COMMENTARY
SW or SWD for rice?
By Ernesto Ordoñez
Philippine Daily Inquirer
First Posted 02:17:00 04/18/2008
Filed Under: rice problem, Food, Agriculture
Is it SW (social welfare) or SWD (seeds, water and dryers) that we really need to address the rice situation? Put another way: “Is it better to give a person a fish, or teach him or her how to fish?”
Of course, it is best to do both. But given limited resources, one should balance the short-term requirements with long-term needs.
If a person needs a minimum amount of fish to survive so that he can at least live long enough to learn how to fish, then that minimum should be given. However, all remaining resources should be devoted to teaching the person how to fish so that, in the long run, it will not be necessary to give a “dole out” of fish.
NFA subsidy
If one buys “palay” [rice before milling] in the northern province of Isabela at the National Food Authority (NFA) support price of P17 a kilo, mills the rice at an assumed 62.5 percent recovery to convert this to premium special rice, adds the milling fee, freight from Isabela to Manila, and the standard P30 mark-up, the landed cost of a 50-kg bag will be P1,495. This translates to P30.10 a kilo.
Table 1 is constructed with input from Joji Co, president of the Philippine Confederation of Grain Associations. It assumes different price levels at which a kilo of palay is bought from farmers at the farm gate.
If we assume that a person buys palay at the current P17 NFA support price and sells at the NFA retail price of P18.25, he or she will lose P13.85 a kilo because the cost incurred is P30.10 a kilo. If that person is wealthy enough to buy 5 percent of the approximately 12 million tons (or 600,000 tons) required by the Filipino people, and sells this at a loss of P11.85 a kilo, then he or she stands to lose P7.1 billion.
Note that this will benefit only 5 percent of the population, when the poor are estimated to account for 32 percent of our people.
The government must decide at what level to subsidize rice sales. That level should not jeopardize getting the resources necessary to achieve rice self-sufficiency so we will not be subjected to food shortage and high import prices arising from the global rice shortage.
Table 2 we constructed with updated figures from Department of Agriculture (DA) and other sources that show the different ways (SWD—weeds, water and dryers) to achieve rice self-sufficiency.
Assuming a 10-percent production rice shortage, or approximately 1.2 million tons of rice, we note that converting the 2.4 million hectares currently using regular seeds to certified seeds will add another 4.5 million tons of palay or, assuming a 62.5-percent recovery, 2.9 million tons of rice.
This is more than enough to cover the production shortfall. Other methods like converting to hybrid seeds or using the System of Rice Intensification (SRI) can also be employed with different returns of investment (ROI) rates, depending on what the objectives are for the area.
For water, we note that irrigation rehabilitation is less than 1/10 the cost of new national irrigation systems (NIS) on a per hectare basis, yet yields the same additional rice crop. There are currently 400,000 hectares of irrigation systems that have to be rehabilitated.
If we do this, we will have an additional 1.9 million tons of palay, or 1.2 million tons of rice, enough to cover the projected national rice shortage.
Appeal to governors
Dryers are also a very desirable option. Faulty drying accounts for a third of our 15 percent post harvest losses. If we address this problem, we will cut our rice shortage in half.
Last April 15, in the MAP-Agribusiness and Countryside Development Foundation meeting, former secretary of agriculture Senen Bacani said: “We can easily solve our rice shortage if we set our minds to it.” The table on Rice Development Options supports this contention. The ROIs [returns on investments] are high and therefore provide sustainability, just like “learning how to fish.”
It is hoped that the need for rice self-sufficiency will be given the proper attention and resources, rather than sacrificed in favor of an over-emphasis on “giving fish” in the form of too much food subsidies.
In the current law, the local government units (LGUs), more than the DA, are primarily responsible for agricultural development.
We recommend that the governors meet the mayors and the farmer stakeholders in each province to decide the appropriate balance between SW (social welfare) and SWD (seeds, water and dryers). The optimal combination of SWDs can be guided by the additional costs and ROIs for each option.
The governors can then jointly help the national government complete the rice master plan for self-sufficiency that was abandoned in 2003. This way, our nation can finally be on the road to food security.
The author is the chairman of Agriwatch, former secretary for Presidential Flagship Programs and Projects, and former undersecretary for agriculture, and trade and industry. For inquiries and suggestions, email agriwatchphil@yahoo.com or call or fax +632 8522112.
TABLE 1: RICE LANDED COST IN MANILA
TABLE 2: RICE DEVELOPMENT OPTIONS
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