Editorial

Madyaas Pen JUNE 15 – 21, 2008 ISSUE

A Case of Filipinos Subsidizing

Thai and Viet Farmers

The Republic of the Philippines, on the occasion of the 147th birth anniversary of Dr. Jose Rizal and the celebration of the feast of St. John the Baptist, has perfected a deal with Vietnam. The deal is for the Philippines to import 600,000 metric tons of rice from Vietnam at a cost of US$940.00 per metric ton including freight to the Philippines.

At an exchange rate of P44.00 to a US dollar, the import cost per ton is P41,360 or a total of P24.816 billion. In simple term, one kilogram cost P41.36. The price will still increase after adding the distribution cost from the port of entry or unloading port to the distribution to several markets in Luzon, Visayas and Mindanao.

This new rice importation, according to DA secretary Arthur Yap, brings to a total of 2.3 million metric tons imported in 2008. It will start arriving to the Philippines in July until September this year. “We have been able to secure a good deal with Vietnam and saw this as a good opportunity to expand our stockpile” claimed Secretary Yap. “This deal will augment the Philippines’ buffer stocks when the price and other conditions are suitable for us,” Yap added.

This latest rice importation enabled the Philippines to import rice from Thailand and Vietnam valued at US$1.54 billion or P67.76 billion at P44.00 to one US dollar exchange rate to date.

Just imagine for the government to import 2.3 million metric tons, a huge quantity of rice from Vietnam and Thailand in less than one year! If that money was made available for the construction of irrigation systems to channel the huge amount of water that has been draining to the seas, evaporating on the air, percolating under the soil and eroding lives and properties, the Philippines should have been a rice exporter and not the number one rice importer of the world. Just imagine the huge amount of money squandered through fertilizer scam, white horse agriculture and other corrupted projects, the farm families could have been economically improved.

But what a shame! The government through its National Food Authority buys palay at P11.00 and increased it to P17 per kilogram with 11 percent moisture content and 97 percent pure. However, the Philippines is buying rice abroad more expensive than what NFA is offering the Filipino farmers. In April 2008, the Philippines bought rice at US$1,136.00 per ton or US$1.136 per kilogram or P50.00.

At 60 percent palay milling recovery, the imported rice is mush more expensive. What a tragedy for Filipino farmers! Here, the GMA government buys rice at higher cost from Thai and Vietnamese farmers, but buys much lower from Filipino farmers. What is the motivation? Time will come, the Filipino farmers will stop producing rice for the market. They will just produce palay for their own consumption.

Milling 100 kilograms of palay at 60 percent recovery will yield 60 kilograms rice. Analyzing the cost, 100 kilograms palay cost P1,700 plus P1.00 per kilogram milling cost. The total cost is P1,760.00 excluding handling. Dividing P1,760 by 60 kilograms milled rice, local rice cost only P29.33 per kilogram. But NFA sells it to the consumers at P18.25 per kilogram.

This explains why NFA is losing billions of pesos of public funds, by subsidizing rice consumers. Add to it the commission paid officials responsible for the rice importation.

NFA Deficit

For the first quarter of 2008, NFA posted a P43 billion deficit. In 2007, the shortfall was P2.6 billion. The rice importation in 2008 as of today, is estimated to be the highest in 10 years and may cost the government of the Philippines US$1.54 billion or P67.76 at P44.00 to a dollar rate.

Production Target

The government envisions to achieve 98 percent self sufficiency in rice in the year 2010. Its production target is 19.8 million tons annually. But how can we attain rice sufficiency? To do it, there must be ample irrigation, efficient and effective agricultural extension and other farm services. But the DA is only existing in Diliman, Quezon City and in their regional offices. There is no frontline technologist to provide necessary farming technologies to farmers. Inputs of production are expensive, fuel to run farm machines are expensive.

The government is focusing at enhancing rice distribution, stabilizing food prices, and cracking down on rice cheats. Notice, there is no production focus.

For the government to achieve its dream of food sufficiency, it must provide ample supports to the farmers. DA must review its rice policy with the view and special emphasis to balance the benefits provided between farmer producers and consumers. /MP