Sunday, April 13, 2008

Rice Shortage: Real or Imagined?

PerryScope: by Perry Diaz

Recently, President Gloria Macapagal Arroyo said that there is no rice shortage; however; she said that the people will just have to pay more. She claimed that all this talk of "rice shortage" is imaginary. Well, last year the government imported 1.4 million metric tons of rice from Vietnam to fill a 10% shortage in domestic rice production. This year, in an unprecedented call to the Vietnamese president, Arroyo asked for a guarantee of 1.5 million metric tons of rice. With a rapidly diminishing domestic production, the government has to import 20 percent -- about 2.5 million metric tons -- this year to avert a rice crisis.

It is interesting to note that the world price of rice in 2003 was only $200 per metric ton. Last year it was around $300. Currently at $700 per metric ton, the market price is anticipated to soar to as much as $1,000 per metric ton. That would peg the price of commercial rice in the Philippines at P40 per kilo. Currently, the price of domestic rice supplied by the government-owned National Food Administration (NFA) is P18.00 per kilo and commercial rice is P31.00 per kilo. The question is: Once the supply of domestic rice is depleted, could the people -- particularly the poor -- afford to buy commercial rice at exorbitant prices?

A few days ago, Vietnam lowered its rice export quota this year from 4.5 million metric tons to 4.4 million metric tons in order to increase its own rice reserves. To date, almost 4 million metric tons have already been exported leaving only half a million metric tons to be sold through December of this year. Obviously, Vietnam would not be able to supply enough rice to the Philippines this year. Where would Arroyo get the rice she needed to prevent a rice crisis?

The rice crisis in the Philippines was bound to happen because of the failed economic policies of President Arroyo. Once a rice-exporting country, the Philippines today is the world's top importer of rice. A series of events that transpired since Arroyo took over the presidency in 2001 have been discussed as the reasons for the declining domestic rice production. In my opinion, the following were the causes of the looming rice crisis:

1) Hybrid Rice Farming - In 2002, the Arroyo government launched the Hybrid Rice Commercialization Program to increase rice production and thereby achieve rice self-sufficiency. In 2004, at the 4th International Crop Science Congress held in Brisbane, Australia, a group consisting of Flordeliza H. Bordey, Jesusa M. Cabling, Cheryll B. Casiwan, Rowena G. Manalili, Alice B. Mataia, and Guadalupe O. Redondo presented their study titled "Socioeconomic Evaluation of Hybrid Rice Production in the Philippines." The study showed that hybrid rice farming has higher gross income than the traditional inbred farming. "However," they said, "the hybrid rice cost of production is significantly higher due to higher seed, fertilizer, pesticide and hired labor cost. Because of these offsetting factors, net profit from the two types of rice farming did not differ significantly." In 2004, it was reported on that a farmer from Isabela province spent "more than P170,000 for seeds, fertilizers and pesticides, and recovered nothing from a local rice hybrid Magilas." In its report, "Fiasco in the Field: An Update on Hybrid Rice in Asia," it showed that hybrid rice is being rejected by farmers across Asia.

2) P3-Billion Fertilizer Scam - In December 2005, the Senate joint committees chaired by Senator Ramon Magsaysay, Jr. issued a report which concluded that the P728-million fertilizer fund intended for farmers were diverted by then Undersecretary Jocelyn "Joc-joc" Bolante for the 2004 electoral campaign of President Arroyo. According to the report, collaborative testimonies from Agriculture officials, 13 farmer groups, Commission on Audit officials, the Budget Secretary, and alleged "runners" of Bolante indicated that the "farmers did not get a single farm input or implement" in 2004. The report named Bolante as the "master architect of the scam." He negotiated the release of funds from the Department of Budget and Management and then authorized the funds' release. He also wrote the congressmen and local officials of the availability of the funds. According to the Commission on Audit, the "funds went through a circuitous route thus resulting in fragmented accountability." The joint committees revealed that the P728 million fertilizer fund is just a portion of a larger fund -- P2.806 billion -- released during the 2004 elections.

3) P3.1-Billion Irrigation Fund - A few days ago, the Kilusang Magbubukid ng Pilipinas (Movement of Farmers in the Philippines or KMP) asked local government officials to account for P3.1 billion that were released to municipalities for the repair, rehabilitation, and restoration of irrigation systems. KMP said that its chapters have been reporting since June 2007 that no irrigation repair work were done in their regions. KMP claimed that the fund is "missing" and asked Congress to investigate what was done with the money. According to KMP, the Department of Agriculture and the National Irrigation Administration have at least P8.8 billion in irrigation fund but could not explain where the funds went.

4) Biofuels Act - Republic Act 9367, the Biofuels Act, was enacted in 2006 to maximize the production of sugarcane and coconut to supply the needs of bioethanol and coco-biodiesel. The law is perceived to be beneficial to large landowners. To meet the demands, the country needs to convert 177,400 hectares to sugarcane and coconut plantations to augment the existing 167,300 sugarcane farms. Here is the stinger: the law allows large farm owners to get land-use exemption under the Comprehensive Agrarian Reform Program (CARP).

5) Jatropha - In 2006, Arroyo threw her support for the mass plantation of Jatropha tree whose oil can be converted into bio-diesel. In 2007, the government entered into several agro-fuel deals with Chinese companies. The largest was the $3.83-billion contract with Fuhua Group in which 1.2 million hectares of agricultural land -- a tenth of the total agricultural land -- would be converted into jatropha plantations; thus, drastically reducing rice production.

It is evident that Arroyo's policy of shifting into biofuels at the expense of rice production and the scams involving the P3-billion fertilizer funds and the P3.1-billion irrigation funds have caused rice production to decline.

At the end of the day, it is not the 7.3% GDP growth that is important, it's the well-being of the people, particularly the poor. A recent survey conducted by Pulse Asia in February 2008 showed that 71% of Filipinos considered themselves poor or very poor. The survey also showed that 66% of the respondents believed that the economy has worsened in the last three years. Only 11% believed that the economy is better today than in 2005, and 23% said that there has been no change. Something is wrong with the picture.

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