Since the Department of Agriculture launched the Food Staple Sufficiency Program to boost local rice production to meet 100 percent of domestic requirements by 2013, the country’s rice self-sufficiency has risen from 88 percent in 2011 to 93 percent this year, according to the Philippine Rice Research Institute (PhilRice).
Yet, despite this, prices have still surged from P32 per kilo in 2012 to P43 this month even with international prices of rice remaining “relatively stable,” and a slight decrease in per capita rice consumption — from 119 kilos in 2008-2009 to 114 kilos in 2012 — according to PhilRice.
There are reasons for this, which researchers and academics from PhilRice and the University of the Philippines Los Baños enumerated at a forum organized by the National Academy of Science and Technology at the La Breza Hotel in Quezon City Thursday.
Rice is the staple food of 80 percent of the 100 million Filipinos, according to a study done by UP Los Baños College of Economics and Management dean Dr. Isabelita Pabuayon and associate professor Dr. Agham Cuevas.
The Philippines’ consumption per person per year is lower than other countries in Southeast Asia (228 kilos for Myanmar, 215 kilos for Vietnam, and 140 kilos for Thailand), but higher than the global average of 65 kilos.
Here, rice is used for food, animal feed, and processing.
The grain is grown by 2.4 million farmers on average farm sizes of 1.14 hectares, earning a net farm income of P22,000 per hectare per cropping season.
Middlemen between the farmers and the consumers incur marketing costs, as they take care of transportation, storage, processing, packaging, and retailing, among others. These costs, added to the profit they need to make, affect prices, Pabuayon said.
The Philippines also imports rice, though this has decreased over the past three years — from one million metric tons in 2011 to 365,000 metric tons in 2013. This year, however, the country was forced to import 1.4 million metric tons, she said.
Global rice prices increase at about four percent annually. In 2008, during the rice crisis triggered by demand rising faster than the supply, global rice prices hit $700 per metric ton, finally settling at $523 in 2010-2014, Pabuayon said.
High income growth and increasing population affected demand, while weather disturbances and dwindling stocks affected supply, in 2008. The price increase was also tied to increased prices of wheat, corn, and oil.
But the more influential factor, she said, was government policy among key players like the Philippines, which is among the top ten importers and producers in the world.
In 2008, a panic-stricken Philippine government agreed to pay higher than the prevailing world prices and contracted huge amounts for import. In turn, suppliers decreased the volume they brought to the world market, leading to an even bigger increase in prices.
Pabuayon doubted that current global prices can be lowered to pre-12008 levels, which hovered around $300 per metric ton from 1980 to 2007.
In the Philippines, where rice prices are around 50 percent higher than world prices, there has been a six percent increase in rice prices annually from 1990 to last year.
Pabuayon said there is a link between Philippine prices and the stocks kept by the National Food Authority (NFA).
“(W)e probably did not import sufficient amounts to enable us to maintain our price level,” she said, noting that NFA stocks have been declining since August 2011.
PhilRice senior rice research specialist Dr. Flordeliza Bordey explained that the stocks NFA maintains can be used two ways: as a buffer stock the government can give out as aid during calamities, and as an instrument to stabilize rice prices when the threat of increases looms.
Used for the latter purpose, it prevents the private sector from arbitrarily jacking up rice prices because the NFA will be ready to unload its stocks into the market as soon as prices get too high.
The greater the stocks held by the government, the more stable the prices, said Bordey.
A government inter-agency planning committee makes sure the country has enough rice to last through the lean months from July to September. The committee then recommends a certain volume of imports to the NFA just in case there is a shortfall.
However, this recommendation is not always heeded, noted Bordey.
In July last year, for example, the imported stocks were just good for 20 days instead of three months.
When the number of days the stocks last decrease, it is no surprise that rice prices increase, she said.
The Food Staple Sufficiency Program prescribes a certain amount to be imported should a shortfall occur, but the government imported less than what was required because of the “political nature of importation,” according to Bordey.
“Every time NFA announces that it will be importing, it seems to be seen as the end of the world. People complain, ‘Can’t we feed our citizens ourselves?’ It is as though importing rice is such a grave sin,” she said.
The issue became even more charged when President Benigno Aquino III declared rice sufficiency as one of his major policy directions.
“We cannot really target self-sufficiency and low prices at the same time. You have to choose one (or the other). The key to this balancing act is the priorities really of our government. Right now it seems we are at the self-sufficient but high-price phase,” Bordey remarked.
PhilRice executive director Eufemio Rasco cautioned against importing, however, given that in essence, the Philippines was importing labor as well, despite the unemployment in the country itself.
He also countered the popular belief that the Philippines was “kulelat” (doing badly) compared to its rice-producing neighbors, Thailand and Vietnam.
“If we are so good, why are we importing? The answer is in mathematics.”
Thailand and Vietnam have larger areas of land for cultivation and smaller populations, and have river deltas that serve as natural irrigation.
The archipelagic nature of the Philippines, weather, transportation, and infrastructure are other factors.
“It’s a miracle that we achieved 96 percent rice sufficiency,” Rasco said, referring to the number Pabuayon gave for last year’s performance.
“We are good, but they have natural endowments we don’t,” he added.
Rasco also stressed that the issue really revolved around the rice farmers.
Even in the best of times, they do not earn enough. Alternative sources of income for them should be looked into, he said.