DA bats for limited foreign equity in rice production

MANILA, Philippines - The National Rice Program of the Department of Agriculture (DA) has rejected the proposal of the National Economic and Development Authority (NEDA) to lift limitations on foreign equity in rice production.

In a memorandum addressed to Agriculture Secretary Proceso Alcala, DA Assistant Secretary and National Rice Program coordinator Dante Delima said his office is in favor of allowing foreign direct investments in some aspect of rice production but is against full foreign control in production and supply.

Sought for comment, Delima said NEDA conveyed the proposal on the easing of foreign equity in rice production to his office in a letter dated May 30.

“This may have been intended to increase foreign investment, but our position is that rice production should be controlled by Filipinos,” he said.

Delima noted that rice remains an important crop as food and as source of livelihood for many Filipinos in rural areas.

“More than two million households are engaged in rice-based farming; millions more of farm laborers, and tens of thousands of merchants, depend on rice farming and trading for a living,” he said.

He also noted that the Philippines should be protected from the volatility of world trade.

“Countries can be held to ransom by any reason (economic, political, or ideological), and world rice trade is the subject of political decisions by governments who are the biggest market players and who consider rice a vital commodity,” said Delima in the memorandum.

He said that instead of allowing foreign participation in production, foreign participation should be limited to post harvest facilities and marketing activities.

“It is for these considerations that we strongly oppose a proposed 100 percent foreign equity in rice production and supply; while allowing for limited foreign direct investments in post-harvest and marketing activities, subject to consultations with rice stakeholders,” Delima said.

“We however support foreign direct investments in the area of farm mechanization, post harvest facilities, credit, processing of by-products and other high-end products, and exports,” he added.

He proposed that the amount of foreign investments be designated by the government’s investment board, while joint venture agreements may be subject to mutually-agreed upon ratio of investments.

He also said tax holidays and tax relief may be granted for a specific period (i.e. five years), while lease contracts may be subject to a 25-year term, renewable every 10 years thereafter.

He proposed that employment of local citizens may be mandated in areas where no or little skill is required; while for areas that need special skills, the number of employees from the local skilled labor force or experts may gradually be increased over time.