Private poultry sector urged govt to monitor Custom Bonded Warehouse import irregularities

August 26, 2019

The private sector has pressed government to address import irregularities, especially of Customs Bonded Warehouse (CBW), that allows dumping of cheap poultry imports adversely affecting small producers as imports peaked to a record 310 million kilos (2018).

   The United Broilers and Raisers Assn (UBRA) has asked newly-appointed Department of Agriculture (DA) Secretary William D. Dar to put in place system to systematically monitor imports,  particularly that of CBW.

   UBRA leaders, , together with Philippine Chamber of Agriculture and Food Inc (PCAFI) President Danilo V. Fausto, just met with Dar regarding reform recommendations in specific farm sectors.

   The poultry raisers are asking DA to keep a data monitoring of CBW chicken imports. 

   “(In the past), DA has shown no institutional commitment to address unfair trade and smuggling. They  can’t even present data on customs bonded importation,” said UBRA President Bong Inciong.

   “It is so obvious that there’s irresponsibility on the part of the government.  When you say customs bonded warehouse,  you’re supposed to (use imports for manufacturing input)and re-export, but DA has no data showing what is being re- exported.”

Newly-appointed Department of Agriculture Secretary William D. Dar meets with farm sector leaders led by Philippine Chamber of Agriculture & Food (PCAFI) President Danilo V. Fausto. (From left) Ernesto M. Ordonez, (Alyansa Agrikultura); Francisco Buencamino (meat processing); Salvador Salacup; Gregorio San Diego (poultry-United Broilers & Raisers Assn); Roger Navarro (Phil. Maize Federation Inc.); Dar; Fausto; Roberto Amores (Philippine Food Processors & Exporters); Noel Reyes, DA; Edwin Chen, (hog-PROPORK). The farm leaders strongly urge the new secretary to carry out reforms that will raise local food production that creates rural jobs and regulate and curb excessive imports.

  Although 30% of these CBW imports are allowed to be distributed to local markets (supermarkets, wet markets), such volume has to be paid with tariffs.

   “But there’s no record showing they pay tariffs. Here is where we find it hard to look up to government.

They have a mandate to develop local industries. How can you develop your industry if you don’t have data, how can you manage?” said Inciong. “They keep talking about competitiveness about addressing unfair trade, smuggling when they don’t even bother to organize data.”

   Fausto said the poultry industry is a top priority in the agriculture sector as it is the sector generating the third highest revenue, following only rice and pork.

   Philippine Statistics Authority (PSA) data showed gross value of poultry production as of the first quarter of 2019 was at P55.4 billion.

   Inciong said there is a globally recognized system to monitor technical smuggling—that is comparing local import data compared to imports being reported from country of origin. But DA is not even adopting this system. 

   This absence of CBW monitoring record applies too with the Bureau of Animal Industry (BAI) and National Meat Inspection System (NMIS), UBRA said.

   The poultry raisers are also raising the following problems with Dar:

  1. Government’s priority for importing poultry and other farm goods compared to developing local farm sector.

   “Government has the fondness for justifying imports.  This is the opportunity that has high gov ernment support. Last year, inflation was high, they all panicked and removed safeguards for chicken.  So in September 2018, we were (selling chicken at) below cost all the time.  Our cost would be higher than the few years ago,” said Inciong.

  •  Market imperfection—farmgate prices do not directly affect consumer price.  Even if farmgate price plunges, consumer price is the same.

   “In July farmgate price was at (a very low) P81 per kilo.  But market price was still high at P170.  In July, farmgate price increased to P106 per kilo, and the retail price for consumers is still the same,  at P170.  Our position is imports do not benefit consumers.  That’s true for rice, corn, chicken, and other agri products.”

  • Lack of coordination between Board of Investments (BOI) and DA.  BOI may be giving unnecessary incentives to new poultry manufacturing applicants by using incorrect assumptions.     

   In the past, there was an instance BOI gave incentives on the assumption there is a huge demand-supply gap for MDM mechanically deboned meat (MDM).  This assumed this poultry classification renders the product useful for preparing chicken in the usual way (tinola, frying, turbo, etc). But  MDM is really used as extenders in siomai or other processed meat.

   “BOI invited the investor on the belief there’s massive shortage of chicken based on MDM data. But they  just damaged the industry.”

   Nevertheless, Inciong said Trade and Industry Secretary Ramon Lopez and DTI Undersecretary  Ruth Castelo just met this month with UBRA regarding this concern of the sector.

   PCAFI has also urged government to recognize huge trade subsidies being granted by other developed countries to their farmers, including poultry raisers, and similarly support Filipino farmers this way.

   “Subsidies in one form or another have been the template for other countries with successful agricultural sectors.  If we are to win the struggle for the future of agriculture, a more pragmatic approach as practiced by US and China should be the way forward,” said Fausto.

   The United States Farm Bill as of 2018  placed farm support at $867 billion including huge trade support for making sure American farmers get a higher price for their produce even despite lower market prices.

  Data monitoring of imports will be pivotal in helping raise small poultry raisers’ income amid global trade liberalization.

   “The mindset of government is more imports, more local players will be forced to be competitive. But the government is the one that’s not competitive because it doesn’t provide the sector the amount of subsidy other governments provide their agri sector,” said Inciong.    Chicken imports consistently rose from 135 million kilos in 2012, 141 million kilos, 2013; 177 million kilos, 2014; 198 million kilos, 2015; 232 million kilos, 2016; 244 million kilos, 2017; and 310 million kilos, 2018. (Melody M. Aguiba)

Farming entrepreneurs asked govt to allocate budget for palay buying in Central Luzon

Farmer-entrepreneur Simeon T. Sioson

Farming entrepreneurs asked govt to allocate budget for palay buying in Central Luzon

May 28, 2019

For any questions or interview requests, please contact 0929-715-8669, 0917-102-6734 (Growth Publishing for PCAFI)

Farmer-entrepreneurs have asked government to allocate budget for the purchase of palay in Central Luzon as it is the farmers that have extended credit to DA for a buyer’s credit, rather than government lending to farmers.

   Rather than the Department of Agriculture (DA) lending to farmers, it is farmers from the Federation of Central Luzon Farmers Cooperative (FCLFC) that have extended supply credit to government because DA’s National Food Authority (NFA) apparently does not have the budget for buying already sold palay (husked rice).

   In a letter to DA Secretary Emmanuel F. Pinol last May 20, FCLFC asked for an adequate and uninterrupted funding for NFA.

   “Magalang po naming hinihiling sa inyong tanggapan na mapagkalooban ng sapat at tuloy tuloy na pondo ang NFA Bulacan . (We kindly request you to grant sufficient and continuous funding for NFA Bulacan),” said FCLFC Chairman Simeon T. Sioson.

   NFA has owed farmers for the purchased palay even before the May 13 national elections.

   Sioson also said in a forum led by Philippine Chamber of Agriculture & Food Inc (PCAFI) President DAnilo V. Fausto that farmers are already losing significantly from the decline in palay price since the ratification of the Rice Tariffication Act (RTA).

   Palay’s farmgate price in some parts of Central Luzon had already dropped to P11 to P13 or even P10 per kilo since RTA, Sioson said.

   This brings farmers a loss of P5  to per kilo from the price of P18-P19 per kilo prior to RTA passage.

   Fausto said that with the RTA’s Rice Competitiveness Enhancement Fund (RCEF), government should be able to strengthen credit to farmers – meeting whatever financing need to help them upgrade into becoming entrepreneurs.

  PCAFI President Danilo V. Fausto

RCEF allocates P1 billion yearly for six years for a credit program to farmers called “Expanded Rice Credit Assistance” (ERCA).

   ERCA fund will be equally managed by Land Bank of the Philippines and Development Bank of the Philippines. 

   It bears “minimal interest and with minimum collateral requirements.”

   Fausto said the credit should be an integrated facility not only for financing rice farming, but agriculture-related activities that will raise farmers’ income and add value to their produce. It should include financing for livestock, poultry, and farming of fruits and vegetables.

   In boosting credit supply to the agriculture sector in order to maximize its contribution to economic development,

   Fausto said PCAFI is also urging government to strengthen implementation of the Bangko Sentral ng PIlipinas’s Agricultural Value Chain Financing (AVCF) Program.

   Sioson said Central Luzon farmers are experiencing difficulty selling their entire rice produce to NFA.

   “Nung ang bigas nasa 14.4 % moisture content, nireject nila kasi i-dry muna raw.  Nung ibinalik namin at less than 10% ang moisture content, ni reject rin kasi overdried raw.  (NFA rejected our rice (unhusked rice) when it was at 14.4% moisture content. So we dried it first.  But when we returned at less than 10% moisture content, NFA also rejected it saying it’s overdried,” said Simeon.

   Ironically NFA traditionally imports rice from Thailand and Vietnam whose quality has been mired with controversy due to pests (bukbok) infecting the imported rice due to their old stock nature.

   “Ano ba kaibahan ng bigas na may bukbok na inisprayan ng insecticide na ini-import ng NFA dun sa mga palay ng magsasaka na di raw katanggap-tanggap.  Kahit lugi kami ng P5 sa palay ok lang, pero bukbok at overdried, that’s unfair.” 

   (What’s the difference between NFA’s imported, pest-laden, and insecticide-sprayed rice from the rice produce of Filipino farmers that are said to be unacceptable? Even if we lose P5 per kilo from farmgate, that’s just ok.  But to say that our rice should be rejected because it’s overdried, that’s unfair.).

   Roger Navarro of the Phil. Maize Federation Inc  during the PCAFI meeting that the same rejection in post harvest-related activities in corn has been experienced by farmers with NFA.

   “NFA should rather adjust pricing, whether it’s at 14% moisture content or should compensate farmers with any equitable pay for drying instead of asking farmers to return their produce home,” said Navarro.

   “Since NFA has its own drying facility, it should rather dry the ones with higher moisture so farmers will already be assisted in the sale of the grain.”(Growth Publishing for PCAFI)

Rice Tariffication pours tons of poor quality, pesticide-sprayed imported rice to Ph, stripped P95B income of Filipino farmers

May 24, 2019

The private sector expressed fear the Rice Tariffication Act will pour tons of poor quality, pesticide-sprayed imported rice and has so far stripped away P95 billion in income to Filipino farmers at a P5 per kilo farmgate loss.

   Companies participating in a dialogue of the Philippine Chamber of Agriculture & Food Inc. (PCAFI) with Department of Agriculture Undersecretary Ariel T Cayanan disclosed the present reality of previous fears prior to RTA ratification.

   “Before importation was only for buffer stocking.  But now, importation is the rule.  It becomes a permanent solution to the rice shortage.  Rice from Thailand and Vietnam is not as good as local rice,” said an entrepreneur of Chen Yi Agventures which built Visayas’s most modern rice complex in Alang Alang, Leyte.

   “We produce local rice; we do not mix with imports.  It’s entirely good– much better quality than imported.  But their rice has long been stocked in the warehouse, shipped for some time, and stocked again in local warehouses.  Their rice is sprayed with pesticides because of bukbok (pests) and  with artificial fragrance because it smells old.”

   Frisco M. Malabanan, SL Agritech Corp. rice consultant, said at the prevailing price of palay (rice husk) at farmgate which declined by around P5 per kilo, Filipino farmers are deprived with as much as P95 billion in income. 

   It is based on the country’s local palay production of 19 million metric tons.

Dr. Frisco M. Malabanan

Palay’s farmgate price in some parts of Central Luzon had already dropped to P11 to P13 or even P10 per kilo since RTA, according to Federation of Central Luzon Farmers’ Cooperatives (FCLFC) Chairman Simeon Sioson. 

   This is from the previous P17 to P20 per kilo at farmgate.

   In the market, imported rice looks new, shiny, fragrant (because of the pandan flavour spray) and nice as some of them appear to be whole grains and not broken rice (at times due to mixture with local rice).

   But indeed, these are the poorest of all rice as Philippines imports the cheaper, broken rice, according to the Chen Yi investor.

   Even the P10 billion Rice Competitiveness Enhancement Fund (RCEP) may not be effectively implemented.

   This is as DA had failed to raise many farmers’ living levels even despite the ACEF (Agriculture Competitiveness Enhancement Fund).

   PCAFI President Danilo V. Fausto said DA does not appear prepared (in technical, staff capability, administrative capability) to implement the P5 billion RCEP mechanization program.

PCAFI President Danilo V. Fausto

   PCAFI President Danilo V. Fausto said DA does not appear prepared (in technical, staff capability, administrative capability) to implement the P5 billion RCEP mechanization program.

   “As to the beneficiaries, how will you identify them? About 80% of cooperatives are non-compliant with CDA (Cooperatives Devt Authority) certification.  If you deal with them, you will be dealing with non-existent institutions,” said Fausto.

   DA-Philmech (Phil. Center for Postharvest Devt. & Mechanization) hardly has people and equipment to carry out distribution of P5 billion RCEF fund. 

   “Even Amtech (Agricultural Machinery Testing Evaluation Center)  under the University of the Philippines’ Los Banos is not capable of such supporting that huge task of testing machines to support the RCEP mechanization program,” said Fausto.

  He said machines should not be carelessly distributed to farmers if they do not have resources to at least maintain the machines – or these machines will just be sold or abandoned.

   This is much as the Philippine Carabao Center does not just give away buffaloes to farmers who do not have the resources (land, feeding/milking facilities, etc) to raise them well .

   Amtech is the agency tasked to test quality of imported machines.  However, even its legal mandate is questionable in order to support DA.

   Nevertheless, Cayanan, who represented DA Sec. Emmanuel F. Pinol during the PCAFI dialogue, said RCEF will tap resources of the DA Regional Field Units (RFO).  Initial beneficiaries will be farmers in irrigators’ associations.

   DA also started reviewing its beneficiary list after farmers’ benefit programs had been transferred from the Department of Social Welfare & Devt (DSWD) to DA due to the Napoles controversy, said Cayanan.

   Chen Yi was concerned the RTA will sidetrack government’s focus on modernizing local agriculture.

   “It will be very easy to get import permit. We’ll not work on productivity.   We’re putting food security at risk.  What happens if Thailand and Vietnam can longer supply us because they also have their own food security issues or if China or US will import more?  They can pay more money.”

   Chen Yi poured since 2014 a huge investment of P1.7 billion in an integrated rice complex in Alang Alang, Leyte in order to help uplift farmers from poverty after it was devastated by typhoon Yolanda.

   The company was since alarmed on the Philippines’ rice situation since the 2008 crisis caused the country to import more than one million metric tons with some volume reaching  a high price of $1,800 per metric ton.

   With the financing of Land Bank of the Philippines,  Chen Yi put up the rice operation engaged in growing seeds, planting rice, harvest, drying and processing, and distribution.  Its aim is to cut production cost from P14 per kilo to P6 per kilo to be competitive with Thailand and Vietnam.

   As to the training component of RCEP, Cayanan said Sec. Gen. Isidro Lapena (Technical Education & Skills Devt. Authority) committed to deploying trainers for farmers’ use of machines. (Growth Publishing for PCAFI)

DA Secretary Emmanuel F. Pinol with Chen Yi investors

Private rice sector pressed DA to partner with private enterprises in P10B rice fund implementation, buy farmers’ palay at all costs

Most modern integrated rice complex in Alang Alang, Leyte

May 23, 2019

For any questions or interview requests, please contact 0929-715-8669, 0917-1026734; Growth Publishing for PCAFI)

The private rice sector has pressed the Department of Agriculture (DA) to partner with private enterprises on the implementation of the P10 billion Rice Fund and to unequivocally buy farmers’ palay as a commitment to local rice industry despite liberalization.

   Enterprises participating under a Philippine Chamber of Agriculture & Food Inc. (PCAFI) forum asserted the private sector’s role in the effective implementation of the Rice Competitiveness Enhancement Fund (RCEF) as government may fail to properly implement it.

   In a PCAFI dialogue with DA Undersecretary (Operations) Ariel T. Cayanan,  Chen Yi Agventures, a company that built the most modern rice processing plant in Alang Alang, Leyte. asked DA to allow participation in 4 subsectors of rice operations.

   These are mechanization, seeds distribution, lending and extension – where the private sector has expertise in.

   The Federation of Central Luzon Farmers’ Cooperatives (FCLFC) also pressed DA to buy farmers’ palay—at a price based on quality offered, rather than reject these as rice farmers had disappointedly experienced.

   The proposal of Chen Yi Agventures has been filed earlier with DA Secretary Emmanuel F. Pinol.

   “As one from the private sector, we’re very grateful for Secretary Pinol’s  help.  He loves our program. He said we will work together to help implement the Rice Fund,” said a Chen Yi Agventures entrepreneur. “Our proposal is with the DA. We discussed it at length with Secretary Pinol.  And it’s not a new dialogue.”

DA Secretary Emmanuel Pinol with Chen Yi Agventures investor  

Providing these services (seeds supply, mechanization, lending, training & extension) on a large scale to farmers needs private enterprise.

   “Implementation is something the government is not good at. But the private sector can teach farmers how to plant seeds and monitor these daily.  It can own and maintain the machines, and teach farmers how to use these,” said the Chen Yi entrepreneur.

   “Merely giving machines away to farmers is not the solution. The problem DA encountered is farmers just abandon or sell the machines because they don’t know how to use these.”

   Chen Yi stressed the importance of raising rice farmers’ productivity.

   “That rice price will go down due to the rice tariffication law is only one concern. The most basic question is not whether price will go down, but that the yield of farmers remains low.  Even if palay price goes up, farmers’ income is low.”

   “Their ability to get out of poverty is not dependent on price of rice, but on productivity. You think it’s not relevant, it’s very important.  Productivity is what the Rice Fund should address.”

   Chenyi put in P1.7 billion investment in a highly-mechanized, integrated rice plant in Leyte which uses the most advanced technology in Visayas and Mindanao. Its operation is from planting seeds to planting rice, harvesting,  drying-processing, and distribution.

   The program’s target is to lower production cost from P14 per kilo to P6 per kilo, competitive to Thailand and Vietnam.  That uplifts Filipino farmers out of poverty through a contract farming scheme.

   “We want Filipino farmers to experience how it is to have money in their hands. French farmers are so successful in making a lot of money. They have comfortable living because France is taking care of its farmers. Farming is abt food security,”  said Patrick Renucci, Chen Yi French investor, said earlier on national television.

   “France has changed its farming system a long time ago while the Philippines is so behind.  That’s why we believe we have to change how people are framing because food is so important.”

  PCAFI President Danilo V. Fausto said during the dialogue that DA has to beef up capability to implement RCEP considering the present limited budget and capable staff it has.

   DA-Philmech (Phil. Center for Postharvest Devt. & Mechanization) hardly has people and equipment to carry out distribution of P5 billion RCEF fund. 

   “Even Amtech (Agricultural Machinery Testing Evaluation Center)  under the University of the Philippines’ Los Banos is not capable of such supporting that huge task of testing machines to support the RCEP mechanization program,” said Fausto.

PCAFI President Danilo V. Fausto

   Amtech is the agency tasked to test quality of imported machines.  However, even its legal mandate is questionable in order to support DA.

   FCLFC Chairman Simeon T. Sioson also said during the PCAFI dialogue that poor rice farmers in Central Luzon have experienced several rejections from the DA-National Food Authority (NFA) when they sell their palay. 

   NFA had claimed that it buys farmers’ palay at a higher price when dried with a 14% moisture content, but still buy their produce if it’s not dried, only at a lower price.

   However, Sioson said, Central Luzon farmers were compelled to dry their palay after initial NFA rejections. However, when moisture content went below 12%, NFA also rejected them.

   It is unfair to poor Filipino rice farmers that NFA buys Vietnamese and Thai rice at whatever quality they’re in. 

   Even if these are old, long-stocked rice that need spraying for pesticide and bad smell, these are accepted by NFA, Sioson said, while rejecting newly-harvested rice from local farmers.

   Also, Sioson said government still owes farmers in Central Luzon payment for accepted palay—instead of lending to farmers.

Farmer-leader Simeon T. Sioson on Maunlad na Agrikultura

   “Magsasaka po kami ng San Miguel, Bulacan.  Hindi po kami nababayaran ng NFA mula sa mga palay na ibinenta naming. May mga recibo po kami—bago pa mag halalan.  Meron pa nga po na may 10 araw na ngayon, hindi pa nababayaran.  Sana po mabigyan ng sapat at tuloy tuloy na pondo sa Bulacan.” (Growth Publishing for PCAFI)

PHOTO CAPTIONS

  1. DA Sec. Emmanuel Pinol with Chenyi Agventures investors
  2. Chenyi’s integrated rice processing complex, Alang Alang, Leyte
  3. PCAFI President Danilo V. Fausto
  4. Farmer-leader Simeon T. Sioson

4;

Rice tariffication bill to dampen agri investments, threaten food security amid climate change

Rice tariffication bill to dampen agri investments, threaten food security amid climate change

Feb. 12, 2019

Rice Tariffication Senate Bill 1998 will dampen investments in agriculture and threaten food security amid imminent climate change, private sector group Philippine Chamber of Agriculture & Food Inc. (PCAFI) said.

SB 1998 will send a strong signal that investments are discouraged in the farm sector and imports are welcome. It is abandoning the welfare and livelihood of Filipino farmers.

“Since rice is the most political of commodities, if the government will be seen as having abandoned the rice farmers to the ravages of unfair trade so that consumers can savor the magic of the market, then investments in the sector will shrink,” said PCAFI, led by Danilo V. Fausto, president.

“Why produce when the signal from the government is to import? How the rice farmers will be treated will determine how the rest of the sectors will be so treated.”

However, a more threatening impact of SB 1998 is the food security threat as world supply of rice in the market is vulnerable to shrinkage due to the imminent climate change.

In January 2010, an issue paper of the United States Council on Agricultural Science and Technology (USCAST) stated:

“Globally, agriculture faces unprecedented challenges such as increases in the demand for livestock-based foods in Asia, climate change that threatens to decrease production capacity in many places around the world, and increasing demand due to continuing rapid population growth in some poor countries.”

An additional crucial problem in the search for success in agriculture is the utterly useless and misleading ideological debate about liberalization and protectionism.

This has bogged down the sector since our accession to the World Trade Organization (WTO) in 1995.

The dominant framework has been, of course, liberalization as it has been held in almost sacred regard in the corridors of government power and the halls of the academe.

There was this notion that the magic of the market will force Philippine Agriculture to become competitive.  As such, it bears much of the responsibility for the current sad state of neglect and abuse of the sector.

Protectionism, on the other hand, only held nominal sway in the rice sector because of the much-undermined Quantitative Restriction (QR).

We need to be free of this debate that will bring us nowhere.  The pragmatic approach is to look to those who have succeeded.

On December 20, 2018, the United States passed another Farm Bill into law granting subsidies to both producers and consumers in the amount of US$867 billion in the next 5 years.  It must be noted that these are federal subsidies and do not include those granted at the State level.

Subsidies in one form or another have been the template for other countries with successful agricultural sectors.

Strangely, since 1995, our policymakers and some of those in the academe have been silent regarding the issue of subsidies despite the fact it was the main reason why the DOHA Development Round of the WTO was torpedoed by developed countries.

China, like the United States, also did not allow itself to fall prey to any ideological approach.

Ramgopal Agarwala, who for three years was chief of the Economics Unit in the Beijing Office of the World Bank, stated in his 2002 article “The Rise of China: How to Make it an Opportunity and not a Threat” that among the key elements of the reform process was “avoiding shock therapies and adopting a gradualist approach and making careful sequencing of reforms in the light of ground realities.”

Agarwala also took note that “China took the general insights on reform from its own experience as well as that of other countries and then determined what would work given the current conditions at the time of reforms.

Of course, the Rice Tariffication bill provides for an apparent automatic appropriation for 5 years in the amount of PhP10 billion.

In addition, all rice tariffs collected will go to a Rice Competitiveness Enhancement Fund (RCEF).  These are supposedly the safety nets.  EXPERIENCE, however, teaches that even safety nets provided for by LAW can be undermined by ideology and poor governance.

The Agriculture and Fisheries Modernization Act of 1997 (RA 8435) also provided for an automatic appropriation of P 17 billion annually for six years on top of the regular Department of Agriculture budget but it never happened.

The 1995 Tariffication Act (RA 8178) established an Agricultural Competitiveness Enhancement Fund (ACEF).

The source of the fund was the tariffs collected from imports under the Minimum-Access-Volume (MAV) we have committed to the WTO.  Unfortunately, the ACEF is more known for corruption than enhancing agricultural competitiveness.  These safety nets seemed to be more for show because up to now the government has no trade data system to determine if an importation is in accordance with the rules of the WTO in terms of valuation and trade remedies, if any.

As such, do we not owe the rice sector a more gradual approach and a modicum of sequencing in implementing tariffication?  Do we not owe the consumers a viable rice sector that would provide balance to imports which also vulnerable to climate change and avoid a repeat or worse of the Rice Crisis of 2008?

If we are to win the struggle for the future of agriculture, a more pragmatic approach as practiced by countries like the US and China should be the way forward. End (Growth Publishing for PCAFI)

Private farm group PCAFI vehemently opposes rice import liberalization bill, presses Duterte for Filipino Farmers First policy to support local farmers

Private farm group PCAFI vehemently opposes rice import liberalization bill, presses Duterte for Filipino Farmers First policy to support local farmers
Danilo V. Fausto PCAFI PresidentFebruary 11, 2019

Private farm group PCAFI has vehemently opposed rice import liberalization bill SB 1998 and urged Duterte Administration to pour full subsidy in a “ Filipino Farmers First” policy rather than supporting foreign farmers.
The Philippine Chamber of Agriculture & Food Inc (PCAFI) opposed Senate Bill (SB) 1998 as it presses government to adopt a Filipino Farmers First rice policy.
PCAFI said the Duterte Administration should zero in on a policy adopted by the United States and China pouring significant subsidy for the farm sector.
“On Dec. 20, 2018, the US passed another Farm Bill into law granting subsidies to both producers and consumers in the amount of US$867 billion in the next 5 years. It must be noted that these are federal subsidies and do not include those granted at the State level,” said PCAFI.
Allowing imports to flood the Philippines’ rice market is not a “magic wand” that will just push down rice prices in the interest of consumers.
It will have tremendously numerous adverse repercussions and will abandon Filipino rice farmers. Investments in rice farming will collapse.
“How the rice farmers are treated will determine how the rest of the sectors will be treated,” said PCAFI led by Danilo V. Fausto, president.
“Since rice is most political of commodities, if the government will be seen as having abandoned trice farmers to the ravages of unfair trade so that consumers can savor the magic of the market, then investments in the sector will shrink. Why produce when the signal from the government is to import?” PCAFI said.
SB 1998 may threaten food security. The imminent climate change can unexpectedly shrink global rice supply anytime.
The United States Council on Agricultural Science and Technology (USCAST) stated “Globally, agriculture faces unprecedented challenges such as increases in the demand for livestock-based foods in Asia, climate change that threatens to decrease production capacity in many places around the world, and increasing demand due to continuing rapid population growth in some poor countries,” said PCAFI.
The rice import liberalization is proposed under SB 1998 led by Senator Cynthia Villar which replaces quantitative restriction on rice with tariffs.
Providing subsidies to farmers has been the success track of countries – US and China– that have become leaders in agriculture, said PCAFI.
“Subsidies in one form or another have been the template for other countries with successful agricultural sectors. Strangely, since 1995, our policymakers and some of those in the academe have been silent regarding the issue of subsidies despite the fact it was the main reason why the DOHA Development Round of the WTO was torpedoed by developed countries.”
“If we are to win the struggle for the future of agriculture, a more pragmatic approach as practiced by countries like the US and China should be the way forward.”
In the first place, Filipino farmers never really enjoyed increased income from the liberalization ideologies of World Trade Organization advocates as some Filipino economists have imbibed.
“They (farmers) haven’t even savored (the magic wand of liberalization) with the 1995 shock liberalization).”
Debating on liberalization and protectionism is useless and misleading. This has bogged down the sector since our accession to the World Trade Organization (WTO) in 1995, according to PCAFI.
Farm liberalization has subjected Filipino farmers to abuse.
“The dominant framework has been liberalization as it has been held in almost sacred regard in the corridors of government power and the halls of the academe. There’s a notion the magic of the market will force Philippine Agriculture to become competitive. As such, it bears much of the responsibility for the current sad state of neglect and abuse of the sector.”
Even the incumbent quantitative restriction (QR) policy, which imposes a maximum volume per crop year that may be imported by the National Food Authority, is a weak policy that will not optimize opportunities for Filipino farmers nor boost food production.
“Protectionism, on the other hand, only held nominal sway in the rice sector because of the much-undermined QR. We need to be free of this debate that will bring us nowhere.”
China, like the United States, also did not allow itself to fall prey to any ideological approach.
RamgopalAgarwala, who for three years was chief of the Economics Unit in the Beijing Office of the World Bank, stated in his 2002 article “The Rise of China: How to Make it an Opportunity and not a Threat” that among the key elements of the reform process in China was avoiding shock therapies and adopting a gradualist approach and making careful sequencing of reforms in the light of ground realities.”
Agarwala also took note that “China took the general insights on reform from its own experience as well as that of other countries and then determined what would work given the current conditions at the time of reforms.
The Rice Tariffication bill provides for an apparent automatic appropriation for 5 years in the amount of P10 billion.
In addition, all rice tariffs collected will go to a Rice Competitiveness Enhancement Fund (RCEF). These are supposedly the safety nets.
Experience, however, teaches that even safety nets provided for by Law can be undermined by ideology and poor governance.
The Agriculture and Fisheries Modernization Act of 1997 (RA 8435) also provided for an automatic appropriation of P17 billion annually for six years on top of the regular Department of Agriculture budget but it never happened.
The 1995 Tariffication Act (RA 8178) established an Agricultural Competitiveness Enhancement Fund (ACEF). The source of the fund was the tariffs collected from imports under the Minimum-Access-Volume (MAV) we have committed to the WTO.
Unfortunately, ACEF is more known for corruption than enhancing agricultural competitiveness. These safety nets seemed to be more for show because up to now the government has no trade data system to determine if an importation is in accordance with the rules of the WTO in terms of valuation and trade remedies, if any.
“As such, do we not owe the rice sector a more gradual approach and a modicum of sequencing in implementing tariffication? Do we not owe the consumers a viable rice sector that would provide balance to imports which also vulnerable to climate change and avoid a repeat or worse of the Rice Crisis of 2008?” End (Growth Publishing for PCAFI)

PCAFI opposes rice import liberalization bill

Danilo V. Fausto PCAFI President

Private farm group PCAFI vehemently opposes rice import liberalization bill, presses Duterte for Filipino Farmers First policy to support local farmers
February 11, 2019

Private farm group PCAFI has vehemently opposed rice import liberalization bill SB 1998 and urged Duterte Administration to pour full subsidy in a “ Filipino Farmers First” polivy rather than supporting foreign farmers.
The Philippine Chamber of Agriculture & Food Inc (PCAFI) opposed Senate Bill (SB) 1998 as it presses government to adopt a Filipino Farmers First rice policy.
PCAFI said the Duterte Administration should zero in on a policy adopted by the United States and China pouring significant subsidy for the farm sector.
“On Dec. 20, 2018, the US passed another Farm Bill into law granting subsidies to both producers and consumers in the amount of US$867 billion in the next 5 years. It must be noted that these are federal subsidies and do not include those granted at the State level,” said PCAFI.
Allowing imports to flood the Philippines’ rice market is not a “magic wand” that will push just push down rice prices in the interest of consumers.
It will have tremendously numerous adverse repercussions and will abandon Filipino rice farmers. Investments in rice farming will collapse.
“How the rice farmers are treated will determine how the rest of the sectors will be treated,”said PCAFI led by Danilo V. Fausto, president.
“Since rice is most political of commodities, if the government will be seen as having abandoned trice farmers to the ravages of unfair trade so that consumers can savor the magic of the market, then investments in the sector will shrink. Why produce when the signal from the government is to import?” PCAFI said.
SB 1998 may threaten food security. The imminent climate change can unexpectedly shrink global rice supply anytime.
The United States Council on Agricultural Science and Technology (USCAST) stated “Globally, agriculture faces unprecedented challenges such as increases in the demand for livestock-based foods in Asia, climate change that threatens to decrease production capacity in many places around the world, and increasing demand due to continuing rapid population growth in some poor countries,” said PCAFI.
The rice import liberalization is proposed under SB 1998 led by Senator Cynthia Villar which replaces quantitative restriction on rice with tariffs.
Providing subsidies to farmers has been the success track of countries – US and China– that have become leaders in agriculture, said PCAFI led by Danilo V. Fausto, president.
“Subsidies in one form or another have been the template for other countries with successful agricultural sectors. Strangely, since 1995, our policymakers and some of those in the academe have been silent regarding the issue of subsidies despite the fact it was the main reason why the DOHA Development Round of the WTO was torpedoed by developed countries.”
“If we are to win the struggle for the future of agriculture, a more pragmatic approach as practiced by countries like the US and China should be the way forward.”
In the first place, Filipino farmers never really enjoyed increased income from the liberalization ideologies of World Trade Organization advocates as some Filipino economists have imbibed.
“They (farmers) haven’t even savored (the magic wand of liberalization) with the 1995 shock liberalization).”
Debating on liberalization and protectionism is useless and misleading. This has bogged down the sector since our accession to the World Trade Organization (WTO) in 1995, according to PCAFI.
The proposal for farm liberalization has subjected Filipino farmers to abuse.
“The dominant framework has been liberalization as it has been held in almost sacred regard in the corridors of government power and the halls of the academe. There’s a notion the magic of the market will force Philippine Agriculture to become competitive. As such, it bears much of the responsibility for the current sad state of neglect and abuse of the sector.”
Even the QR policy, which imposes a maximum volume per crop year that may be imported by the National Food Authority, is a weak policy that will not optimize opportunities for Filipino farmers nor boost food production.
“Protectionism, on the other hand, only held nominal sway in the rice sector because of the much-undermined QR. We need to be free of this debate that will bring us nowhere.”
China, like the United States, also did not allow itself to fall prey to any ideological approach.
RamgopalAgarwala, who for three years was chief of the Economics Unit in the Beijing Office of the World Bank, stated in his 2002 article “The Rise of China: How to Make it an Opportunity and not a Threat” that among the key elements of the reform process in China was avoiding shock therapies and adopting a gradualist approach and making careful sequencing of reforms in the light of ground realities.”
Agarwala also took note that “China took the general insights on reform from its own experience as well as that of other countries and then determined what would work given the current conditions at the time of reforms.
The Rice Tariffication bill provides for an apparent automatic appropriation for 5 years in the amount of P10 billion.
In addition, all rice tariffs collected will go to a Rice Competitiveness Enhancement Fund (RCEF). These are supposedly the safety nets.
Experience, however, teaches that even safety nets provided for by Law can be undermined by ideology and poor governance.
The Agriculture and Fisheries Modernization Act of 1997 (RA 8435) also provided for an automatic appropriation of P17 billion annually for six years on top of the regular Department of Agriculture budget but it never happened.
The 1995 Tariffication Act (RA 8178) established an Agricultural Competitiveness Enhancement Fund (ACEF). The source of the fund was the tariffs collected from imports under the Minimum-Access-Volume (MAV) we have committed to the WTO.
Unfortunately, ACEF is more known for corruption than enhancing agricultural competitiveness. These safety nets seemed to be more for show because up to now the government has no trade data system to determine if an importation is in accordance with the rules of the WTO in terms of valuation and trade remedies, if any.
“As such, do we not owe the rice sector a more gradual approach and a modicum of sequencing in implementing tariffication? Do we not owe the consumers a viable rice sector that would provide balance to imports which also vulnerable to climate change and avoid a repeat or worse of the Rice Crisis of 2008?” End (Growth Publishing for PCAFI)

Private sector pressed banks to allot P1.1 trillion for agro-industrial business as PD 707 mandated

Private sector pressed banks to allot P1.1 trillion for agro-industrial business as PD 707 mandated
November 23, 2018

The private farm sector has pressed the banking industry to allot P1.1 trillion for agro-industrial activities as mandated by PD 717 in order to support industrialization and poverty reduction which can be accelerated through agriculture-based manufacturing.
The Philippine Chamber of Food & Agriculture Inc (PCAFI) urged banks to abide by the Agri Agra Law that mandates banks to allocate at least 25% of outstanding loan portfolio. Of this, 10% should be devoted to credit for agrarian reform beneficiaries.
PCAFI President Danilo V. Fausto said there remains an estimated P1.1 trillion, equivalent to 16% of banks total outstanding loan, that is not being aptly availed of by the agriculture sector.
Out of around P10 trillion total loan outstanding of banks as of end 2017, only 14% has been released for the farm sector.
“Banks’ loan portfolio has been growing through the years but not because of real, inclusive economic progress or reduced poverty. It’s merely because real estate and other industries are growing,” he said.
PCAFI has asked the Bangko ng Sentral ng Pilipinas (BSP) to be updated on the status of Circular 908 which set up the Agricultural Value Chain Financing Framework (AVCFF).
Two years after an issuance on Feb. 24, 2016 of the lending features (Monetary Board Resolution 360) of AVCFF, the resolution has barely raised financing for agriculture value added manufacturing.
AVCFF was designed to reduce risks of banks that are lending to agricultural production.
In the sole nature of agricultural production, risks to banks of non repayment is relatively high. Pure agriculture production traditionally suffers from losses when a weather-related calamity hits.
But through the use of the value chain schemes, risks are significantly reduced.
In order to follow through the circular’s implementation, PCAFI asserts banks should have an Agri Banking Department, much as they have mortgage banking departments that assess collateral value in real estate lending.
It is imperative for government to strictly enforce each bank’s compliance with PD 717 if it has to take the path of manufacturing-based agro industrialization.
This is the solution that Thailand, Malaysia, and other Southeast Asian countries earlier took and should be embraced too by the Philippines.
“The solution that made an impact in our neighbors’ economy is they put agriculture in the forefront of their economy. They made it a tool for poverty reduction that results in increase in farmers’per capita income,” said agro-economist Pablito M Villegas, also PCAFI director.
“Investing in food and agriculture is the surest way to reduce poverty. But banks would rather pay a fine because they do not appreciate agro-based industries and its impact in poverty reduction,” he said.
PCAFI officials believe the budget of DA is severely low at P70 billion. Even over a 10-year period, this falls below the trillion level that should be channeled in loan by banks to the sector.
Even more deplorable, this yearly DA budget already includes the entire DA bureaucracy budget. It includes maintenance and operating expense for paying employees’ salaries and wages, utilities, and other operating expense.
“In reality, only around 50% or P35 billion of this DA budget goes to capital expenditure or investments in the farm sector,” said lawyer Elias Inciong, PCAFI director and United Broilers & Raisers Association president.
Banks should open their eyes on the opportunities from the agriculture value chain businesses rather than just assess the value of the collateral or assets of the farmer-borrowers that they may foreclose once repayment fails.
“Look at my business opportunities, rather than my collateral,” said Fausto, a farming entrepreneur. He founded DVF Dairy Farm Inc which produces “Gatas ng Kalabaw.
While poverty level in Thailand, Malaysia, Indonesia, and Vietnam has already gone down to the 10% level because they bankrolled their agro-industries, Philippines’ poverty rate is still at a high 30%.
“President Duterte is targeting 20% poverty level. But our neighbors Thailand, Vietnam, Indonesia have poverty level at just 10%. Malaysia’s poverty is even less than 10%,” said Villegas.

AVCFF

BSP has issued Circular 908 as a means to channel financing to agriculture and fisheries. It taps more sophisticated financing schemes that are extended to value chain players in other related agriculture manufacturing ventures.
“By encouraging linking of various actors, players in the agricultural value chain, credit risk of smallholder farmers can be reduced,” according to BSP.
“This is expected to further improve productivity in the agriculture and fisheries sectors and uplift the lives of these marginalized farmers.”
Credit products for farmers’beneficiaries are trade receivables finance and factoring (a business’ sale of its sales contract of goods or receivables to another so as to hasten cash turnover).
There is also the warehouse receipts—farmers and related value chain enterprises receive a receipt from a certified warehouse as a collateral to access a loan.

Loan disbursements

Another AVCFF financing program is Loan Disbursement. It may be cash—completed in one transaction or in installment. It may be loan proceeds to suppliers—suppliers of farmers (for example fertilizer, seeds) are directly paid by banks in order to control the loan’s use.
Another system is the use of an anchor firm which endorses a loan release to a farmer’s entity to ensure that the machine or technology to be acquired by the farmers are the proper technology to be used. This way, rejects are reduced and productivity is optimized.
Circular 908 also provided for the Disaster Contingency Mechanism (DCM). The DCM is an immediate financing relief to a farmer who has experienced a disaster in order to recover from losses resulting from weather or related calamities.
Circular 908 also provides for accountability schemes in the value chain system by allowing factors, aggregators to become directors of agricultural businesses. Melody M. Aguiba