Hearing the farmers plea

If we do not hear the farmers’, not only will they be in peril.  Our poverty will increase, food security threatened, and our peace and order disrupted. At the recent November 25-26 National Rice Industry Stakeholders Conference in Iloilo organized by the Department of Agriculture, a farmer leader in his twenties said: “Kung hindi ayusin ang kapatagan, ang mga tao ay pupunta sa kagubatan (If the lowlands are not fixed, the people will go to the mountains).”

He was referring to rice farmers losing more than half their income during the past year because of the newly imposed 35 percent import rice tariff. This forced the domestic price of palay to decrease in order to compete with the very cheap rice imports.

How bad is the rice farmer’s situation? Using the average of 4 tons a hectare, the production cost of P12 a kilo (though the official DA presentation at the conference showed it is now P12.45), and the officially recorded dry palay price of P15.43, the net income was P12,040.  This is only 40 percent of last year’s P31,760.  This is using Philippine Statistics Authority (PSA) information as of the fourth week of October. Since PSA data was not updated for November, we instead used DA data updated as of Nov. 25.

The average farmgate price for the month of November was recorded at even lower than last month at P4.40, with income correspondingly decreasing to only P9,600 a hectare.

The critical question that few have raised and no one has officially answered is :  “At what price can the farmer’s produce compete  with imported rice?”

A few weeks earlier, I showed that two data sources (are from the private sector and the other from DA)  independently and unofficially estimated that price to be P12.00.  Two days ago, we collected the newest DA data available. Assuming the landed cost of imported rice at P16.00, a 35 percent tariff of P5.60, and the cost to the warehouse at P5.20, the equivalent total cost at wholesale would be P26.80. Though the wholesale to palay price ratio has deteriorated from 2.2:1 in 2018, 2.4:1 in 2019, we will use the conservative 2018 ratio. The resulting palay price (P26.80 /2.2) is P12.18, similar the P12.00 price estimated a few weeks ago. At the P12 production cost per kilo, the average farmer cannot survive. However, the more productive farmers can, but they are in the minority.

At the Rice Conference, the farmers were told to wait one or two more years to give the 35 percent tariff a chance.

The farmers’ plea, heard loud and clear with many expressing much anger, was that this was unfair and cruel.  The government imposed the 35 percent tariff. But following the law using Republic Act 8800, the government can remedy this mistake by using the safeguard of increasing the tariff to the correct level.

They can then implement an adjustment plan, which other countries and our own industry sectors do, to decrease this rate to 35 percent or lower. But this should be accompanied with the competitive enhancement measures and government support services that our government has not been giving our agriculture for the last 22 years, when we fist committed to rice liberalization. The farmers’ plea has been ignored during all this time.

Their plea, and their justifiable demand, must now be heard and acted upon. Given the very low P12 per kilo the farmers must sell their palay to compete with the cheap imports made possible by the 35 percent tariff, many in the recently held National Rice Industry Stakeholders Conference specified that increasing the 35 percent tariff is a top priority. They ask: “What is the government waiting for?”