The rice factor

The recent rice crisis in the Asian region that saw prices skyrocket to record levels is once again changing the already complex production and trading relationships that affect the country’s self-sufficiency program and the calls for trade liberalization under ASEAN.

By January 1, 2010, or just a little more than six months from now, Philippine rice will be moved from the Highly Sensitive List in the Asean Free Trade Area Preferential Tariff Scheme (AFTA-CEPT) to the Inclusion List. Consultations are once again ongoing with local stakeholders.

As the gap in imported rice prices from Thailand and Vietnam and those locally produced has significantly closed during the last few months, the programmed reduction in tariffs seem to have lost its teeth – or has it?

Since the rice crisis that affected global trade last year, Vietnam and Thailand’s prices have risen from about P8 per kilo to just about P28, or just around Philippine levels of P29-P30 per kilo. Clearly, the threat of cheap imported rice being dumped locally to the detriment of our rice farmers has lost steam, at least for the moment.

The current consensus among rice trading experts is for high price levels to continue a few more years resulting from a global trade slowdown and the continued restriction of exports by countries that traditionally sell the grain to other nations.

Postponement

If there is going to be a deciding reason to postpone full trade liberalization of rice, it is the global economic crisis and the resultant bizarre behavior of rice prices in the global market that have seen levels rising by more than double.

Already, Agriculture Secretary Arthur Yap has been quoted as saying that tariff cuts for the rice sector will be moved to 2012, or two years later, because of the “highly sensitive” nature of the commodity.

On the other hand, and as expected, rice farmer associations are calling for the postponement of the original ACEF-CEPT provisions to 2013, or only when the country’s rice self-sufficiency program is realized. Their call is not necessarily motivated by patriotic aspirations.

Struggling rice self-sufficiency program

The local rice sector has not rid itself of a 30-plus-year problem. Farming in particular, has been plagued by high production costs resulting from expensive fertilizers and pesticides, inefficient irrigation support, inclement weather, pests, and tired rice seed varieties. Diminishing rice lands have also contributed to the damage.

More importantly, the Philippine government support to its rice self-sufficiency program had been eclipsed over the years by that of other countries’, namely Thailand, Vietnam, India, and recently, even China. And while others have progressed to self-sufficiency – and even to exporting, the Philippines has deteriorated to becoming the world’s biggest importer.

Our own program has become hostage to corruption, political challenges and changes, neglect, bureaucratic vacillation, and even misguided interests by both the affected sector and self-proclaimed nationalists.

Even today when there is a firm commitment by the agriculture department to attaining 100-percent self-sufficiency in harvested rice by 2013, there are certain groups that have presented an equally compelling argument to take advantage of cheaper rice imports if and when available.

After all, if Filipinos can have substantially lower-priced, albeit imported, rice on their tables, shouldn’t that be enough reason for government to open its ports to importation, and not necessary at zero-based tariff?

If other countries choose to subsidize their rice production through massive investments in irrigation, roads, storage, training, and even the development of new breeds of rice varieties, then the Philippines and Filipinos in fact are benefiting when such artificially priced rice is brought to our shores.

New threats

But the reality today is that imported rice prices are almost at par with local production. Since this situation could stay on for a few more years, the concern about free trade killing our rice farmers is no longer as urgent as before.

But more than the tariff issue, there are new threats that are seen to affect production in the coming years, one of which is the changing climate and the danger of rice lands being replanted to other crops that are sources of biofuels.

Also, the effect of global warming, or the rising temperature all over the world, is being feared by rice scientists. Changing weather patterns that would likely affect rainfall – or its lack – are seen to hit traditional production areas, and therefore disrupt harvests.

Research stations are working overtime to coax new varieties of rice that could grow faster in anticipation of warmer weathers. Studies have shown that rice yields fall by 10 percent for each one-degree rise in the minimum temperature at night.

Another threat comes from the rising coastal waters, and key rice-growing areas like Vietnam, Indonesia, Bangladesh, and India are vulnerable to increased salinity of their irrigation water sources.

Rice sufficiency a political time bomb

Given the recent paradigm shifts in global rice production, we could find ourselves critically exposed should another global shortage happen. Considering that we are a nation that regards rice as a main meal staple, any supply crisis could easily turn to political turmoil.

More than ever, government must focus on making its self-sufficiency program work – and at the soonest time possible. Similar to what our neighboring countries did, we will have to pay to make this happen. In the end, though, it would very well be for the best.

Philippine Collegiate championship games

The collegiate basketball season is just around the corner. Team line-ups are being finalized and several leagues will commence competitions by the end of this month. The search for the best collegiate teams in the country starts.

After the “mother league” tournaments, the teams are looking forward to the regional championships and then the zonal qualifying games. At stake are seven seats to the “Sweet 16” finals and the chance to win the much-coveted national collegiate title.

Other teams that will complete the “Sweet 16” line-up are the top four teams both of the UAAP and NCAA, and the champion of CESAFI, Cebu’s premier collegiate league.

Watch this space or visit www.CollegiateChampionsLeague.net for updates on collegiate basketball ongoings nationwide and the 2009 Philippine Collegiate Championship Games.

Should you wish to share any insights, write me at Link Edge, 25^th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.