Slowpoke decisions touch off rice crisis

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An economist from government think tank, Philippine Institute for evelopment Studies (PIDS), contested Department of Agriculture (DA) Secretary Proceso Alcala’s “rice self-sufficiency strategies” citing “flaws” in the management of the country’s current rice situation that stem from “inherently slow, politicized decision-making.”

PIDS senior research fellow Dr. Roehlano Briones said on Wednesday that the country’s rice prices are higher than what is “enjoyed by the rest of the world,” because “our domestic production is not enough to meet demand.”

Briones’s statement comes in the wake of Balisacan’s September 10 Memorandum for the President, warning of “food security issues” arising from a 2013 rice production deficit of anywhere from 0.5 million to 1.4 million metric tons (MT).

But while Alcala continues to insist that rice supplies are sufficient, Briones, citing Bureau of Agricultural Statistics (BAS) figures from 2010 to 2012, quotes a minimum deficit of more than 3 million MT between production and net food disposable data.


“This implies shortage; if this is not closed by importation, shortage pushes up the price of rice,” said the UP economist.

Balisacan makes the same recommendation in his memorandum: “importation of at least 0.5 million MT should be immediately pursued to address the projected supply gap and stabilize prices and possible lower them.”

Real-time decisions
Briones argued that further importation of the basic commodity should be coursed through the private sector “subject to reasonable government regulation.

“Private traders can make real time responses to day-to-day movements in supply and demand,” he said.

“Government response is not as rapid given bureaucratic procedures inherent in its decision-making. Moreover its decisions tend to be highly politicized rather than reflective of market conditions.”

The 2011-2016 Food Staples Security Program (FSSP), crafted by the DA itself along with other stakeholders, makes the same recommendation.

Contrary to the FSSP, DA-NFA statistics show that private sector importation in 2013 has gone down to 3 percent of this year’s total imports from last year’s 76 percent; a 98-percent reduction in actual quantity. On the other hand, NFA imports have nearly doubled, from 120,000 MT in 2012 to 205,700 MT this year. Too, importation of the said 205,700 MT was allegedly overpriced by as much as P457 million.

In their resolution at the House of Representatives calling for an inquiry into the said “overpricing,” Reps. Gary Alejano and Francisco Ashley Acedillo of Magdalo party-list wrote: “P457 million could have funded the construction of irrigation systems for 3,778 hectares of land. That’s a land area almost twice the size of Makati City, large enough to produce 30,224 MT of rice a year or P705.2-million worth of rice at P23,333.57 per metric ton.”

Balisacan and Briones, both economists, propose that government funds are better spent for irrigation to improve rice production, lower prices and increase the income of farmers, among others.

In April 2013 alone, the DA-NFA spent some $94.5 million to import 205,700 MT of rice from Vietnam at $459.75 per MT. At current exchange rates, this translates to more than P4 billion, exclusive of duties and taxes.

No govt-led importation
Amid mounting calls for the immediate importation of at least 500,000 MT of the rice “to address the supply gap and stabilize prices,” the DA on Wednesday maintained that there would be no government-led importation this year.

Alcala said that they continue to be guided by the President Benigno Aquino 3rd’s policy pronouncement during his second State of the Nation Address to limit importation of the staple to a minimum.

The DA chief issued the statement in reaction a recent newspaper report, suggesting that he “unilaterally” disregarded recommendations by the National Economic Development Authority (NEDA) Director General Arsenio Balisacan to import at least half a million tons of rice due to alleged production shortfalls.

“We uphold consensus decision-making, especially on key policy issues,” he said.

“For the record, I never said anything that challenges the proposal of a colleague in the President’s economic team,” he added.

Instead, Alcala said has explained in various forum that the DA and its grains agency National Food Authority have been following a calibrated approach and an established process in dealing with rice importation.

He noted that the country’s main harvest occurs in the second half of the year, the wet season crop, which produces 60 percent of the annual output. Thus, decisions on whether to import and how much are usually finalized by the NFA Council at the start of the succeeding year taking into account the inventory at the end of the year and the outlook for the first semester or the dry season crop.

WITH REPORT FROM JAMES KONSTANTIN GALVEZ

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