Exporting organic rice

Visible in supermarket shelves nowadays are those supposedly organically-grown rice made distinct by their coloring – red, brown, purple, and black. These rice varieties have a loyal and captive market while commanding premium pricing.

Local demand may not be as buoyant yet, but globally, there is a huge potential for these varieties especially among those who are more health conscious or only patronize farm products that are grown in pesticide- and chemical fertilizer-free environments.

According to growers, the margin of profitability for organic rice varieties has become more attractive with better farming techniques to grow these special grains. Because of this, a number of our rice growers are keenly developing the export potential of locally grown organic rice.

Niche market

To put things in proper perspective though, organic rice cannot supply the world’s food demand simply because it takes longer to harvest compared to the commercial white rice that we are all familiar with.

As a fertilizer executive often reminds me, if the world were to wait for its food to grow at the pace of organic rice, then half would grow hungry – which would be cause enough for riots and wars.

With this, our organic farmers should be reminded that the market they dare to develop will continue to be a niche market in the longer term. This may mean higher prices – and much improved profitability – in the future on potentially tight supply, but production cannot be expected to go anywhere near what the world’s rice producing countries are currently producing.

While our government can opt to support such products for export, it must not lose track of the need to further improve the current rice farming systems and invest in improved varieties and extensive infrastructure support, i.e., improved irrigation, better storage, and an efficient network.

Are we rice self-reliant?

Manuel Q. Bondad, who regularly provides this column with data and comments on rice, recently sent a letter that tackles national rice production with the view of getting the country on the road to self-reliance. He writes:

“That the National Food Authority (NFA) approved the importation of 187,000 metric tons of rice for 2013 made news in nearly all of our newspapers; just as 2.4 million metric tons (MMT) were procured from neighboring countries in 2010, 1.8 MMT in 2009, and 2.4 MMT in 2008.

“It is significant because yearly imports from 1998 to 2007 only averaged 1.0 MMT. This year’s  187,000 MT allocation is lower than the 189,700 MT import level in 1984 but higher than the 119,200 MT importation in 1988 when the Philippine population reached “only” 52 million compared to close to 100 million this year.

“It is noteworthy that over a 30-year period from 1983 to 2012, published records from the United Nation’s FAOSTAT show that the Philippines imported rice except in 1983, 1986, 1987, 1991, and 1992.

Indisputable gains in rice production

“We cannot deny government’s indisputable gains in rice production of late at 18 MMT, surpassing the highest ever recorded volume of 16.8 MMT in 2008.

“Similarly, Indonesia with its population of 240 million and rice production of 68 MMT is thrice ours for years deemed self-sufficient, and yet from 1997 to 2012, rice imports for buffer stock fluctuated from 348,000 MT in 1997, peaked to 4.8 MMT in 1999, dived to 189,000 MT in 2005, and settled at 1.95 MMT in 2012.Industry sources place imports at 800,000 MT in 2013.

“Why the importation? According to the Indonesian Grain and Feed Update in January 2013, the country’s initial rice production target of 71 MMT reached only 68 MMT in 2012 due to “conversion of agriculture lands to non-agricultural uses,” prompting Indonesia’s Ministry of Agriculture (MOA) to propose to the President of Indonesia a ban on such conversions fearing a shortage of suitable land for rice production. Will the Philippines consider a similar move?

“Moreover, the recent floods in Indonesia destroyed thousands of hectares planted to rice prompting the government to revise production targets. Our country is similarly situated as our brothers in Indonesia. Climate change is unpredictable. No country is spared.

Safe buffer stocks

“It is significant that Indonesia’s rice stock inventory of 2.3 MMT as of year-end 2012 is within the minimum level set by Bulog, the state grains agency, and deemed safe as buffer stock, compared to the Philippines’ inventory of 2.0 MMT as of February 2013, which buffer stock is sufficient for two months’ consumption assuming zero production and importation from March to April 2013.

“Critics should take note that in 2010 our rice inventory reached a record breaking 3.4 MMT that would take 120 days to consume, which shipment took more than a year for rice exporting countries to deliver to NFA’s bulging  warehouses from November 2009 to early 2011.

“The inventory carrying costs alone reached close to P100 billion in 2010. The same pattern was observed in previous years. No wonder NFA incurred mammoth debts and bank interest payments, while precious rice turned to staple not even suited for hog or cattle feed!

“Clearly, the NFA Council proposed importation of 187,000 MT is for buffer stock unless a “weather disturbance” will necessitate significant  importation on a scale that has buffeted Philippine agriculture for years. It could happen this year.

“We should be open to rice importation at all times. Why not, and at the right price? In our view our country, like Indonesia, is self-sufficient in rice. Self-sufficiency should not be equated with zero importation.”

Short break

I will take a short break next week as I will join my brother and fellow Philippine STAR columnist, Ray Butch Gamboa, on a driving tour of Greece. Our visit to historical places in Athens and the Peloponnese area was arranged courtesy of the Greek Ambassador to the Philippines, Madam Constantina Koliou.

This column will be back to discuss current issues on April 30, 2013.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.