SMC offers to import rice

In a freewheeling conversation with Ramon Ang last week, we talked about the current rice crisis. He quickly offered to buy all the rice needed to bring down retail cost by 30 percent.

RSA explained that San Miguel has modern grain storage facilities nationwide which can be used to accept delivery of rice shipped in bulk (no sacks). They can also store rice in temperature and humidity controlled silos that make it possible to keep the grains fresh for up to two years. No bukbuk.

He is just waiting for the law to be passed allowing the private sector to import rice and just pay a tariff. The price of good quality rice is low enough in the international market, he said, so that even with a tariff, it can be sold at a discount to consumers.

I mentioned RSA’s offer to Finance Secretary Sonny Dominguez when I had lunch with him at his office the following day. Sec. Sonny immediately said that is good news.

Indeed, the finance chief said he was just talking to Presidential Spokesman Harry Roque who was about to announce government’s decision to loosen rice import rules ahead of the passage of the rice tariffication law. Harry confirmed this to me by text message.

Sec. Sonny said he told the NFA Council that the private sector should be able to import rice under the minimum access volume rule precisely because the key word is minimum… they can import above that minimum as needed.

The finance secretary said infusing more rice supply in the market at this time is the only way to bring about supply and demand balance. That, in turn, will bring down retail prices and our high inflation rate as well.

Of course, the finance secretary is correct. This is basic economics. Indeed, even the agriculture secretary stumbled on this truth when he said we should legalize smuggled rice as an emergency measure.

All those who criticized the agriculture secretary, including a senator are plain idiots for failing to see the suggestion as a good stop gap measure to increase supply. The crisis in Zamboanga, the agri chief said, was due to our successful anti-smuggling drive.

The smuggled rice in the southern backdoor is part of the supply chain that was disrupted. I understand that from Zamboanga to Tawi Tawi, they have been enjoying low cost smuggled rice for years.

There is no good reason why we should deprive our brothers and sisters in our southern backdoor from continuing to enjoy cheap good quality rice. They are closer to Sabah than they are to any NFA warehouse. They have every right to complain they are being deprived of something our own government cannot provide.

If you thought about it, rice smugglers, by infusing supply in our retail market, have been doing a better job than the NFA in keeping the retail price of rice at a reasonable level nationwide for years. Our bad restrictive policy on rice importation is to blame. This is what the tariffication law should fix.

Sec. Sonny Dominguez also told me last Friday that he is in favor of getting the corporates like San Miguel into agriculture. He thinks this is the only way we can enhance food security and even lift farmers out of poverty.

The finance chief observed that unless we do large scale agriculture, which only the corporates can do, we will keep on having problems with supply and prices. He is against giving the Agrarian Reform Law another extension. The law has failed all these years and it is stupid to expect a better future outcome.

Sec. Dominguez was once an agriculture secretary. He knows why, unlike our regional neighbors, we are unable grow enough of our own food.

RSA, for his part, thinks government must also help farmers by guaranteeing to buy local rice at a price that will encourage farmers to plant. He said San Miguel is now buying a large part of the ingredients they need locally.

San Miguel has entered into contracts with farmers to grow cassava and corn, among others, with guaranteed price. Marketing their produce is a major problem of farmers and that normally leaves them at the mercy of greedy traders.

San Miguel also goes into contracted growing of livestock with the company supplying feed and guaranteeing to buy all the chicken, pork, or beef the contract grower can produce.

RSA said he is ready to offer the use of their modern storage facilities to government at cost. That’s a good idea because the benefit of San Miguel’s investment in those facilities can be maximized for social good.

As far as Sec. Dominguez is concerned, San Miguel should be able to help government bring down the retail price of rice right away by importing faster than NFA can. But I think those who benefit from the current system will make sure San Miguel won’t go far in its offer. Many are taking advantage of the supply gap to boost prices.

It is also unfortunate government bureaucrats can’t get their act together in bringing down food price inflation. Sec. Dominguez complained about how Customs had been holding shipments of galunggong for no good reason. That only raises import cost passed on to consumers and increases food cost in the consumer basket. The resulting high inflation rate embarrasses the Duterte administration. Customs is under him, so I guess he told them off.

The rice situation, on the other hand, is testing the political will of President Duterte. He is being severely undermined by NFA officials who can‘t quickly bring the rice supply they imported to market. Worse they imported old bukbuk infested rice even as they probably paid the price for good commercial rice.

The next move is really the President’s.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco