NEDA recommended that in the intermediate term, rice imports have to be continued even beyond the minimum access volume level.

It advised that at least 500,000 MT of rice be immediately imported to address the projected supply gap and stabilize prices and possibly lower them.

At the same time, it added, there is need to address the reduction in the income of rice farmers and the decrease in the domestic supply. Income-augmenting projects are needed to enable farmers to earn extra income.

These projects, part of the Community-Based Employment Program, can include irrigation systems or facilities, farm-to-market roads, and postharvest facilities.

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BALANCING ACT: The challenge of balancing food self-sufficiency and food security falls on President Noynoy Aquino, who is called upon to carry out RA 8178 or the Agricultural Tariffication Act approved on March 28, 1996.

“Tariffication” refers to the lifting of quantitative restrictions, such as import quotas or prohibitions on agricultural products, and replacing them with tariffs, the tax levied on imports. Under RA 8178, tarrification is applied on all agricultural products except rice.

To help Philippine agriculture compete globally, RA 8178 envisions raising productivity by supporting irrigation, farm-to-market roads, post-harvest equipment and facilities, credit, research and development, extension services, other market infrastructure and market information.

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OBJECTIVES: It does not seem logical that the government — long bannering rice self-sufficiency — has yet to fully implement the 17-year-old tarrification law providing benefits to farmers while liberalizing policies for agricultural imports.

The law provides that tariffs on agricultural imports be plowed back to the local sector by way of irrigation, farm-to-market roads, post-harvest equipment and facilities, credit, and research and development extension services, among other items.

It mandates that such tariffs go to the Agricultural Competitiveness Enhancement Fund or ACEF, which can be used to finance the development initiatives mentioned.

Another goal is to increase investments in agriculture while reducing corruption where favored importers are given “special permits, exemptions, and privileges” under an importation-prohibitive environment.

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MIDDLE GROUND: The law on tarrification provides a middle ground for those pushing for protectionist policies and those batting for the abolition of restrictions on agricultural imports.

In the case of rice, local prices have been significantly higher than prevailing world prices because of the government’s refusal to adopt a more open policy on the importation of the grain.

This despite its being a signatory to the Uruguay round of multilateral trade negotiations of the World Trade Organization. Obligations under the WTO must be respected lest the country’s credibility in the international community be impaired.

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BURDEN TO THE POOR: Dr. Roehlano Briones, a senior economist working with the government think-tank Philippine Institute for Development Studies, pointed out in a recent paper that rice self-sufficiency must not be at the expense of food security.

“The goal of rice self-sufficiency is noble, but it cannot be equated to zero importation,” he said. “With the continuous demand for food staples, particularly rice, as a result of a steadily increasing population, the government should maintain a practical stand to achieving food security.”

In his discussion paper titled “Philippine Agriculture to 2020: Threats and Opportunities from Global Trade,” Briones said the strategy of curtailing imports has resulted in substantial price increases for most agricultural products, thus presenting “a substantial burden to the poor.”

He said “specialization on comparative advantage” is a better model than a highly conservative protectionist approach if the country is to improve its agriculture sector.

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UNPOPULAR BUT CORRECT: “Importing more rice will bring the price of the grain closer to world prices,” Briones said.

The Aquino administration has proven, he said, that it is capable of passing reform measures that may be unpopular but correct.

The President’s hands are not tied in implementing long-overdue trade policies that will bolster the country’s position as Asia’s rising tiger, he added.

Implementing RA 8178 may be unpopular to corrupt importers who want to monopolize the limited volume that the government is allowing, Briones pointed out, but it is the correct thing to do.

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