Solutions to the Philippines'

rice crisis
Manila, Philippines — According to the Philippine
government, there is no shortage of rice in the
country. Rice production is up and rice imports are
meeting local demand. The rice harvest season will
also start soon. But the government admits that the
price of rice has gone up and most likely it will
continue to go higher.
A Philippine senator confirms that the rice supply is
stable. He adds that the rice crisis in the Philippines
is artificial. He blames rice hoarders and smugglers
for distorting rice inventories. He insists that the
Philippines is experiencing a rice distribution crisis.
What is the government doing to address the
problems of the rice industry? Is there a plan to
punish the protectors of the rice cartel?
What steps are being taken to ensure food self-
sufficiency? Recently, Philippine President Gloria
Macapagal-Arroyo convened a food summit wherein
she outlined her plan to improve the agriculture
sector. Six assistance packages for agriculture were
launched under the program of "FIELDS" -- F for
fertilizer, I for irrigation and infrastructure, E for
extension and education, L for loans and insurance,
D for dryers and other post-harvest facilities, and S
for seeds.

The government promised to build farm-to-market

roads, ferry ports, and airports for agricultural cargo.
Rice and corn processing centers will be developed.
Funds will be released to promote organic fertilizer
and hybrid seeds. The agricultural credit program will
be enhanced. Rice subsidies are to be given to poor
farmers. Arroyo is asking Congress to enact a law
making farm land acceptable as loan collateral.

Since billions of pesos are allotted for the emergency

agricultural program, Arroyo has vowed to appoint a
deputy Ombudsman at the Department of Agriculture
to watch over its transactions. Hopefully, this will
minimize corruption in the bureaucracy.

Earlier, the government had proposed the reduction

of tariffs to ease prices of agricultural products,
especially rice. A Cabinet member is appealing to the
public to reduce consumption of rice or to replace
rice with other root crops. Restaurants are asked to
serve a half-cup of rice to their customers. The
private sector is enjoined to practice corporate
farming or to ensure that employees are given rice
subsidies through planting of rice by the country's
biggest corporations.

Public universities are told to open their gymnasiums

so they can be used as rice warehouses. Agricultural
colleges are encouraged to increase farm
demonstration laboratories to bolster the
administration's food security and stability program.

The military was ordered to make military trucks and

aerial logistics available for the delivery and
distribution of rice around the country. Police forces
were mobilized to guard against rice smuggling. The
government cancelled the licenses of rice traders to
weed out unscrupulous merchants. Agricultural
officials are conducting spot inspections of rice
warehouses to monitor the rice supply in the country.
President Arroyo reported that she has succeeded in
persuading Vietnam and other countries from
Southeast Asia to continue exporting rice to the
Philippines.

Is the government doing enough to avert a full-blown

rice and food crisis? Many people are not satisfied
with the proposed action plan of the government.
Senators are looking for a master plan which will
comprehensively tackle the modernization of
Philippine agriculture.

Many people believe the government failed to act

quickly when Thailand and Vietnam restricted rice
exports to the Philippines a few years ago. What was
done to raise rice production in the Philippines? What
support programs were implemented to boost
productivity of Filipino farmers? The government-
sponsored food summit was a belated effort of the
government to compensate for its initial failure to
draft a sustainable agricultural program.

Accusing the people of wasteful consumption of rice

is unfair. The Senate president was right when he
asserted, "There is nothing wrong with our eating
habits, but there is with the government's spending
priorities." Another lawmaker also argued, "The
problem is not wasteful consumption but inadequate
consumption. How can you waste rice when there is
no rice to waste in the first place?"

Opposition parties are proposing the immediate

release of local calamity funds for farmers. They also
suggest that local governments should establish a
food security early warning mechanism to ensure
targeted distribution of rice.

The opposition believes that reactivation of peace

talks with rebels will allow the unimpeded cultivation,
planting, tending and harvesting of crops in conflict
areas. Finally, creation of special investigative and
prosecutorial teams is proposed to run after hoarders
and corrupt elements in the agriculture department.

The government's proposed solutions to the rice and

food crisis can be described as palliative. They do not
address the root of the problem. The government
continues to endorse rice importation and
agricultural liberalization despite its failure to revive
Philippine agriculture.

In fact, peasant groups explain that the country's

growing dependence on rice imports is the reason
behind the worsening rice crisis. A senator notes that
rice importation "symbolizes the government's
neglect of the local agriculture sector." An NGO adds,
"Rice importation has not resulted in lowered rice
prices, but worsened the bankruptcy of farmers and
even placed the country in greater food insecurity."

Peasant groups want the government to increase

local procurement of rice instead of relying on
imports. The government, not rice traders, should
buy more rice and other agricultural products from
farmers. This will improve farmers' income while
preventing greedy merchants from exploiting poor
farmers.
 Land-use conversions of rice lands should be
stopped. Food crops should be prioritized over cash
crops and biofuel crops. The bloated funding for debt
and war spending should be realigned to food
production. The rice cartel should be dismantled.
Rice smugglers should be charged with economic
sabotage.

Finally, the rice crisis today is an opportunity to

review the land reform programs of the government
in the past four decades. Landlessness remains a
fundamental problem in Philippine society.
Agricultural production is still backward. Perhaps it is
time to implement a genuine agrarian reform. A
sound agricultural system will propel the Philippine
economy. At the same time, it will ensure that all
Filipinos have access to food at all times.

References:www.mongpalatino.motime.com.
©Coypright Mong Palatino.)
 THE SIGNIFICANCE OF RICE IN THE
PHILIPPINE SETTING
Rice is the staple food of the Filipinos. It is a
politically sensitive commodity with which supply
disruption causes people distress. The Philippines
consumes about 33,000 tons of rice daily.
Approximately, 80% of the total population spends
almost 1/4 of their income on rice alone. This shows
that a slight increase in the price of this commodity
will greatly affect the standard of living for most
Filipinos.

Currently, the world is experiencing a global food

crisis. There has been an increase in demand for rice
all over the world especially in China, Africa, the
Middle East and India. To offset the increase in price,
the top exporting countries of rice have reduced their
exports significantly to keep domestic prices low and
to counter inflation. The Philippines, being the
world’s top importer of rice, is directly affected by
the global crisis. Every year, the Philippines imports
around 15% of its rice supply (equivalent to 2.2
Million tons of rice), most of which comes from
Vietnam and Thailand. But why does an agricultural
nation like the Philippines import rice?

THE REASONS BEHIND RICE CRISIS

 In an article entitled Food Security and Rice? Dr.
Onofre Corpuz provides us some background on
shortages and crises regarding rice. Based on this
article, the Philippines has been importing rice since
the Spanish era. This article by Dr. Cruz seems to tell
us that our notion that the Philippines is a top
exporter of rice is incorrect. Also, the reasons for the
rice crisis before are more or less similar to what we
are already encountering today. He attributes the
recurrent rice shortages to the following: feudal
system, cash crops being favored over rice for
exports and primitive technology. In addition to
these, he also blames the practice of idleness during
the Spanish era.

The Philippines has intrinsic disadvantages in the

production of rice. First, the country lacks water
sources for its cultivation. Unlike our neighboring
countries, their agricultural lands are situated near
flowing bodies of water. Furthermore, the Philippine
agricultural lands are scattered all over the country
on different islands. This means that transportation,
cultivation, maintenance and production are quite
expensive because economies of scale hardly arises
from a disjointed production process.

Another reason for the rice crisis is government

negligence. The government could improve market
outcomes. However, with wrong intervention and
mishandling, the matter could become even worse.
This negligence is evident in the high-cost of
domestic rice production compared to out
neighboring countries. Our country has more or less
4 million hectares utilized for rice production. We
cultivate about 3 metric tons of rice per hectare.
According to the PHILRICE, this figure is insignificant
compared to the country’s production potential
which is 12 metric tons per hectares.

A study done in 1999 by the International Rice

Research Institute (IRRI), indicates that the cost of
rice production in the Philippines is almost 50% more
than that of our neighboring exporting countries’,
Thailand and Vietnam. The annual cost of producing
rice for Vietnam and Thailand is $683 per hectare
and $636 per hectare, respectively. While in the
Philippines, our cost of production is $888 per
hectare. Based on this given data, the principle of
comparative advantage begins to set in. We could
conclude that if production of rice is cheaper in
neighboring countries, then importation of rice is
indeed an economically wise decision. However, an
implication of such dependence on rice importation
makes us very susceptible to global crises like the
one we are currently experiencing. The reason why
no serious damage (relative to other countries
involved) is felt by the Filipinos is that most of our
daily consumption is being produced inside the
country. A much seemingly feasible action that the
government must undertake, is to make the
production of rice less costly by enhancing its
production process.

Aside from its failure to lower the cost of

production, another sign of government negligence
comes into mind when we talk about the failure of
the NFA to procure large amounts of rice. The
primary function of the NFA is to ensure food security
and stable rice prices and supply through diverse
strategies such as the procurement of rice supplies,
thereby gaining significant influence over the market
price. From the peak of its procurement in 1979
which is 10% of the total rice supply, it now dropped
to less than 5% of the total rice supply. A number of
studies have shown that in order for the NFA to
effectively influence the market price of rice, it must
procure 15% more of the total rice supply.

Another government failure is the ill-action of

subsidizing bio-fuel crops. The subsidized bio-fuel
program of most countries in the world, including the
Philippines, has lead to a decrease in agricultural
land allotted for wheat, rice and other agricultural
crops.

To add to the long list of government blunders is its

failure to impede conversion of arable land to
industrial centers, parks and offices. Just recently
before the rice crisis issue, there was this problem
regarding the Sumilao farmers’ agricultural land
being converted into industrial center by a private
corporation. Even though the economic gains we get
from these sectors are substantial, the arable lands
suitable for agriculture is very scarce. Moreover,
there are idle lands in the country that are not being
developed.

And making matters even worse is government

corruption, which has already seeped through the
system. One study indicates that a reduction of one
bag of fertilizer per hectare leads to a 10% reduction
in the grain yield. The money, which was used by the
current administration in funding for their electoral
campaign in 2004, was suspected to be intended for
the agricultural sector’s budget.
Aside from the aforementioned, there are factors
that contribute to the current rice crisis which are
completely out of the government’s discretion. First
among these, are the skyrocketing crude oil prices in
the world market. One notable consequence of this is
that it makes fertilizers and other input materials in
the production of rice much more expensive. Another
is that it also contributes to the increase in the price
of rice since transportation is a cost incurred by
suppliers.

Besides rising crude oil prices, another factor which

contributes to the aggravation of this crisis is global
warming. It has been shown in some studies that a 1
degree Celsius increase in temperature in the overall
climate leads to 15% less agricultural yield. This
poses a much serious problem in the Philippines
where agricultural lands lack abundant water
sources. Other things to be considered are natural
calamities such as flood and drought which also
contribute to lesser food crop yield.

Of all the rice shortage causes that are beyond the

control of the Philippine government, probably the
most detrimental is overpopulation. Ever since, it has
been a known fact that the country’s capacity to
produce food has struggled to cope with its rate of
population growth. The average growth rate during
the years 1990-2000 was 2.34% for the population
while the increase in rice yield, was around 1.6%.
Clearly, if such trends continue, it would be hard for
the Philippines to lessen its dependence on rice
imports because its production of rice grows at a rate
much lower than the rate at which its population is
growing.
There is no denying that today, the world is facing a
global shortage in rice and other agricultural
products such as wheat. This is probably because 2/3
of the world’s population (4 billion people) considers
rice as essential to their daily diet. Among the 36
countries named by the United Nations Food and
Agriculture Organizations that are experiencing rice
shortage, the Philippines is not included. Does this
mean that we are not suffering the so-called rice
shortage? It seems that it’s a yes: we are not facing
the kind of rice shortage that the UNFAO identifies
with the 36 countries. This is because, as mentioned
earlier in this study, 85% of the country’s rice needs
are being produced locally. The other 15% (2.2
Million tons of rice) have already been secured, to be
imported from Vietnam in a signed contract between
our government and their’s. Therefore, no rice
shortage threatens the country. This situation, of
course, is only short-term and it cannot be
ascertained whether next year, our country would be
as fortunate. But a major factor that exaggerates the
current crisis, is the hyped reaction of both producers
and consumers to this artificial rice shortage.
Because the media makes too much of a big deal out
of this crisis, consumers tend to panic-buy while
producers hoard their supplies. Thus, the interaction
of both increase in demand by the consumers and
decrease in supply caused by the hoarding of
suppliers raise the market price of rice
disproportionately. This is why the price of rice is
very high even if there is actually no shortage.

In basic economic courses, shortages could be

eliminated by increasing price up to a point where
quantity demanded equals quantity supplied. This is
exactly why in the Philippine market, the price of rice
increases in order to meet its demand.

But why are there long lines in NFA stores if there

isn’t any shortage? Aren’t long lines indicative of
such? There are long lines in NFA stores because
they sell subsidized rice. If a shortage really occurs,
one thing the government could do is flood the
market with imported rice. Naturally, the price of rice
should go down since supply is augmented. However,
this is not what is happening. The government
imports rice, which is what they have been doing
ever since, and sells it at a much lower price.
Therefore, the main problem that the Philippines is
really facing is the abrupt price increase in rice, not a
shortage of supply, which is caused by the interplay
of all the factors mentioned earlier. Thus, there is no
point for either the consumers or the producers to
deviate from their usual economic activities. The
media can also contribute by not overstating the
issue.

THE COMPLICATIONS OF RICE CRISIS

After analyzing the probable causes of the current

rice crisis, it might be worthwhile to ask what
implications this crisis has on both the consumers
and producers. For the Filipino consumers, the
implication is quite serious. As mentioned earlier,
about 68 million Filipinos expend 24% of their
income on rice alone. This huge proportion of rice in
the Filipinos’ income makes us incredibly worse off
with even a slight increase in the price of rice. The
effect of large price increases of rice for the Filipinos
is a lower standard of living because the more they
spend on rice alone, the less they could afford other
necessities of life. Moreover, a bigger share in the
consumer’s income could also mean that it takes up
a considerable amount in the yearly basket of goods
that determines the consumer price index. It follows
then that significant increases in the price of rice
translate into higher inflation and thus makes
general consumer welfare drop. In April 2008, the CPI
rose to 8% – one of the highest rates ever reached,
even exceeding the BSP’s target of 3-5%. If the crisis
is not solved immediately, experts predict long-term
inflation for the Philippines.

On the producers’ side, one would expect them

rejoicing over large increases in the price of rice.
After all, large increases in the price give them
greater incentive to produce and earn more.
However, this is far from reality. Because they are
not the ones that dictate prices, they are at a loosing
end here. Their profits do not equate to what the
classroom demand and supply mechanism tells us
because they sell their yield at prices dictated by
traders that, more often than not, take advantage by
lowering their buying prices. Asymmetric information
and unjust socio-political institutions (the small-scale
farmers are usually indebted to these traders) are to
be blamed for the farmers’ plight.

SHORT-TERM SOLUTIONS TO THE CRISIS

After the mentioned implications, it would be

essential to discuss the feasible solutions to this
crisis. In the short-term, the importation of rice from
other countries is one proper way to address this
problem. Flooding the market with more supply of
rice, provided the amount is significant, could
influence the market price to some degree. The NFA
serves its purpose indirectly through a subsidized
system of buying imported rice and selling it cheap.
Another short-term solution that is proposed is to
lessen the consumption of rice included in the
Filipinos’ diet. The government, in accordance to this
proposal, could encourage restaurants and fast-food
chains to implement the half-cup rice servings for
every meal (which is already in effect in many
establishments). Also, the government should have a
keen eye on unscrupulous hoarders of rice supply,
and render their activities unlawful and detrimental
to the economy. Furthermore, the consumers are
advised to calm down and be rational in dealing with
the current crisis. Panic-buying would just worsen the
current situation because the shortage crisis which
the world is facing, although certainly relevant, is not
yet evident in our country.

LONG-TERM SOLUTIONS TO THE CRISIS

Most of the long-term solutions that are being

proposed by the government are geared towards the
country attaining food security. One of these must be
aimed at revolutionizing the production process and
lessening the cost of production. Such a goal could
be achieved through investments in research. The 1
billion peso budget granted by President Arroyo for
research would surely benefit this purpose. Aside
from that, agricultural education for farmers and
improvement of irrigation and transport systems are
other strategies that could be pursued.
In addition to these, agriculture-related technology
should be developed so as to increase the quality of
rice. A study indicates that the Philippines has the
least developed methods of production. While
neighboring countries have shifted to advanced
methods of production using high-technology capital,
the Philippines still depends on carabaos. Lastly, the
government can certainly end this rice conundrum if
it puts the conversion of arable lands into industrial
centers to a halt.

References:http://www.forbes.com/markets/feeds/
afx/2008/03/19/afx4791213.html
 Preventing Shortages and
Price Rises
The best strategy for keeping the price of rice low
is to ensure that production increases faster than
demand. Rice production can be increased by
expanding the area planted to rice, by increasing the
yield per unit area, or by a combination of the two.
The opportunity for further increasing the rice area in
Asia is now quite limited. The total rice area in Asia is
unlikely to increase much beyond the current
estimate of 136 million hectares. Although some
increase in cropping intensity is still possible, rice
land is being lost to industrialization, urbanization, or
conversion to other crops.

The main source of additional production will

therefore have to be yield growth. Global average
rice yields must continue to rise at an annual rate of
at least 50 kg per hectare to keep pace with the
expected demand, or by 0.5 tons per hectare over
the next 10 years (about 12% above current levels).

Productivity growth through the development and

dissemination of improved technologies is the only
long-term viable solution for bringing prices down,
preventing future increases in price, and ensuring
that affordable rice is available to poor rice
consumers.

To achieve this, a second Green Revolution is needed

now as much as the first Green Revolution was
needed to avoid famine and mass starvation. The
task is equally challenging but not insurmountable,
provided a substantial boost is given to agricultural
research, which continues to remain highly
underinvested. Increased research investment
together with policy reforms that make rice markets
more efficient will help bring rice prices down to a
level affordable to the poor and, ultimately, reduce
poverty.

Rice Crisis Problems

Rice and other farm produce shortages hitting crisis
levels.
Quantity and quality of harvest does not conform to
market needs.
Under utilize farmlands.
Challenges and problems in agricultural production
are not effectively being met at the farmers level.
Neighboring countries have been able to tap their
potential harvest in terms of quantity and quality by
adopting new farming methods, systems, and
growing practices.
Current Philippine harvest yields are well below
global production averages.
Our ongoing solution to this rice and food crisis as an
agricultural products supplier, is to empower Filipino
farmers on effective high yield high quality rice
growing methods, systems, and growing practices,
with the use of high quality low cost organic
agriculture. products and farmer training workshops
we do nationwide.

Rice Crisis Solution Program Objectives

Increase the rice crop yield by 15% to 30% plus.
Intensify the adoption of organic farming in all crop
sectors.
Increase the income of Philippine rice farmers by
increasing production yield and quality.
Educate, and train rice farmers through our
agriculture workshops, and their biggest role in
solving the rice and food production crisis.
Rice Crisis Solution Program
Working with Filipino rice farmers with their
agricultural projects with agriculture training
workshops, and low cost high quality organic
fertilizer, adjuvant, and seed dressing products. All of
which cost less than what is on the market today,
with a revenue sharing program in which everyone
involved benefits, all the way to the rice farmer.

References: mail@agriculture-ph.com