Licking the rice problem
Last Friday’s “Understanding Choice Forum” at the Eduardo Aboitiz Development Studies Center was very informative and timely. Focused on how we can attain food security, the forum featured three speakers from the Department of Agriculture (DA), National Food Authority (NFA), and the International Rice Research Institute (IRRI) to present what they are doing now in response to the escalating prices of food products, particularly rice, our main staple.
Listening to the three speakers actually made me feel that everything was under control. Under President Arroyo’s P43.7-billion new DA thrust for agricultural productivity and modernization, which she aptly calls FIELDS (Fertilizers, Irrigation and other rural infrastructure, Education and training of farmers, Loans, Dryers and other post-harvest facilities, and Seeds of high-yielding varieties), the objective is to increase palay production from 16.24 million tons in 2007 to 17.3 million tons this year, and further to 18.5 million tons in 2009; and 19.8 million tons in 2010, which would make us “100-percent self-sufficient.”
The message from the NFA is that there is enough imported rice already to meet our deficiency in local production for sale to the poor at a subsidized price but the NFA’s work is being complicated by the presence now of more people coming from the middle strata of our society who join the lines to buy NFA rice in view of the soaring prices of commercially-sold rice.
The Philippines is host to the IRRI and there should be no reason why we should be left behind by our neighbors in Asia in using new technologies to increase rice production. If ever we have a problem with our domestic production of rice, it could only be due to the deficiency in our rural support infrastructure, poor managerial ability of our local farmers, and the uneconomic size of their farms that makes the application of modern methods of farming less profitable. This is especially true under conditions of depressed farm-gate prices during harvest time that FA could not control because of its limited budget to buy palay for stocking purposes.
Because of the low profitability of rice farming, many rice farms ended up being sold for residential, commercial, or other uses. This further hampers our ability to attain food self-sufficiency. In the forum, somebody pointed out that the country’s investment in agriculture is very limited and this could only be explained by the low profitability of our farms.
Despite land conversion, however, I know that our existing rice lands may still be enough for our need for rice production but only if we make use of every modern production technology offered by IRRI and if the government also does its work seriously in building our rural infrastructure, especially irrigation and post-harvest facilities, sans corruption.
What is technologically possible in rice production, however, may not necessarily be financially viable to the farmers if they do not profit from it. My own observation is that most farmers get paid only for the labor part of their production. After accounting for labor cost, nothing much is left in profit to compensate for their effort in running the farm, the imputed rent for the use of their land, and interest for the capital they use in buying farm inputs. As a consequence, we find that, compared to the city dwellers, the income of our farmers in the countryside is much lower, which led me to think during the forum whether in fact the recent upsurge in the prices of food products is bad. What can be more welcome than this for the poor farmers in particular and for the nation as a whole to reduce our inequity?
Of course, high food prices are bad for those who do not produce food at all. But when we make it a government policy to sell food cheaper for all, we also run the risk of sacrificing the welfare of our much poorer farmers who produce the food. So, if the market leads to higher food prices, as will be occasioned when supply demand outstrips supply, the solution is not necessarily always to bring down the prices through government intervention. That may only encourage the farmers to sell their farms. The answer may lie instead in making the income of our urban dwellers higher, which can also be had only if we invest more in our industries and create more jobs faster than our population increases.
Lowering the cost of farming also help, and this can be achieved with farm subsidy, if necessary. Farm subsidy is easier to handle than the subsidy we give the rice consumers through the NFA, which has many leakages.
The thing is that since EDSA II, new investments in the country has been very scarce except in information technology-related industries. That explains why many of our workers remain unemployed or underemployed and why food prices have become untenable.
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