Agriculture News Analysis

The rice of life

Yet again the government is having to grapple with what has become a perennial dilemma – how much more rice has to be imported so that the Filipino people have enough to eat. Yet again as hopes of attaining self-sufficiency in rice production rise to fade, the realities of shortage kick in with projections clearly showing that at current levels more rice will be needed. The only question now is how much more?

Horn of Plenty dreams – the notion that the Philippines will become self reliant in terms of its rice needs; even become a net exporter – have once more been replaced by the actuality of the Horn of Empty. The Philippine Statistics Authority is pointing to a 240,000 tons decrease in rice output from last year’s harvest. And last year the Philippines needed to import an additional US$465.5 million worth just to ensure there was enough supply of the national staple. So once again, the Philippines is going to be hit with another big rice-import bill.

This year’s paddy rice output is expected to be 17.91 million tons against 18.15 MT for 2015 – a 1.3% drop. An additional 1 million plus tons will come from overseas sources – largely from Thailand and Vietnam. In August, government placed an order, through its grains-procurement agency, the National Food Authority (NFA), to purchase 250,000 tons of rice. The NFA now has standby authorisation to buy a further 250,000 tons.

Meanwhile, applications for rice import permits from local traders now number more than 100. Collectively, they aim to ship-in a total of 750,150 tons – 326,325 tons from Thailand; 280,375 from Vietnam. This figure falls short of the maximum annual volume – 805,200 tons – which private traders are permitted to import under a 2014 World Trade Organization quota agreement. The final deadline for shipping is 28 February 2017.

That agreement, which expires next year, is country specific and quota specific. With regard to Thailand and Vietnam, the maximum allowed to import from each country is 293,100 tons which means that local importers have already exceeded that quota for Thailand. Another source, Pakistan, for which the NFA has an import quota limit of 50,000 tons, has already received applications from traders to bring in 143,450 tons.

Other countries and their quotas on the NFA list include, China and India, 50,000 tons each; Australia, 15,000 tons; El Salvador, 4,000 tons; other countries, 50,000 tons.

As usual, much of the blame for the rice shortfall can be laid fairly at the door of the weather – specifically the El Niño dry spell and a series of destructive typhoons. The last two of these, Lawin and Karen, were responsible for US$212 million and US$62 million respectively, with much of the losses coming from rice crops.

But that’s not the full picture. Rice farming is often inefficient, under-mechanised, and struggles constantly with poor irrigation systems and water shortages. Agriculture as a sector needs a massive injection of investment funds to bring it on par with its peers in Southeast Asia – and rice production is undoubtedly in the greatest need.

None of this is a secret – neither to this government, nor the last one, nor the one before that and so on. In June, Agriculture Secretary, Emmanuel Piñol, himself a farmer by trade, said that to rehabilitate the farm sector would need an immediate US$651 million – but that’s just to compensate for the battering it’s taken over the past couple of years. To upgrade it to the point where it becomes competitive within the region will take multiples of that.

Piñol, like his boss, Philippine President, Rodrigo Duterte, is a realist; like him too, he’s not work shy, spending much of his time travelling throughout the country gathering information and seeing the problems which agriculture faces first hand. If anyone can make sense of just how bad a state Philippine agriculture is really in – and precisely what’s needed to fix it – it’s Piñol.

He won’t dress it up as so many of his predecessors have; he won’t sugarcoat it. The fact is the Philippine agricultural sector holds a massive potential and would have relatively little difficulty in attracting big overseas bucks once a clearer picture of its specific needs – by crop, animal stock, equipment upgrades and province – are known.

In January to end June, total agricultural output fell by 3.48%, with the crops subsector chalking up a 4.97% decline from its contribution in the first half of last year. And while crops contributed 48.31% to total agri-production, crop production in the first half actually declined by 6.80% compared to the first six months in 2015.

Plainly, for a country where more than one third of all land area is agricultural land and where the rural workforce accounts for around 30% of the country’s total workforce, agriculture’s performance – it contributed just 9.49% to GDP last year – is unsustainable.

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