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Economists on Friday said opening up rice importation
to the private sector is the most feasible long-term solution to the
supposedly looming “rice crisis” in the country. At present,
only the National Food Authority (NFA) is allowed to source rice
from abroad. In the past several decades or so, similarly authorized
government agencies also acted as sole importers of the staple.
Felipe Medalla, an economist and
a former Socioeconomic Planning secretary, said his proposal, if
taken up by the government, would ruin rice hoarders.
“The best way to destroy these
cartels is to open up importation to everybody,” Medalla added,
referring to the rings run by the rice hoarders.
Jovi Dacanay, an economics
professor from the University of the Asia and the Pacific, agreed.
Dacanay further proposed that the
government break alleged monopolies in port operations to ease rice
prices.
“What really is the problem is
the distribution (of rice),” she said.
The proposal raised by Medalla
and Dacanay, apparently, had been thought of by Agriculture
Secretary Arthur Yap.
Also on Friday, Yap said he had
discussed with Finance Secretary Margarito Teves the possibility of
opening up rice importation to the private sector and relaxing
tariffs on the staple in an effort to further stabilize local rice
prices.
Toward steadying the prices, the
Agriculture department will repack and sell both
government-subsidized rice and medium-priced varieties.
Also, Yap said, the department
will expand areas planted to palay this wet season to 2.54 million
hectares to sustain record-high rice yields and meet
self-sufficiency targets for the staple in the medium and long term.
Starting next month, he added,
the NFA “will have a stronger presence in the market (through)
supervised selling” not only of the government-subsidized rice but
also the medium-priced commercial varieties at P24 to P25 a kilo to
cater to low- and middle-income consumers.
Yap said the food authority will
directly deliver its stocks to its accredited retail outlets and put
an end to previous practice of allowing traders to pick up their
stocks from the agency’s warehouses. This move, he added, will
prevent “diversion” of government-subsidized stocks to private
warehouses.
The Agriculture chief said the
“supervised selling” by the food authority will be undertaken
primarily in the country’s 10 most hunger-prone provinces, to
ensure that the government-subsidized rice stocks reach the intended
beneficiaries instead of ending up in the hands of unscrupulous
traders in connivance with erring NFA people.”
Yap said they will also set up a
Rice Action Center to monitor the status of rice supply and prices.
During a press briefing, Yap
announced that he had ordered the suspension of the rice agency’s
Isabela provincial manager, Alfredo Paguila, and of its regional
director, Danilo Pastrana, pending investigation of an alleged rice
scam in the province.
He also announced that he will
invite lawmakers to the department to conduct an “open house” to
tackle proper measures that will address the rice situation.
Also during the briefing, the
Agriculture secretary denied the involvement of his father-in-law,
Jimmy Gaw, in rice retailing, contrary to an allegation made on
Thursday by Senate Minority Leader Aquilino Pimentel Jr.
“My father-in-law is not
involved and was never involved in grains importing or trading,”
Yap said.
He said unabated population
growth prevents the government from resolving concerns on food
security overnight. This handicap, Yap added, explains the rice
imports from Vietnam and the United States to stabilize the domestic
supply. Meanwhile, he said, the department is pursuing long-term
measures to make the country self-sufficient in rice.
The NFA, according to Yap, has
the capacity to import up to 2.7 million metric tons of rice this
year, of which 700,000 metric tons are expected to arrive in July.
Medalla told the Manila launch of
the “Economic and Social Survey of Asia-Pacific 2008” in Pasig
City, “The collective wisdom of the market should decide
importation.”
Medalla, now also an economics
professor at the University of the Philippines-Diliman, hinted that
these cartels enjoy close ties with some government officials,
making them virtually untouchable. He refused to name names.
Medalla also hinted that
government statistics showing growth in the agricultural sector
particularly in rice production are interference.
“The more that the government
interferes in the market, including in the rice market, the more the
economy is vulnerable to shocks and crisis. The best performing part
of agriculture is where the government is absent,” he said.
Medalla added that “lack of the
right statistics could result in wrong forecasts, leading to
crisis.”
Medalla said if the statistics
are to be believed showing that agricultural production is
outstripping population growth, then there is no reason for the
supposed rice shortage.
According to him, the government
of President Gloria Arroyo can improve the apparently precarious
rice situation by continuing to import rice, improving productivity,
and lowering production costs.
“The main solution right now is
for the government to import rice at a loss but hopefully they will
phase out this solution and come up with a better alternative,” he
said.
Last year, the NFA imported some
1.6 million metric tons of rice, mostly from Vietnam.
But imported rice is expensive,
Medalla said. “The government is losing money because it buys high
and sells low,” he added.
The former Socioeconomic Planning
secretary said he had heard from an official of the food authority
that there will be losses of P100 billion by 2010 and that the
authority’s cumulative deficit will be P100 billion by that year.
Sen. Francis Escudero had said
that the cost of subsidizing cheap rice sold by the chief rice
agency could reach P21.7 billion this year. “If imported rice will
cost $707 per metric ton, which was what the government paid for the
335,000 metric tons it bought this month, then the two million
metric tons that the government plans to bring in this year will
cost P58.7 billion, based on a P41.50 to $1 exchange, which is still
higher than the official foreign-exchange forecast,” he added.
To improve domestic production of
the prime commodity, Medalla suggested that reforms in the
agricultural sector should be pushed and more investments in the
sector should be put in by the government.
He added that irrigations,
dryers, and other post-harvest facilities should be made accessible
to farmers in the countryside to allow them to bring and sell their
produce to the market.
To improve ricelands, Medalla
said, the government should slow down conversion of lands for
industrial or residential uses. Those wanting to convert for such
uses, he also proposed that they be charged a “conversion fee.”
Medalla conceded that conversion
“can be allowed anytime provided that you contribute to
nation-building by paying (such) fee, which can be used to upgrade
the agricultural sector.” 
--James Konstantin Galvez, Darwin G. Amojelar and Ira Karen
Apanay
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