First of a series
IT was a roller-coaster ride for the global farm sector this year. It was hit by a double whammy of food and oil crises that pulled down farm productivity, drove commodity prices to historic highs and unsettled governments across the globe.
Dwindling global supplies and the planned purchases of huge volumes of rice by importing countries, including the Philippines, early this year reportedly led to food shortages and rapid increases in rice prices worldwide.
Export bans imposed by the world’s biggest rice exporters—such as Thailand and Vietnam—had aggravated the situation, leading to food riots in the capitals of several countries, including some in Asia.
According to the United Nations World Food Program, the global rice crisis was a “silent tsunami of hunger, threatening the lives of 20 million of the world’s poorest children.”
The Philippines, the world’s biggest importer of rice this year, had felt the brunt of the global rice crisis, as it spent about $1.5 billion to import 2.3 million metric tons of the staple. Last year, the country imported 1.79 million tons of rice worth only $494 million.
The huge amount paid by the government for rice imports was due to a surge in the prices in April to a high of more than $1,200 per MT, up from the December 2007 level of only $400 per MT. It was only this month that rice prices stabilized to $540 per MT.
Not in RP
With rice being a “political” commodity in countries where it is the staple food, experts initially thought the Philippines would go the Haiti way, where massive street protests triggered by food shortage toppled Prime Minister Jacques Edouard Alexis.
Such a doomsday scenario did not happen here, though, as the Philippine government rolled out bold measures to check wild price swings in the short term and ensure rice supply in the long run.
Anticipating a bleak global food scenario, the Philippines first moved to purchase 1.7 million MT of the grain in the first half and later entered into a government-to-government deal with Vietnam for the supply of another 600,000 MT.
The government also convened a special cabinet meeting as early as December 2007 to discuss short- and long-term measures to boost farm productivity.
This led to the P43.7-billion centerpiece farm agenda called the FIELDS, which President Gloria Macapagal-Arroyo unveiled during the National Food Summit in April.
FIELDS stands for fertilizer, irrigation and other rural infrastructure, education and extension work, loans, dryers and other post-harvest facilities, and seeds.
Strategies
In line with the FIELDS program, the Department of Agriculture had put in place a five-year rice self-sufficiency program (2009-2013) and jump-started several intervention programs to boost yields and stabilize supply.
The Rice Self-Sufficiency Plan 2009-2013 was crafted by agricultural experts and scientists in an effort to increase palay production by at least 5.1 percent yearly. The plan targets to reach a 100-percent sufficiency volume of 21.58 million MT by 2013.
The government’s strategy also included raising the palay support price to P17 a kilo from only P12 per kilo and increasing spending for farm infrastructure and irrigation, which were said to be the key requirements in increasing farm output.
With the huge volume of rice imports this year, Agriculture Secretary Arthur C. Yap ordered the National Food Authority and other agriculture agencies to pursue an “aggressive procurement and distribution” strategy.
Affordable rice
As the linchpin of the “aggressive procurement and distribution” strategy, the NFA beefed up its inventories with imports and flooded the market with affordable rice stocks costing only P18.25 per kilo.
Effectively, the government subsidized about P30 a kilo to enable it to sell cheap rice to the “poorest of the poor” Filipino families under a joint project with local government units, Church-based groups and the Department of Social Welfare and Development.
The cost of this program, projected to reach P20 billion by the end of this year, was financed mainly by the government’s “Katas ng VAT (value-added tax)” subsidy program.
The DA and NFA also sold rice at P25 to P35 a kilo for middle-income consumers, kept tabs on rice millers and grains traders, and run after hoarders and profiteers.
At the height of the rice crisis, this moves helped pull down the prices of the grain to P32 a kilo from a high of P40-P50. Rice was even more expensive at that time in Thailand and Vietnam, where the respective per-kilo prices were P56 and P67.
Domestic prices have fallen further since then, with the Bureau of Agricultural Statistics (BAS) reporting an average price in Mega Manila markets of P30 a kilo and even dropping later to as low as P23 in certain outlets.
Increased procurement
Yap said the strategy adopted by the government enabled it to temper increases in retail prices even during the traditional lean months—when market prices usually go up—and induce respectable farm sector growth led by palay and corn.
To further reduce the country’s dependence on rice imports beginning 2009, Yap ordered the NFA to shift its aggressive procurement operations toward domestic sources.
In the last few months of the year, the DA was able to secure the Cabinet approval for the food agency to purchase at least 1 million MT of palay from local rice farmers, or close to 6 percent of this year’s estimated palay production of 16.8 million MT.
Over the past two years, the state-owned agency has been purchasing only 1 percent of total palay production.
The DA has likewise teamed up with the Departments of Agrarian Reform, Environment and Natural Resources, and Finance, as well as the Board of Investments to develop a package of fiscal and nonfiscal incentives to help promote a corporate farming program.
(To be continued)
