Focus on farmer income

Urban farms are nice to have. But feeding all of us requires real farms with real farmers. Soon, we may not have enough farmers. Our farmers are getting old, average age 58 years old. Their children no longer want to be farmers for good reason. Farming keeps farmers poor.

Our farmers work in small farms of a hectare or two. The rice and/or other crops they plant each year don’t earn them enough to feed their families. They are indebted to their gills to traders (to buy seeds and fertilizer) and are forced to sell to the same traders at bottom prices come harvest time. They don’t have access to facilities for drying and storing their produce so they can wait for better market prices. They lack transportation to bring their produce to market.

Farmers earn supplemental income by being tricycle drivers, working for other farms or being construction workers. For most of the year, they are consumers of rice and other agricultural produce and suffer food inflation like the rest of us.

Two things must happen quickly for our farmers’ sake and ours. Their productivity should significantly increase. Government must also make sure they get the technical and marketing assistance to help them be better farmers who can grow enough food for the rest of us.

Last week, the President authorized the use of hybrid rice seeds at the behest of Henry Lim Bon Liong. The Palace press release claims “hybrid farmers have reported harvesting around seven to 15 metric tons (MT) per hectare as compared to the average 3.6 MT/hectare for inbred seeds.”

Actually, hybrid rice seeds have been around for a long while. I interviewed Henry back in August 2011 and he told me about the hybrid rice varieties his firm, SL Agritech Corporation (SLAC) had developed. Henry claimed to me back then that he had experimental plots of rice fields planted with his hybrid and “the farmers came back with eight tons, 14 tons of palay (unhusked rice) per hectare where before they could produce only three tons per hectare. Last year, we even got 17 tons per hectare.”

Of course, Henry was wearing his salesman’s hat when he talked to the President. He could have over promised and those 14 to17 tons per hectare production may be exceptional rather than the rule. It’s dangerous for the President to blindly buy Henry’s sales pitch only to experience expensive, but disappointing results later. The President’s credibility will suffer.

It would be a mistake to give Henry a monopoly on seed supply that benefits from the government’s subsidy. Nothing like competition to prevent any rent-seeking attempt. I am also told Henry’s seeds are imported.

Hybrid seeds provide higher yields, but are more expensive (inbred costs only P600 per kilo while hybrid seeds are around P2,000). Government has been promoting hybrid rice since 2001. But the adoption rate of farmers has remained low (about five percent of total rice area) despite concerted efforts and massive subsidies, PIDS, the government think tank, observed.

A former DA executive said PhilRice has conducted a number of studies that indeed show hybrid results in higher yield and income despite higher fertilizer cost (irrigation is now free). Most of our Nueva Ecija farmers are using hybrid seeds yielding them at least six MT per hectare. National average is 4.1 MT.

But the PIDS further noted that farmers do not see the yield advantage compensating for the higher cost of seeds, labor, and other inputs usually required by hybrid varieties. Unlike inbred varieties that can be grown by farmers, hybrid varieties must be purchased every cropping season.

On the other hand, I am told that the inbred seeds of PhilRice produce excellent results. The cost is one third of a hybrid. If the farmers are diligent, they only need to use one fourth of the inputs required by hybrids and achieve yields of seven to eight metric tons per hectare. The high cost of using hybrid seeds may worsen the poverty of farmers with the skyrocketing cost of fertilizers. Government will subsidize, but at the expense of other crops.

Usec Leo Sebastian, who was recently appointed the rice production czar of the President, worked at PhilRice and should know what to do. Hopefully he isn’t overruled because Henry, as president of the Filipino-Chinese Chamber, was close to the President during the campaign. The President, it seems, is susceptible to the last bulong.

In the end, what matters is how much money is left in the pockets of farmers after selling their produce, hybrid or inbred.

A former DA usec pointed out to me that the Philippine Statistics Authority cost and return study on palay production in 2021 already showed a net return of more than 40 percent. “It is huge, but if one is tilling a hectare, there is no way that you can earn a decent income from that despite all the subsidies given by the government.”

Simply put, a Filipino farmer is constrained not only by his productivity, but also by the size of the land that he tills and the lack of post-harvest facilities. This means, despite all these interventions (hybrid seeds, etc), a farmer still does not earn enough to support his family because of farm size constraints.

As one economist in one of my Viber groups puts it, “This perspective should reframe the policy discussion to focus on improving farmer incomes to lift them out of poverty.”

Since the rice farmer can’t expand beyond the hectare he owns, the objective is to allow land consolidation between farmers. But the debt condonation bill approved by the House states that farmers, whose debts have been condoned by the government, will be prohibited from selling or leasing their land for 10 years!

The ideal situation pointed out by economist Toti Chikiamco is to allow farmers to lease their lands and earn a lease income. They can become farm workers with a stable salary in bigger, better managed farms. They can become workers in agro-industrial enterprises.

Hopefully, the President, in his eagerness to solve the rice problem quickly, doesn’t believe Henry’s solution is risk-free, a sure thing. Other issues regarding incomes of farmers must be addressed.

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