Economists, rice leaders: Sustain rice tariffication, but guarantee farmers’ support, correct trade imbalances– rice hoarding, illegal trading, pricing; form farmer alliances

Dr. Glenn B. Gregorio (fifth from left), SEARCA director, leads forum on Rice Tariffication Law

December 4, 2019

Economists and rice sector leaders have pushed for mixed policy recommendations in light of the rice tarification law (RTL) — pressing for sustained implementation yet strong and “guaranteed” farmer support, or the RTL may turn to be “disastrous.”

   Safety nets for the protection of farmers are of prime importance as these apparently have not been installed as evidenced by farmers’ poor plight from palay’s collapsing price.    

   This has been raised during the “Regional Implications in the Philippines’ RTL” forum organized by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA). 
   “The challenges we always face every cropping season relative to systemic barriers to farmers’ income  were not addressed head on in the RTL,” said Cresencio C. Paez, director of Asian Farmers Association for Rural Sustainable Development.

   “Safety nets for the protection of the farmers and consuming public were not taken into account concretely and strongly. A lot is said about promises. (But there is a need for) ‘guarantee’ of protection.”

   The challenges waiting to be addressed, Paez said,  amid the RTL’s implementation are “price volatility, land productivity, climate change’s effects, market power which involves cartel (traders hoarding rice) resulting in market abnormalities, governance, corruption, weak government agencies, and faulty extension delivery.” 

   “The RTL, if not well calibrated in its implementation, will be disastrous, and it is now happening this early,” said Paez at the SEARCA forum.

   SEARCA, in its mandate to help upgrade graduate education in agriculture in South East Asian countries, believes the vision toward a common ASEAN (Association of Southeast Asian Nations) market is steering farms to form regional alliances. 

   That leads to“promoting and strengthening intra-ASEAN trade.” A liberalized rice sector under the RTL regime readies Philippines   in such globalized trade,

   Dr. Glenn B. Gregorio, SEARCA director, said government should have a system by which the
“right price of the right rice” can be determined. 

   This has significant implication for both the farmers and consumers, Gregorio said.

   Farmers depend on the right price of rice for their income and livelihood.  Consumers likewise depend on the right price of rice for their economical consumption of the staple as an important factor in keeping a desirable standard of living.  

   The ASEAN Plus Three Emergency Rice Reserve (APTERR), designed to beef up food security in emergencies in among ASEAN countries, should be sustained, although threatened, with the RTL.

   Jansinee Kankaew of the APTERR Secretariat, said the National Food Authority (NFA)’ s function has been altered as a result of the RTL.  This may adversely affect implementation of APTERR. 

   Thus, the APTERR program should be maintained for emergency purposes amid the RTL, Kankaew said at the SEARCA forum.

   APTERR is a reserve fund of 787,000 metric tons (MT) contributed by ASEAN members for emergency use .  Philippines contributes 12,000 MT of rice for this reserve.

   Jerry E. Pacturan International Fund for Agricultural Development country program officer, said the RTL is in track in supporting rural transformation and modernization. 

   “It will foster better use of resources, higher productivity, farm consolidation, mechanization of the rice sector, and improved focus on suitable rice areas,” he said at the SEARCA forum.

   Nevertheless, government should have a “more responsive strategy” so that vision toward diversification of the agriculture sector will be a reality.  With diversified agriculture, farmers will be able to shift or add growing of more profitable high value crops—fruits and vegetables–  and earn higher income.

   “If resources are managed properly and government focuses equal attention on other high value crops that the country has competitive advantage in,  a highly productive, quality-oriented, product-differentiated, and modernized rice industry will improve agriculture performance,” said Pacturan.

   The country may even be able to export specialty and heirloom rice from upland farms, he said.

   Dr. Ramon L. Clarete of the UP School of Economics said that there has been initial shock as Philippines appears imported rice this year at a higher 10% of  total consumption.

   That is a significant jump compared to just 5-7% imports in previous years. 

   Yet this import percentage will likely no longer exceed 15%, Clarete said.

    This is as the rice sector steps up to demands of competitiveness as a result of the RTL

   “The import liberalization may cause higher productivity to local rice farms and efficiency along its local rice value chains– milling and logistics. We will retire those inefficient and marginal rice farms, and what’s left would be the efficient farms. Old rice mills would have to go.  Like Cambodia the remaining rice millers invest in modern rice mills and much larger storage and other post-harvest facilities,” he said.

   Clarete’s policy recommendation is for government to help facilitate alliances of farms in order to boost productivity.  This will help small farms to commonly achieve economies of scale.

   “The one-hectare farm household or so can still be part of the industry. The farm can actually boost its productivity if it joins an alliance of several others and get their aggregated farm managed professionally.” (Melody Mendoza Aguiba)

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