Good advice

Dealing with a rice crisis requires good advice from someone with the experience, the technical knowhow and market savvy. That’s why I turned to Art Yap, former agriculture secretary, former Bohol governor, former PITC and NFA Administrator. With the President’s price control, I was curious to know how Art felt about it.

“I never believed in price controls,” Art said. “Price controls only give birth to black markets. Price controls may just add to local jitters. The challenge is simple: we must find ways to flood domestic markets with rice, even as the market now is carrying sufficient volumes to supply local consumption.”

That’s exactly what I wrote last Monday. We may theoretically have enough stock, but all that talk from a DA usec about how inadequate the NFA buffer stock is gave traders an excuse to raise the retail price of rice in the public markets. The root of our problem today is like a similar public announcement from NFA some years ago that spooked even the international market.

We are at the start of the rice harvest season, so we really shouldn’t worry too much. We need to acquire more rice stocks even if we have to import at a higher price to overcome the image of near empty NFA bodegas that the DA usec unleashed. Suspending the 35 percent import tariff can encourage private traders not to cancel their orders from Vietnam and Thailand so we can improve our in-country stock.

But the government must act fast. A rice trader wrote to me to say that they have stopped importing and have started to cancel import orders. He sent me a clipping of a news story in a Vietnamese newspaper with the translation that confirms requests of Philippine importers to cancel their orders. So, the 350,000 metric tons of imports the government is expecting to arrive this month is probably not arriving.

The other thing our government could do is engage India and our traditional supplier countries to sell us rice on a government-to-government contract basis.

We have done something like this in the past with regards to oil, another highly political commodity. Because the US and UK oil companies supplying us with oil were cut off by the Arab oil exporters in reaction to the Arab-Israeli conflict, we had to seek what we called g-to-g agreements for oil supply through the Philippine National Oil Company. It worked well.

Our relationship with India has been improving recently and we can appeal to this blooming friendship as a basis for a g-to-g rice supply agreement.

Actually, despite its rice export ban, India has started to allow select exports to key allies. That should include the Philippines. We share their distrust for China and just recently, we bought some defense armaments from them. Our bilateral relations with India are at an all-time high.

Alternatively, Art suggests that our government can lead the negotiations to secure volumes and for private traders to undertake the importations. In fact, Art pointed out, in the recent mission of the DA and NFA to India just a week ago, India suggested this modality.

Art suggests another way for the government to support private initiatives is to expand the breadth and coverage of supportive regulations under a green or food lanes program for food importers. Importing with less bureaucratic regulations has always been the request of traders.

Art said that the government could also easily make a request to the ASEAN plus three nations (China, Japan and South Korea) to access volumes from the emergency rice reserves or food security mechanisms. Many of these nations maintain buffer stocks measured not in months, but in years’ supplies and they will need to replenish and rotate these stocks anyway.

Easily within the power of the President, Art recommends that NFA raise its buying price for palay (unhusked rice). It had been at P19.00 per kilo for the last 13 years.  The inflation rate has gone up many times in that time and, yet, the price support for rice farmers has not moved at all. Why should farmers sell to NFA when local traders are buying at a premium of P3 to 5 per kilo over the NFA support price? It is not surprising why NFA’s buffer stock is very low.

If NFA wants to buy more local palay, Art said it must change its policy as the buyer of last resort to being the buyer of first resort by setting a higher buying rate for the industry.  The price of palay changes through the seasons, so NFA must buy palay at a “price range” depending on prevailing market conditions instead of being pegged on one immovable price.

“I believe if NFA is given the authority to buy at a higher price from farmers, coupled with an aggressive buying policy of being first to buy, then purchasing at least 10 percent of the national harvest and setting the tone of better prices for farmers is possible,” Art said.

Putting price controls that will impoverish market vendors who are also on a hand-to-mouth existence will not add to the country’s overall supply. And unless the government acts quickly by securing supplies from India and our ASEAN allies, we may end up unprepared if the international rice market situation worsens, as it could.

Still, Art thinks there is no need to panic. Our rice prices are rising because we are at our lowest production at this time in the year or what is called the “lean months.”

But of greater concern for all Filipinos, in Art’s mind, is how to break free from this recurring food crisis. We need a sustainable solution. The situation is aggravated by the continuing rise in the number of mouths we have to feed. In the last international food price crisis in 2008, we were 90 million Filipinos. Today we are a nation of more than 110 million!

In the end, we must face the challenge of making our agricultural sector efficient and productive to feed all of us. Art has some ideas on that too for another column.

Boo Chanco’s email address is [email protected]. Follow me on X (twitter) @boochanco