The rise in the price of rice

I‘ve never fancied myself to be an economist; nor can I claim to be a great student of economics because I cut class so many times my economics professor practically gave up on me. But one thing is clear — I do know about the law of supply and demand. And it’s obvious that it is at work here judging from the rise in the price of rice as supply continues to decline on a global scale. Regardless of government’s explanations, there will be a shortage down the road because the continuing spike in the price of oil, conversion of lands for biofuels production and erratic climatic changes could seriously affect rice production all over the world.

In the Philippines, the demand for rice continues to grow because majority of people have it as their staple. BBC has already dubbed us the world’s biggest rice importer — which is rather ironic considering that we used to be self-sufficient with this crop. The UN also said we are No. 2 among countries most vulnerable to food shocks because we have become very dependent on food imports. Other countries will eventually refuse to trade food because they will need the supply for their growing population, like what China is doing now — turning down our request for 150,000 metric tons of wheat. They’re preparing for a crisis themselves where they have 1.2 billion people to feed.

Having said that, it’s obvious we have not been successful in two critical areas. One is in the agricultural sector which we have failed to develop in terms of technology, infrastructure, irrigation, post-harvest facilities and other support services to increase production. People like Enrique Zobel and Danding Cojuangco — both big landowners — have time and again warned about our land reform program which may sound like a socially and politically correct move. But in the end, they predicted its failure because simply giving land to farmers will not necessarily mean a better life for them. 

And they were right — because two decades after the implementation of the Comprehensive Agrarian Reform Program (CARP), many farmers continue to wallow in poverty. They need money for a tractor or carabao to till their land, seeds, fertilizer, pesticides and other farm inputs. They need money for food, medicine and other basic needs. In the end, many of these beneficiaries take out loans and “pawn” their land ownership certificates to financiers or sometimes, to corrupt agrarian reform officials to pay up these loans. If floods or droughts destroy the crops, these people get even more buried in debt.

In fact, during a dinner hosted by German Ambassador Christian-Ludwig Weber-Lortsch, we had a discussion on CARP with Congresswoman Etta Rosales and European Chamber president Henry Schumacher and how poverty has become more rampant because of the failure to develop agricultural lands. There’s a lot of migration to urban areas because people want to escape the extreme poverty in their provinces, especially the children who resent seeing their fathers trapped in a vicious cycle. Many farmers claim they were better off before CARP because they had a steady salary and did not have to worry about social security, education for their children and medical expenses since their landlords took care of these things.

On the other hand, loopholes have allowed landowners to convert and reclassify agricultural lands into residential, industrial and eco-tourism areas, virtually making the land exempt from CARP coverage. That’s why it’s probably time for us to review the agrarian reform program because it has not really been successful. Of course, there are a number of encouraging stories like San Miguel Corp.’s decision to give 144 hectares to farmers in Sumilao, Bukidnon. SMC also has a program that gives technical assistance and financing for farmers, assuring them a guaranteed floor price for crops like cassava — to the credit of Ramon Ang, president of San Miguel, who said  only a modernized agriculture program can provide the solid foundation for industrialization. And if I may add, give us food security especially during critical times. 

That we now face a rice shortage despite being a big producer is unfortunate. We can resort to stop-gap and short-term measures like importation; we can even declare death by musketry to hoarders and other opportunists who take advantage of the situation to make a huge profit. But what we really need is a long-term solution that would ensure our food security. We may not have full control of global warming and climate change, but we can certainly do something about protecting our environment. To those advocating jobs and investments over the environment, I have only two words for them: “Wake up.” Climate change is upon us. We are already suffering from the lack of water and ultimately, the lack of food. 

Another major factor is the continued increase in our population especially in the poor sector. As I pointed out in my column last week, rapid population growth especially in poor countries will push back economic development and exacerbate poverty. With the number of people increasing at a rate faster than the agricultural sector can produce rice and other products, the possibility of a major food shortage stares us right in the face. We certainly don’t want to be like Africa and Haiti where food rioting is already taking place at this very moment due to high food prices. And as I have said, hunger will defy any law. 

The bottom line is, developing the agricultural sector to increase food production and ensure food security to match the growing number of mouths this country has to feed is the only way to avert a serious crisis of unimaginable proportions. 

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