Time for competence at DA

The legislative bicameral conference committee has approved the rice tariffication bill with no licensing by the NFA, removal of the NFA Council, and a P10 billion fund for rice competitiveness.  Economists have long advocated replacement of quantitative restrictions on rice importation with a simple tariff.

But the reform measure has also been vigorously opposed by some supposedly farmers groups and by agriculture officials, including the current secretary. They claim that import restriction protects local farmers. That has not worked for decades, but they still believe it miraculously will.

As proposed by the economic managers, the bill allocates P10 billion for the Rice Competitiveness Enhancement Fund to buy farm machinery and equipment, seed production, and training on rice farming. The restrictions on rice imports only punished rice consumers, including farmers who buy from the open market once their personal stocks are consumed.

President Duterte actually ordered rice import liberalization after heated discussions in the Cabinet between the finance secretary and the agriculture secretary. But in the end, the agriculture secretary insisted no written order was given by the President.

In fact, the agriculture secretary in his new capacity as NFA chairman, dilly dallied in implementing a DTI program allowing supermarkets to import 350,000 metric tons of rice. Only 15,000 metric tons have been approved for importation by the Lucio Co Puregold Price Club.

Under the DTI program, supermarkets and traders can import rice from any country with the maximum quantity to be allocated per importer set at 20,000 MT. Rice sourced from an ASEAN country will be levied a 35 percent tariff and 50 percent for non-ASEAN origin.

Removing the rice import restrictions became urgent after the country’s inflation rate zoomed up beyond the expectations of government economists and the central bank. The cause was traced to an above normal rise in food cost inflation, notably the price of rice.

NFA not only failed to import enough buffer stock, but also caused the public to panic when its administrator showed empty warehouses to media reporters. Duterte initially blamed the rapid rise of international oil prices for the high inflation rate. Many also mistakenly blamed TRAIN 1 as the culprit.

High inflation was caused by the failure of Duterte to decide amidst the long running debate between the old chairman of the NFA Council and the NFA administrator on the right rice importation policy. That probably explains why Duterte was using other explanations for high inflation.

Rice import liberalization makes sense. As estimated by Rolando Dy, an agri-business specialist from the University of Asia and the Pacific: CIF Manila for rice (25 percent broken) P22.63; tariff P7.92; Handling/importer mark-up P5; total warehouse price P35.55 and a retailer mark-up of P1.50 for a retail price of P37.05 a kilo.

But we must do more than just liberalizing rice importation. We need a total program for everything from convincing farmers to plant hybrid seeds to giving farmers access to farm credit and modernizing operations of rice farms.

We also need to have economies of scale in rice farming, same as Thailand and Vietnam. That is difficult, if not impossible, under the Agrarian Reform Law. We need to have a president bold enough to declare the law dead and come up with a better program.

We need a new Rafael Salas to lead our agriculture sector to produce the country’s food (not just rice) requirements. We can concede the current secretary has the best intentions, but we also need one with training and experience to do the job.

We need someone with the organizational ability of the late Paeng Salas, the international experience of William Dar, and the political skills of Arthur Yap.

While Dar and Rep. Yap had their chance as past agriculture secretaries, they didn’t have the funds now available to produce a new golden age. Hopefully the President realizes how important it is to have the right person… or risk high inflation again or worse.

Other than rice, the other important crop that has been neglected in the last two years of Mr. Duterte is coconut. It is so bad that the Thais are killing us in our own market.

At Unimart Capitol Commons, I noticed that the shelf for something as simple and basic as coconut milk is now Thai territory. Several brands of packaged coconut milk from the top shelf to the bottom are occupied by Thai brands. Only Knorr is Philippine made.

This reminds me of a similar visit I made a year or so ago to an Asian supermarket in California. I found a coconut water brand called Sarap that was canned in Thailand. There were also boxes and boxes of fresh young coconut or buko from Thailand.

Let us not talk about patis, a product as Filipino as we can imagine. That, too, is now dominated abroad by the Thais. We have been hearing how bad poverty is in our coconut regions. Processing of agriculture products like coconut provides another level of local value added that should help farmers get better prices for their produce.

Food processing isn’t as high tech as producing cell phones or as complicated as manufacturing cars. Why isn’t this happening?

Is this a problem of DTI as well? Even here, we have lost the cooking oil market to palm oil of Malaysia. I am not surprised given the massive assistance the Malaysian government gives their planters.

We are not even talking of allocating additional government funds to help the coconut farmers. The farmers have billions of pesos in coco levy funds sleeping, and maybe being pillaged somewhere. Why can’t these funds be used to help the farmers get a better living from coconuts?

I am hoping 2019 will be the year for agriculture. That can happen with a new inspiring leader for this sector. Results! We need less promises and more good results!

Boo Chanco’s e-mail address is [email protected].

Follow him on Twitter @boochanco