Increasing rice production is not the key for the Philippines to become competitive in the Asean Economic Community (AEC), according to Dr. William Dar, who once headed the International Crops Research Institute for the Semi-Arid Tropics and founded the InangLupa Movement in the Philippines.
Respected much for his views on the agriculture sector, Dar said that while the Philippines can attain 100-percent rice self-sufficiency, it won’t make the country competitive in the Asean region because the farmgate prices of palay in the country remain high. Also, the country’s neighbors have been earning dollars from exporting high-value crops.
In a presentation during the forum “Future of Philippine Agriculture: Thinking beyond 6 years” held on July 28 at UP Diliman, Quezon City, Dar illustrated how the Philippines can become competitive in the AEC by focusing on the development of high-value crops that made some neighboring countries more competitive in the farming sector.
A paper from InangLupa penned by Dar also echoed the same sentiments. Titled “Re-energizing Philippine Agriculture for the Asean Economic Integration” the paper said the prevailing agriculture policy in the Philippines is to address supply gaps and earn from the export market.
“The country’s current strategy for agricultural development is highly conservative, prioritizing traditional crops, with production targets designed to close any domestic supply-demand gap. The policy is supported by trade measures to protect domestic markets with tariffs and non-tariff barriers. The regime may be characterized as ‘import substitution agricultural development,’ the agricultural counterpart to the country’s earlier adoption of import substitution with regard to industry,” Dar said in the paper.
The powerpoint presentation showed the Philippines will be hard-pressed to become competitive in rice production compared to leaders Thailand and Vietnam. According to InangLupa research, Thailand has 11 million hectares of land devoted to rice of which 80 percent are irrigated; Vietnam has 7.5 million hectares of which 100 percent are irrigated; and the Philippines has 4.5 million hectares of which 69 percent are irrigated.
Besides having less available land, the Philippines does not have the natural water system to support more rice production that Vietnam and Thailand have. As a result, the farmgate prices of palay (unmilled rice) in the Philippines are P14-P15 per kilo compared to P10 in Thailand and P7 in Vietnam.
The Philippines is also behind when it comes to food exports in Asean, with $6.7 billion recorded in 2014, according to InangLupa research. On the other hand, Indonesia recorded $38.8 billion, Thailand $38.4 billion, Malaysia $26.2 billion, and Vietnam $24.8 billion.
To make the country competitive in the AEC, Dar said the Philippines should grow more high-value crops and accelerate agro-industry. This would “transform and upgrade agriculture from traditional farming to a globally competitive agribusiness sector,” according to Dar.
Three phases must be done, according to Dar. The first phase is to promote the planning of rubber, coconut, mangoes, coffee, cacao, banana, palm oil and other high value crops; second phase is to strengthen agro-processing and its linkages to production, strengthen supply chains, upgrade commodity clusters, and provide farmers access to technologies and finance; and to deepen the farming sector’s participation in the Global Value Chain and present the Philippines as an agribusiness regional hub.
From InangLupa’s research based on 2014 data, the Philippines can only boast two exports commodities with receipts reaching $1 billion a year: banana and coconut. Indonesia, however, earns $17.5 billion from palm oil exports alone, while Malaysia recorded $12.08 billion also solely from palm oil. Furthermore, Thailand boasts natural rubber exports amounting to $6 billion and rice at $5.4 billion, and Vietnam $3.3 billion in coffee beans, $2.9 billion from rice, and $2.6 billion from shrimp.
Dar said that because 80 percent of the country’s nine million hectares of land are devoted to rice, corn and coconut, the Philippines had the highest rural poverty in Asean in 2014 at 40 percent, which is not a great improvement over the 46.9 percent recorded in 2000. Comparatively speaking, Thailand’s rural poverty rate was 13.9 percent in 2013, Indonesia 13.8 percent in 2014, Malaysia 8.4 percent in 2009, and Vietnam 17.4 percent in 2010.
Dar said that compared to high-value crops, rice can be considered a “subsistence crop” because it requires a high level of inputs and in the Philippines, and it is the traders that earn more from trading rice instead of the farmers.