Rice continues to be an intractable problem.
Rising prices for the staple commodity continues to fuel the inflation rate. With untamed inflation, monetary authorities will keep interest rates higher for longer. That will be like applying the brakes on our growth rate.
Food prices are rising every month, frustrating all efforts to curb inflation. At the core of food inflation is rice inflation.
We thought we had licked that problem with a law that allowed free trade in rice subject to tariffs. Under this new rice trading regime, private importers are free to import the staple from the international market. The National Food Authority (NFA) will be limited to purchasing from local producers to maintain our buffer stocks.
Things did not work out according to expectation. As our rice imports rose, prices continued to rise as well.
Perhaps the most effective way to curb rice inflation is to dramatically cut the tariff rate imposed on the commodity. But that will deny government the revenue it needs to modernize our domestic rice production. This means the efficiency of our domestic production will remain stagnant.
We have among the highest cost of production for rice. One reason is that we have broken up the land and encouraged small landholdings. This effectively inhibits mechanization of our rice farm systems.
All the countries we import rice from are in the Asian mainland where great rivers irrigate the fields for a water hungry crop. Domestic irrigation costs, although partly subsidized by government using taxpayer money, continue to push up prices.
Our power costs, because of poor planning in the energy sector, continues to keep irrigation costs high. The more severe droughts we expect because of climate change will not help ensure cheap and abundant water supply.
Later this year, as the toll taken by the El Nino phenomenon is accounted for, we will likely see tighter global supply and a continuing spiral in prices. The beast will not be tamed.
President Marcos opened the possibility of certifying as urgent bills amending the Rice Tariffication Law (RTL). What those amendments are will still be subject to legislative debate.
From his other utterances on the subject, it appears one amendment the President is thinking about is allowing the NFA to import rice as well. Before RTL, the NFA had monopoly over rice importation. That monopoly opened wide margins for corruption.
By leaving to the bureaucracy the decision to import rice or not, we made domestic supply unreliable. Several times in the past, the NFA decided to import rice late because of political pressure from our own farmers groups. The delayed importation decisions caused supply uncertainty and actual shortages that required rationing.
We cannot return to a government monopoly over rice trading. The international market for rice is thin. We cannot be assured adequate supply whenever we decide to import. The bulk importation also creates an incentive for rice traders in mainland Asia to jack up prices and rake in huge profits.
Today, the surplus grains available for exportation has thinned dramatically. Some of the countries we import rice from have decided to restrict sales to ensure ample supplies for their own domestic markets. India, for instance, imposed restrictions on the volume and varieties of rice available for exportation. That creates uncertainties for the rice importing countries.
Since the Philippines is the largest importer of rice, we bear the greatest uncertainties. Should severe drought or severe rain destroy crops from our rice sources, we will be left with an empty bag.
We have no choice but to live with this great uncertainty. The last time we had some sort of rice self-sufficiency, our population was only 60 million. Today our population is nearly double that.
There is no way to increase the amount of land we have available for rice farming. Land is a finite resource. Flatland is even more finite. There are competing needs for the land that will bring greater economic output than rice. We need flatland, often the most arable, for commerce, industry and housing.
We will have to wrestle with our rice problem for generations to come.
One approach is to integrate farms, introduce mechanization and higher yielding varieties. One example for this is the FDN Farms in Isabela province that has accomplished a national record of 231 cavans of rice per hectare. With a little more effort, FDN Farms is confident it could break the world record yield achieved by a farmer in India.
In addition, FDN Farms has introduced fish cultivation and cross-cropping in its enterprise. It benefitted from training support for its workforce from the Department of Agriculture and TESDA. The owners of the farm are now offering their methods for replication in other farms elsewhere.
The increased use of higher yielding varieties could face challenges from environmentalist groups however. Recently a court, in a worrying turn against GMOs, ruled against the dissemination of protein fortified rice and enriched eggplants. This could be used as a precedent against other genetically modified crop varieties that are the only solutions to our shortage of arable land.
The agrarian reform orthodoxy that favors breaking up agricultural land into uneconomic little “family-sized” parcels could constrain the growth of properly capitalized, technology absorptive integrated farms such as FDN.
Our struggle to be an efficient food producer runs against many old orthodoxies held sacred by groups that insist they be called “progressives.” The road forward will not be easy.