Rice economics

In college, I took up six units of Economics plus three units of Economics as an elective. In the MBA school, I took up six units of Economics and Managerial Economics.

Imbibing so many units of Economics does not make me an economist nor an expert on the economy. But it qualified me to teach Economic Journalism at Asia’s oldest university for three and a half years, with the rank and pay of an associate professor.

I claim some degree of expertise in an activity every Filipino who can count from one to ten indulges himself in – consumption. With a population of 115 million, the Philippines is the 12th largest consumer market on earth.  Philippine GDP is worth $1.29 trillion in what the dollar can buy in local goods, the 29th largest in the world.

When I was a boy of six or seven, two or three times a week, my mother would send me on an errand to the talipapa three blocks away from our house in Manila. With five pesos, I was to buy a kilo of fish (usually galunggong, today a luxury at P200 a kilo), plus a cut or a few pieces here and there of pork, tomatoes, garlic, kangkong, okra, aubergine (talong) and kalabasa (I can cook pinakbet).

The fish and the vegetables had better be fresh or I would be asked to go back to the market and demand from the vendors a refund or a replacement for the rotten goods I bought.  With the five pesos, I was to buy a ganta or two of rice as well. A ganta is a less than a kilo of rice. Today, a ganta of quality rice is P60. Today, if you do serious public marketing, P5,000 may not be enough.

Also, once a week as a boy, at four in the morning, I would accompany my mother to do marketing at Divisoria.  I was her porter. My reward for the two-hour effort was a cut of delicious rice cake and a piece of overripe mango.

When I started my professional journalism in 1970, agriculture was one of my major beats. Why?  Reporters did not find the agriculture beat sexy. Nor did they understand agriculture. In my case, I bought many books on Philippine agriculture, talked to farmers to understand farming and rice production, visited the IRRI and UP Los Baños, a number of times. I have interviewed more banana plantation, sugar plantation and coconut plantation owners (or farmers) than an average Filipino reporter.

Around the Quezon City Memorial Circle were a number of national government offices having to do with agriculture – the Department of Agriculture, the Department of Agrarian Reform, Philippine Sugar Institute and, of course, UP. In those days, daily newspapers had limited space for police and national news stories (three pages). But they had plenty of space for business and agriculture stories (12 pages) daily. I worked on per column-inch basis, not on a monthly salary. I made ten to 20 times more than a salaried reporter’s pay, monthly.

I relate this experience as a background to why I favor President Marcos Jr.’s imposing of price ceilings on rice – P41 for regular milled rice and P45 for well-milled rice.

Milled is having the husk, bran and germ of palay removed. If you ask me, regular milled rice is a better buy than well-milled rice because the former is more nutritious, although the latter looks better. Converting palay to rice is very inefficient in the Philippines. Losses range from 20 percent to 40 percent of the harvest, enough to cover an annual rice shortage of three million metric tons and enough to feed 14 million hungry Filipinos.

The Philippines is an amazing place. It has the world’s best college of agriculture, UP Los Baños. It has the world’s best rice research center, the International Rice Research Institute (IRRI) which is run by foreigners (non-Filipinos) but manned by Filipino scientists. The Philippine government has its own Philippine Rice Research Institute (PRRI).

When IRRI was founded in Los Baños in 1960, the Philippines was a rich country, richer probably than Japan, which was devastated by two atomic bombs, one of which was unnecessary.   Rice shortages were not a problem. Also, world hunger was not a problem. Today, 12 percent of Filipinos, or three million families, are hungry. Another 800 million are hungry, globally. What happened, IRRI?

In signing the price ceilings order, President BBM was not thinking primarily of lowering rice prices. The objective, I think, was observe the dynamics of the market place, how hoarders and speculators would behave and not necessarily arrest them. Arrest is hard to execute. The speculators and hoarders have government officials and politicians as partners.

Cynics and critics have criticized BBM for his order.  It defies the law of supply and demand. In the first place, the law of supply and demand works only in conditions of ceteris paribus, the economist’s term for all things being equal. In the Philippines, there is no such thing as equality. Outside of Africa, Phl has the world’s worst income inequality.

By the way, that story about then President Ramon Magsaysay (Dec. 30, 1953-March 17, 1957) ordering the repeal of the law of supply and demand is true.

The late Carlos P. Romulo, who was a good friend and who I interviewed a number of times for magazine cover stories, related the story to me. Then Ambassador Romulo was RM’s foreign affairs adviser. The one who advised RM against repealing the law was Commerce Secretary Cornelio Balmaceda, a Harvard MBA.

So is BBM, who was educated at Oxford and Wharton, trying to repeal the law of supply and demand?  No. He is, I think, trying to repeal our mindset, about high rice prices.

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