Supporting Dar’s safeguards
We must support Agriculture Secretary William Dar’s Sept. 11 initiation of rice safeguard investigations. Ignoring this will result in dire consequences involving the lives of 3.4 million rice farmers (3.1 million in direct farming and 0.3 million in ancillary services). The question is: “At what price must farmers sell their wet palay to match imported price so he can sell his produce?”
PRIVATE SECTOR GOVERNMENT
(With tariff, freight and charges) P24 P25
Added for Retail
(With Logistics and Margin) 6 5
Total Price 30 30
Dry Palay 15 15
Wet Palay P12 P12.30
The table above answers this.
The two sources from the private sector are Federation of Free Farmers national manager Raul Montemayor and PhilConGrains president Joji Co. The government information comes from a unit that uses these preliminary estimates to guide them.
The private sector and government have different assumptions, but both arrive at the same conclusion. Both sources assume that dry palay price is one-half of the retail price. They also arrive at similar prices for wet palay: P12.00 and P12.30. We will use P12.30 for this analysis.
We will focus on wet palay. Montemayor said 80 percent of our farmers received the wet price because of their inadequate access to drying facilities.
A Department of Agriculture’s Sept. 9 survey showed the following average wet palay buying prices: CAR (P12.78); Region 1 (P11.62) Region II (P11.88); Region III (P12.41) and Region VI (12.00). This means farmers in these regions will have not much to show for their hardwork, so they may stop planting. On the other hand, there are three regions that have much higher buying prices: Region IVB (P16.22), Region VII (P17.50), and ARMM (P17.67). For the whole nation, the average buying price of wet palay is P14.10.
On Sept. 10, the Philippine Statistics Authority reported: “The production cost of palay in the country is usually around P12 per kilo.” Subtracting this from the average P14.10 buying price yields a profit of P2.10. Multiplying this by the 4-ton average yield per hectare means a net income of P8,400 for one cropping. This is what one-third of our farmers get, since they have no irrigation. The remaining two-thirds with irrigation will get double this at P16,800 a hectare. The national average size for a rice farmer is only 1.1 hectares. Whichever assumption you use, these annual incomes are not even 15 percent of the P125,000 national poverty line for a family of five.
We appreciate and admire the creative initiatives Secretary Dar has instituted to alleviate our farmers’ plight. He is now going beyond the symptoms and addressing the root cause of the problem: the low 35-percent rice tariff level.
Tariffication is desirable. It is far superior to quantitative restrictions, with its attendant misjudgment, arbitrariness, and corruption. But 35 percent is the wrong tariff level, which we pointed out as early as two years ago. We implemented it because it is a WTO commitment. Not doing so would have worse consequences but we must correct this with safeguard measures allowed by the WTO and our own laws.
Dar is resisting other pressures and has made the bold move of initiating the process of getting these safeguards. Considering the information provided here, it is imperative that we now fully rally behind Dar to improve, rather than damage, the lives of our rice farmers and finally achieve food security for our people.
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