Rice is what we make of it

my Trade Tripper column in this 1-2 October 2016 issue of BusinessWorld:

If there is ever a product that most profoundly shaped Philippine politics, economic policy, and international trade, rice (along with sugar) would have to be it. Yet most policy initiatives dealing with rice are sadly defensive. Such, despite the fact, that most Filipinos implicitly profess heavy emotional investment in that little grain.

The Philippine Rice Research Institute, for one, considers “zero rice importation or self-sufficiency has always been the elusive goal of Philippine agriculture policies regardless of political dispensation. Any inferior goal is unpatriotic and criticized as a failure of the government and the nation as a whole.”

Strong stuff.

Pons Intal and Marissa Garcia (in a 2005 PIDS study) discussed the magnitude of rice’s political clout in this way: “the price of rice has been a significant determinant in election results since the 1950s.” That includes the Martial Law years. A possible exception is Estrada’s 1998 popular runaway election.

The problem is basic: we only have around 4.7 million hectares of land suitable for rice. Compare that with 7.8, 10.8, and 13.8 million hectares of Vietnam, Thailand, and Indonesia respectively. Those millions of hectares are irrigated well and fully by natural large river systems.

The Philippines does not have an equivalent inherent irrigation source and the man-made ones are poorly maintained. Ironically, the modern rice breeds we use (same with Vietnam, Thailand, and Indonesia) for greater yields and to survive require heavy amounts of water. Unfortunately, our incoming water flow is almost appallingly nil compared to the aforementioned three countries.

Thus, rice yields are at 5.75 tons per hectare (t/ha)., 3.1 t/ha., and 5.13 t/ha. for Vietnam, Thailand, and Indonesia, respectively. The Philippines does have a respectable 4 t/ha. but for an area less than half of its competitors.

Add the fact that Vietnam (land area of 332,698 sq. km.) has a population of roughly 92 million. Thailand 513,120 sq. km., for a 67 million population. Indonesia 1,904,569 sq. km., for a 255 million population.

The Philippines (area 300,000 sq. km.) needs to feed a population of 100 plus million. Rice consumption, incidentally, means not only as food but also as seed, animal feed, or other non-food uses.

The population increase also relates to the need to convert arable land for residential, commercial, or industrial purposes.

And yet, to add to the fundamental disadvantages that the Philippines has regarding rice production, is the inability of the rice industry to accept and adjust to the same: “farmer interest in rice farming has diminished through the years due to the increasing cost of rice cultivation brought about by the rising opportunity cost of labor and land and the availability of lower priced imported rice, which further dampened incentives for rice production.” Then, also “the lack of proper maintenance of irrigation facilities has meant the deterioration of these systems and the reduction in the effective life of these investments and area coverage.” (Intal and Garcia)

The issue of rice protection has cropped up (pun intended) as a decision is being made to lift WTO quantitative restrictions. When that happens, cursing and gnashing of teeth will be predictably heaped on the WTO, the multilateral trade system, globalization, and the free market.

But then: while protected industries welcome quantitative restrictions or high tariffs, the un-talked about logical unwelcome offshoot is smuggling.

So, despite the Philippines being among the world’s top importers of rice, we still had a rice smuggling problem amounting to almost 50,000 metric tons weekly (as reported by The Diplomat in 2014).

The problem is not the WTO nor smuggling; it’s the inability to feed the huge demand. An inability existing even before the Republic was born.

We’ve practically been a net importer of rice since the 1870s. Except for a small window in the early 1970s, we’ve never achieved rice self-sufficiency. And our insistence in becoming so only resulted in rice prices amongst the most expensive in Asia. Place that within the context of a poverty rate of around 25%.

The Foundation for Economic Freedom’s position calling for the removal of the quantitative restrictions is, I think, the right one: it will “lower rice prices, reduction in hunger, and lower inflation”. In the end, the poor benefits.

And food security should be better defined as managing our food stocks rather than insisting on production self-sufficiency.

Finally, we need to explore other options aside from mere restrictions, importation, and greater budgetary outlay.

One way of thinking about it: do we view local rice production as a means of feeding our citizenry or can it be shifted for cultural, social, tourism, and heritage purposes?

In short, retain the lands most suited for rice, employ willing and able farmers, yet without the pressure of rice production as the source of staple for the whole country.

By reframing rice’s importance, not necessarily now but thinking long term, we can then limit and put focus regarding people, land, money, and effort (including training and regulation) to a rice production that is doable and reasonable.