Rice self-sufficiency: As unnecessary as it is unlikely

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As recently as November, President Aquino 3rd was boasting to an audience of Filipino expats in Laos that “sa pagdating po ng 2013, net exporter na rin tayo ng bigas mula sa dating importer” [come 2013, from being an importer,

we will already be a net exporter of rice],” a canard he has floated with tiresome regularity over the past year-and-a-half or so. But by the first week of this year—notably, the first week of the Philippines’ “National Year of Rice”—Agriculture Secretary Proceso Alcala was again downplaying the prospects for the Philippines to achieve the goal, telling GMA News that while the nation was “on track,” some imports would still need to be made this year, and that achieving the milestone of becoming a “net exporter” would happen sometime after 2013.

Food security is indeed an important priority for any government, and since rice makes up about 40 percent of the Filipino diet, making sure the country has enough of the staple grain is a critical objective. “Having enough” and “producing a surplus,” however, are two different things. The first is manageable; the second is not only virtually a scientific impossibility, it is most likely completely unnecessary.

Back in August, the Asian Development Bank published an in-depth analysis of the outlook for rice production and consumption within the Asean and on global scale over the next decade and arrived at some discouraging conclusions as far as the Philippines is concerned: While production is expected to grow about half a percent faster than consumption between now and 2022, the country’s net shortfall will remain fairly steady at about two million metric tons per year throughout the decade. Upon learning the numbers simply don’t add up to the government’s aspirations, Secretary Alcala’s reaction was, “I don’t care what they think. We are Filipinos, we know better in our country. And when I say that we will attain self-sufficiency next year, we will do our best to make that happen.”

Given the big production numbers publicized by the DA, Alcala’s bravado might actually seem justified—16.68 million metric tons in 2011, an estimated 17.78 million in 2012, and a forecast of 20.04 million metric tons this year. But these figures represent the production of palay—raw paddy rice—rather than milled rice suitable for consumption, which is what the complex model used by the ADB relies on. One metric ton of palay yields somewhere between 580 and 670 kilos of useable rice, according to the US Department of Agriculture. Based on that, at best the Philippines’ rice production was 11.18 million metric tons in 2011, 11.91 million metric tons last year, and perhaps 13.42 million metric tons this year. The first two figures are within six percent of the projections in the ADB report. The third represents either the addition of at least a million new hectares of rice-growing land, or an increase in yield, in just one year, of around 44 percent per existing hectare—which would be a neat trick, considering the long-term trend for the Philippines is for yield to increase by between one and two percent per year, and growing area to increase by around a quarter-percent.

It is fairly obvious that regardless if Alcala cares what ADB thinks or not, the numbers are not going to change by any noticeable degree based on the government’s attitude. Even if it were possible, becoming a “net exporter” might not be the high-value objective it is believed to be. Within the Asean group alone, the five nations that produce a surplus—Thailand, Vietnam, Cambodia, Myanmar, and Laos—produce three times the import needs of the five who do not, and that does not even take into account the export production of countries like Korea, Japan, China and India.

There may be a market for specialty varieties—even Indonesia and Malaysia, both net importers, export small amounts of fancy rice—but the general rice market frankly does not need the Philippines to create a possible glut of rice that would drastically lower prices and ultimately cause unintended economic problems. Crop prices are already declining in the Philippines, having dropped nearly 5 percent through 2012. Increasing rice output would only decrease farmers’ margins further, potentially forcing many of them to turn to different crops, or out of farming altogether; in that case, the Philippines’ position as a “rice exporter” might be short-lived indeed.

Rather than pursue a futile goal, the government would be better off focusing on efficiency and differentiation: maintain imports at manageable levels to promote stable trade relationships with Asean neighbors, and develop high-quality varieties for the export market. Perhaps if agricultural policy was determined less by jingoism and more by practical economics, it would have already productively moved beyond the vain hope of “self-sufficiency” and “becoming a net exporter” to something that actually works.