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Fake news on rice

/ 05:26 AM September 13, 2019

At the Sept. 3 Senate hearing on rice, farmer leaders practically accused some government officials of fake news. The news must be clarified immediately so we can effectively work together.

The farmers questioned why the prevailing farm-gate palay price was reported by the Philippine Statistics Authority (PSA) at P17 a kilo. Romeo Royandoyan of Centro Saka said it was only P8 to P10  in many places. Responding to skeptical questioning on this, Rafael Mariano of Kilusang Magbubukid ng Pilipinas said the actual experience of farmer leaders should not be doubted.

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To help clarify this, we went to PSA to determine the methodology it used. Instead of fake news, we found there was misinterpretation of the data collected.

PSA did not do a random sample, and never claimed it represented the country.  They went only to a province’s five biggest municipalities, talked to people not selected randomly, and referred only to dry palay prices. The farmers were referring to wet palay prices, since this was what they  had because most had no drying facilities. The average cost difference due to drying is P3 a kilo.

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What caused some misunderstanding at the hearing is that the dry palay price of P17 a kilo was used as the farmer’s revenue, a P12-production cost was deducted and a P5 profit was pictured as the average farmer’s profit per kilo. Multiplying this by a 4-ton yield per hectare  resulted in P20,000 net income per hectare for a farmer, which was said to be adequate.

Many  farmers disagreed. Since they receive “wet, not dry, price,” P14 should be used as revenue a kilo.

FARMGATE PRICES/INCOME

2018 2019 Difference

Dry Palay P22.28 P17.62 P4.66

Wet Palay 19.28 14.62 4.66

Net Income /ha. P25,120 P8,480 P16,640

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Production cost for both years is P12.50 per kilo. But farmer’s revenue fell in 2019 because the price of imported rice had to be matched by a much lower domestic price.

Note that 2018 yielded P25,120, three times the P8,848 today. Today’s income is significantly below the monthly P10,481 poverty line for a family of five.

We commend Agriculture Secretary William DAR for his fast initiatives. On Sept. 10, he got the National Food Authority to increase its buying price for dry palay from P17 to P19. He talked to LGUs, government agencies, corporations and other stakeholders to buy even wet palay at prices higher than what traders were offering.

However, these measures will go on for years with much waste unless the tariff is increased. Too low prices of imported rice will force domestic prices to continually stay low to match them, with the resulting lower incomes and losses resulting in more poverty. There will be no end in sight.

It is fortunate the WTO and our own laws give us safeguard measures to raise our tariff to a level where we can compete with imports. Philrice said 70 percent, while Rep. Joey Salceda mentioned 65 percent. The right tariffication is far better than a government monopoly with its corresponding misjudgment, abuses and corruption. A progressively declining tariff rate starting at the correct level will allow us to compete properly with the necessary support services. WTO even allows these measures to last for 10 years.

Imports are still coming in, way above the trigger volume in July that allowed us to take safeguard measures. We must move swiftly. Though only one month in office, Secretary Dar wisely saw this.  On Sept. 10, he initiated formal safeguard proceedings. With this and other support, our farmers can now progress beyond the poverty line.

Because the traders today have an abnormally high margin, they will not raise their prices significantly and cause a sharp spike in inflation. The government earlier said rice tariffication would cut inflation by only 0.6 percent, and yet it said it needed tariffication to curb inflation significantly.  This was fake news, done at the farmers’ expense.

It is time to reject fake news, support the good news of  Secretary Dar’s safeguard measures and emergency mechanisms, and  work together with public-private sector unity for a better rice regime.

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