The current dilemma facing the National Food Authority (NFA) and the interagency NFA Council (NFAC) concerning rice imports are symptomatic of what has been ailing the Philippine government when it comes to its economic policies, particularly those that affect the farm sector. Members of the NFAC, including its ex-oficio Chairman Cabinet Secretary Leoncio B. Evasco Jr., have announced that the government is not keen on importing the buffer stock of the food agency. To beef up the NFA’s rice inventory for the lean months, when farmers do not harvest rice because typhoons usually hit the country from July to September, the NFAC said the government should expand its procurement program instead of buying rice from abroad. The NFAC said private-sector imports under the so-called minimum access volume (MAV) scheme would also prop up Philippine rice inventory in the coming months.
The Department of Agriculture (DA) and the NFA have countered that importing the requirement of the government for buffer-stocking purposes should not be left solely in the hands of the private sector. The DA had even warned that local consumers would be left at the mercy of private traders who can dictate domestic prices. Unscrupulous traders, the agency warned, could make rice unaffordable, which would be disastrous to many poor Filipinos who consume more of the staple to fill their stomachs because they cannot afford more expensive protein sources, such as pork or chicken.
While the government’s plan to increase its purchase of palay from farmers is a welcome development, the NFA’s annual procurement has not even exceeded 1 million metric tons (MMT). In 2008 amid the global rice crisis, the government wanted to buy more palay from farmers to encourage them to plant the crop. The government wanted more farmers to go into planting rice after it had difficulties importing the buffer stock needed by the food agency in 2008 because of limited stocks, which resulted in price spikes. It also did not help that the country’s annual paddy rice output is usually short by 1 MMT. As an incentive, the support price of the NFA was raised by P1 to P17 per kilogram. Farmers, however, complained that they find it difficult to sell to the NFA because of the agency’s “stringent” guidelines in its palay procurement.
Also, despite the existence of the quantitative restriction (QR) on rice for two decades, the cost of producing rice remains high in the Philippines. Filipino farmers cannot compete head to head with their counterparts in Vietnam and Thailand—where Manila usually sources NFA’s buffer stock. The QR on rice—a trade privilege allowed by the World Trade Organization—has been extended twice. The extensions signaled the Philippines’s resolve to become sufficient in rice and reduce its purchases from abroad. Unfortunately, this never happened, because the government could not decide whether it would just import cheap rice or pour huge resources into the local rice sector. There were economists and bureaucrats who have advocated for more rice importation, as this would not cost so much. But there were also those who made a pitch for “self-sufficiency” due to climate change and the possibility that the 2008 rice crisis may be repeated.
The Duterte administration now has a unique opportunity to provide clarity regarding the government’s rice policy. The QR on rice would lapse on June 30 but until now, the government has yet to say whether it would allow more imports or it would prefer to spend as much as P400 billion in two years to “prepare” rice farmers. The government should bear in mind that unclear and vague policies would only hurt the poor, who live in rural areas.