THE country’s agriculture sector will need all the help it can get to become more competitive with its regional neighbors with the advent of the Asean Economic Community, the Department of Agriculture (DA) said.
Agriculture Secretary Proceso Alcala said this support should be translated into targeted interventions that would lead to capacity building for local palay farmers, allowing them to compete in the global market and expand their engagements in agribusiness opportunities.
“We choose to see that the free movement of goods and services will fuel the need to lower costs and propagate value-adding techniques. It will also pull stakeholders together to make the agriculture sector more competitive vis-à-vis those of other Asean countries,” Alcala said.
Alcala recently delivered a keynote address at the 3rd Research Seminar on Benchmarking the Philippine Rice Economy Relative to Major Rice-Producing Countries in Asia at the Shangri-La Hotel in Makati.
The DA chief commended the experts and researchers of the International Rice Research Institute (IRRI) and the Department of Agriculture—Philippine Rice Research Institute (DA-PhilRice) for the success of their landmark comparative study on Philippine rice production with other rice producing countries in Asia.
After over a decade, PhilRice and IRRI presented the results of the project, which assessed the cost of producing palay among intensively cultivated and irrigated ecosystems in six countries: the Philippines (Nueva Ecija), China (Zhejiang), Indonesia (West Java), India (Tamil Nadu), Thailand (Suphan Buri) and Vietnam (Can Tho).
It showed that among the importing countries (Philippines, China, and Indonesia), Nueva Ecija had the least cost of producing dry paddy (at 14 percent moisture content and at P12.34 per kilo). Zhejiang’s and West Java’s were pegged at P13.99 and P16.21 per kilo, respectively.
Relative to exporting countries, however, it was still very expensive to produce rice in Nueva Ecija, with prices at only P8.87 per kilo in Tamil Nadu and P9.46 in Suphan Buri. It was cheapest to produce dry paddy in Can Tho at P6.50 per kilo.
The study also showed that relying on the world market to meet the Philippines’ rice requirement would not be feasible. Thus, the country needs to start its quest for rice competitiveness.
“We will never look at Philippine rice farming the same way again because now, we know better,” he said.
The Philippines is a signatory to the Asean Free Trade Agreement, which took full effect this year. The agreement aims to bring down to zero (except rice) the duties on products coming from Asean countries.
Rice is a commodity that has direct linkages to food security, livelihood security and rural development needs of millions in developing countries like the Philippines. At present, rice is the only commodity in the Philippines that enjoys special treatment in the World Trade Organization, which excluded the same from the agriculture liberalization.
Unlike other agricultural products, rice — the basic staple grain of the Philippines — was not tariffied. Instead, rice farmers were protected through the imposition of a quantitative restriction (QR), which allows only a limited volume of the grains to enter the country.
At present, Manila limits to 805,000 metric tons the amount of rice allowed to enter the country through the so-called minimum access volume or MAV. Shipments outside MAV pay higher rates of 50 percent and would need the approval of the National Food Authority.
But with the government no longer able to control the volume of imported grains once the QRs are lifted by 2017, PhilRice said that cheaper rice would compete in the local market as long as it is subject to 35 percent tariff.
The IRRI-PhilRice study provided inputs that allow analysis of factors critical to understanding basic competitiveness, namely the various production cost factors and practices, levels of subsidy, farming systems, and marketing practices in the rice industry of other countries.
Alcala said that areas of irrigation, credit and insurance are factors which the Philippine rice sector can improve on, as well as the need to address the increasing cost of farm labor through mechanization.
He said that the Philippines must harmonize its standards – such as on phytosanitary measures and good agricultural practices — with the regional benchmarks to build competitive advantage in the Asean market.
“The Philippines needs to fully align our domestic product and production standards with that of Asean’s—not only to be competitive but also to empower the agriculture industry,” Alcala said.