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Rice trade liberalization (Part 2).

There are those who look at things the way they are, and ask why . . . I dream of things that never were, and ask why not? . . . - Robert Kennedy.

More liberal trading among nations across all products and services will bring more economic benefits in the aggregate. But as always more benefits will accrue to some; others will get less and may even be worse off. Thus, the need for safety nets for those who are left out. And time for adjustment for those who are not ready.

But can the Filipino rice farmers survive in a liberalized rice market?

Yes... Why not! Our corn farmers have learned to survive and compete with little government support. They have found new strength with GMO corn hybrids, plus most importantly, aggressive private sector support from seed companies, input suppliers and mechanization custom service providers. With more large grain centers and better shipping and transport logistics, our yellow corn animal feed sector should be even more competitive.

Our coconut farmers have survived, too, but barely. Worse we impoverished them with four coconut levies in succession in the 1970s and 1980s. The coconut levies which by now must be worth at least P70 billion are frozen in the national treasury and with the United Coconut Planters Bank (UCPB).


The key measure of competitiveness is the cost of production of palay vis-AaAaAeA -vis the competition. We have to benchmark our cost of palay again the major exporters like Thailand and Vietnam. The latest figures (January-June 2013 harvest) of comparable high yielding rice farms in the Philippines, Thailand and Vietnam showed that the average costs of production of a kilo of palay in Philippine pesos were P10.03, P9.12 and P6.69, respectively (c/o Dr. Liza Bordey, PhilRice). And the biggest cost factor differentiating the three countries was hired labor: P19,300, P3,700 and P3,300 per hectare for the Philippines, Thailand and Vietnam, respectively.

The competitive strategy therefore is relatively straightforward: 1) dramatically raise our palay yields by widespread adoption of hybrids, and 2) gradual farm mechanization to reduce labor costs.

High yielding rice hybrids produce palay yields of 7-8 tons per hectare compared with the national average of less than four tons per hectare. Rice hybrids now occupy 200,000 hectares out of the total hectarage of 4.5 million. If we scale up hybrid rice planting to one million hectares, we will have enough rice.

Transplanting, harvesting and threshing are very labor-intensive farm operations. We can drastically reduce labor cost by use of small-sized machines which technologies are available from Japan, China and South Korea. However, we have to generate beforehand alternative, productive employment for surplus farm labor through expansion of industry and services, more agro-processing and rural enterprises and further intensification of farming itself (multiple cropping).


With our small average land holdings, increasing income from rice alone would not be enough. If we were to make progress in attaining Millennium Development Goal No. 1 of reducing poverty, especially in the countryside, we need to create more employment and generate greater value-added by diversification to other high value crops and more village-level processing.

Many short-season crops like tomato, pepper, eggplant, garlic, onion, legumes, melons, ampalaya, root crops like gabi and sweetpotato, even ornamentals can be grown in rotation with rice. Income from these rotation crops are often much higher than from rice itself.

With better water control; planting of short maturing varieties; minimum tillage, and use of seedlings partly grown in seedbeds or nurseries to abbreviate the turnaround time between crops it is feasible to harvest 3-5 crops a year from the same rice farm, instead of 1-2, effectively trebling rural employment and farm incomes.


Majority of our rice farmers can hold their own in a liberalized trade regime. Our corn farmers have done so with highly productive GMO corn hybrids with very aggressive private sector support. Rice farmers can do as well with high yielding rice hybrids and farm mechanization. And a paradigm shift from monocropping to a deliberate multiple rotation cropping system built around rice with many high value crops. Private sector support will be crucial: for hybrid seeds supply, village-level processing and linkages with modern trade.

Moreover, the policy objective ought to be not necessarily to attain rice self-sufficiency although that will be most welcome but to increase incomes of rice farmers.

However, our rice farmers need a transition period of at least ten years to be ready for the competition. The elements of this transition are now being explored in the Palayamanan and Palayabangan initiatives of PhilRice under Executive Director and Academician Eufemio T. Rasco, Jr.

The very serious caveat to this modernization ideal is how we grossly mismanaged the Agricultural Competitive Enhancement Funds (ACEF) which had the same noble intention.


If NFA were to be restructured to focus exclusively on buffer stocking, some other agency will have to take on the price stabilization function until our rice farmers are ready for full rice trade liberalization.

If on the other hand NFA will be tasked to continue to perform the price stabilization function during the period of transition, the new NFA must undergo three urgent corporate reforms:

1. The NFA Council directors must be reconstituted to consist of persons of competence and integrity from among nominees endorsed by bonafide farmer organizations, industry associations and professional bodies like the MAP, FINEX, BAP and by the National Academy of Science and Technology (like the justices of the Supreme Court appointed by the President from nominees submitted by the JBC).

2. NFA council membership should be considered as a position of honor and trust; no perks except a cup of coffee and sandwich during Board meetings (like the UP Board of Regents) and a reasonable CoA-approved monthly honorarium like the Governing Board of the DOST research councils and perhaps medical insurance to encourage only well-meaning patriotic Filipinos to apply.

3. NFA must have professional outsourced internal and external auditors reporting directly to the NFA Board Audit Committee (in addition to the COA auditors).


Dr. Emil Q. Javier is a Member of the National Academy of Science and Technology (NAST) and also Chair of the Coalition for Agriculture Modernization in the Philippines (CAMP).

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Title Annotation:Trade
Publication:Manila Bulletin
Date:Oct 4, 2014
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