Revisiting RCEF: Did the rice fund rise to the occasion?

Special report

(Conclusion)

MANILA, Philippines — Game changer.

That’s how pundits described the creation of the Rice Competitiveness Enhancement Fund (RCEF) five years ago.

But was it really game-changing? Not yet, said experts and industry players interviewed by The STAR.

Indeed, the RCEF has made some impact, but not to a level that the government envisioned when the blueprint  was being drafted in 2019.

With the fund now in its sixth and final year this 2024, lawmakers are tinkering with extending the RCEF.

Experts say that a lot of things have to be done to maximize the potential of RCEF and make it a truly “game-changing” mechanism.

First, reallocation of the funds for each component. Putting half of the guaranteed P10 billion fund every year to mechanization sends a message that machines will have the “greatest” impact on farmers’ productivity, says Senen Reyes of The University of Asia and the Pacific (UA&P).

But what’s the rationale behind it?

“If they can really zero in on where the greatest impact was (during the implementation), that would be good. They should tweak the allocation to really focus on what gives the greatest benefit (to the farmers),” said Reyes, who heads UA&P’s Center for Food and Agri Business.

A midterm review of the Rice Trade Liberalization (RTL) Law conducted by a family of economists – Fermin Adriano, Lourdes Adriano and Karlo Adriano – also suggested revisiting the allocation formula of RCEF. The review was published in 2022 as a book titled “Philippine Rice Tariffication Law / A Midterm Review: Challenge and Opportunities.”

They argued that the success of the RCEF mechanization component depends greatly on “land consolidation” to achieve economies of scale. They proposed that farmers must be organized in clusters or blocks to achieve “efficient” use of agricultural machinery.

For them, the current allocation for mechanization is “reasonable” considering that labor accounts for a third of palay production costs.

Services, not machines

Monetary Board member V. Bruce Tolentino, however, proposed that the mechanization component be converted into a service-oriented one instead of giving away machines to farmers.

Under this scheme, Tolentino explained, farmers are given vouchers that they can use to avail services from government accredited enterprises. The enterprises are regulated by the government possibly through a franchising system.

Through this way, the burden of maintaining the life of the agricultural machines would be on the enterprises, Tolentino said. This model is currently practiced in the agriculture sectors of other countries like Vietnam, Thailand and the United States, he added.

Such practice is currently present locally, albeit, in limited terms, such as the provision of drone spraying and seeding services.

“If they provide good services then the farmers will be repeat customers. If the farmers are not happy then the franchise of the enterprise will not be renewed,” he said.

Tolentino’s proposal attempts to achieve two things: relieve the government from procurement of machines and provide farmers with freedom to choose the service appropriate to their farms.

One of the major issues of RCEF implementation was the struggle of the Philippine Center for Postharvest Development and Mechanization to procure machinery. The agency was overwhelmed with the P5-billion budget given to it to implement the mechanization program.

Greater seed component

Experts said the RCEF seed component must be retained and expanded as it is one of, if not, the most successful components of the program to date.

Tolentino proposed the allocation of the seed component to increase and widen its coverage toward distribution of hybrid seeds and climate-resilient rice varieties such as those tolerant to drought, floods and salinity.

RCEF should also support community-based seed production according to a study by Ricardo Dizon, Hazel Tanchuling and Raul Montemayor titled The Gains and Losses of Producers and  Consumers in the Implementation of Rice Tariffication Law: An Integrated Impact Analysis.

The seeds produced from this program must be “promoted” to help farmers cope with rising production costs, according to their study published last year.

The authors also suggested that rice farmers “must be encouraged” by the government to venture into “niche” rice production and supply markets for heirloom rice, organic rice and other specialty rice varieties.

Real-time monitoring required

The establishment of a real-time publicly available monitoring system is also necessary moving forward.

Observers said that such a mechanism has been absent, albeit, too late to be established by the RCEF implementing agencies.

The implementing rules and regulations (IRR) of RCEF mandated the creation of a website that would allow the public to monitor the progress of each component. Part of the website should be the Rice Fund Impact Monitoring System which the Department of Agriculture should have established a year after the IRR took effect or last March 5, 2020.

“That monitoring platform was not followed,” Philippine Chamber of Agriculture and Food Inc. president Danilo Fausto said.

The putting in place of a “robust” monitoring and evaluation (M&E) system was one of the recommendations by the Adrianos. They pointed out that the M&E system needs to be “efficient, rules-based, transparent and accountable.”

Irrigation, fertilizer missing

Experts also said the RCEF must have an institutionalized allocation for small-scale irrigation and fertilizers. These two components, they argued, are critical to raising farm productivity and yet were absent in the original mix of RCEF components.

At present, the government provides fertilizer subsidies but is dependent on existing market conditions, such as the ongoing Ukraine-Russia war. Including fertilization as an RCEF component would ensure that farmers would be able to apply the necessary amount of farm input, they said.

“Science would tell us that the greatest impact to productivity are seeds and fertilizers,” Reyes said.

Fermin Adriano, a former agriculture undersecretary, proposed that the subsidy must be in the form of vouchers or direct cash grants to allow farmers to choose the necessary input for their farm.

Small-scale irrigation systems can also be funded via RCEF to complement the large irrigation systems constructed by the government.

Small-scale irrigations are critical in supporting farmers’ to plant high value crops, especially during dry season, and combat the ill effects of El Niño.

Fausto suggested that a portion of excess rice tariff collections be used to bankroll crop diversification programs for uncompetitive rice farmers, fulfilling the original wisdom of the provisions of the Rice Trade Liberalization Law.

Farmers’ experience

Nhel Victor Verastigue, a rice farmer, for his part, said RCEF gave farmers like him some relief.

According to the Philippine Rice Research Institute (PhilRice), Verastigue, a farmer in Atimonan, Quezon, has doubled his rice yield to 6.6 metric tons per hectare from 3.3 metric tons per hectare using seeds distributed under RCEF.

“Receiving free certified inbred seeds was a big relief for us. We no longer worry about sourcing seeds because we’re assured that new, high-quality inbred seeds with good yields will be provided through the program,” Verastigue was quoted as saying by PhilRice, the main implementer of the RCEF seeds component.

For Joselyn Anda, another farmer-beneficiary, RCEF seeds component alone doubled her income to P30,000, based on the report by PhilRice.

Anda reduced her expenses by P1,800 after following the recommended seeding rate of 40 kilograms for one hectare of land, PhilRice said.

“Joining RCEF has led to a 50 percent reduction in our expenses, dropping from P20,000 to P10,000 per hectare,” Juanito Oliquiano of Polillo, Quezon was also quoted as saying in a separate report.

But the same may not be said for all farmers.

Industry experts said the future of RCEF must embrace flexibility to address the emerging and unforeseen issue of all Filipino rice farmers.

As the experts noted, it will be a “challenge” for the reviewers to determine the success of RCEF — and its future beyond 2024.

“After all the funds and interventions, it seems that (some) rice farmers are still poor,” Ditas Macabasco, a senior agribusiness specialist at UA&P-CFA said.