MUCH has been said about the rice importation controversy at the National Food Authority (NFA) which led to the firing of Cabinet Undersecretary Maia Chiara Halmen Valdez.
The controversy has become a divisive issue among some members of President Duterte’s official family. Charges of meddling, corruption and rent-seeking filled the air.
Contrary to what is being painted, the controversy is not about whether to import rice or not, for that is a given, considering that rice production, even in a bumper crop year, cannot fully meet the domestic demand for rice. What is at the center of the controversy is what modality is to be adopted, as well as the timing.
Cabinet Secretary Leoncio Evasco and Valdez, supported by majority of the NFA Council, argue for the extension of the minimum access volume (MAV) scheme granted to private importers, which has been until recently the modality for importing rice. It is a scheme that is in compliance with our World Trade Organization commitments, and where private importers are allowed quotas to import rice which will then be sold in the open market.
On the other hand, NFA Administrator Jason Aquino and Agriculture Secretary Emmanuel Pinolare pushing for a government-to-government (G2G) rice importation scheme, where NFA will directly procure rice from other countries, and then hold this in NFA warehouses for distribution during times of calamities, or when prices need to be stabilized. They are wary of the existence of rice cartels which are in control of both rice importation and distribution in the country. Their intent is to defend the local farmers by ensuring that they get a fair price that can compete with imported rice.
G2G, however, according to its critics, invites the risk of inflation, as it can drive up the prices of rice that could hurt consumers, even as it requires government spending, whereas MAV can shift the burden to the private sector, and could even earn revenues for the government from taxes paid by the importers.
The controversy dramatizes the fact that rice has become so politically explosive. Since it is the staple food of Filipinos, an increase in prices, while not affecting demand considering that it is relatively price-inelastic, will nevertheless hurt ordinary people. But on the other side of the equation is the welfare of the farmers who are forced to compete with cheaper imports from countries that provide subsidies to their farmers like Thailand and Vietnam. To make things worse, they are at the mercy of traders who buy their rice cheap but sell them at higher prices. And as if this were not enough exploitation, these rice traders are also the rice importers who take advantage of cheaper imports that compete with local rice grown by our farmers.
This is the reason why the President, who is known for his pro-farmer stance, sided with Aquino and Pinol, and fired Valdez.
The move of the President to temporarily halt the importation of rice by refusing to extend the MAV is a means to assure our rice farmers who had a bumper crop the income that they deserve. This is also firing a warning shot at rice cartels and their enablers in government.
But in order to address the issue in a manner that is both beneficial to farmers and consumers, as well as sustainable in the long run, we need to have a reality check.
Even with a modernized agriculture, and robust state support, rice farming may still be seriously challenged by geographic and demographic realities. We need to examine if we really can achieve rice self-sufficiency. We have over 100 million mouths to feed, yet we are an archipelagic country with smaller flood plains. We do not have river systems such as the Chao Phraya River in Thailand, and the Red and Mekong Rivers in Vietnam that can provide stable sources of irrigation water. Our growing population also forces conversion of agricultural lands. Our being an archipelago also adds cost to transporting rice from production areas to other islands. Added to this is our vulnerability to the adverse effects of climate change.
This brings us to the more fundamental aspect of the problem. Rice has become so central in our imaginations. It has become a state of mind that is created by a dominant lowland Filipino cultural template. Yet, there are areas in the country where people eat other staples, such as corn and root crops.
We also have an “unlimited” rice culture, even as food outlets usually refuse to serve half or quarter servings of rice. These practices lead to a lot of wastage. In fact, the International Rice Research Institute (IRRI) estimated that 36 percent of the rice imports in 2011, or the equivalent of 308,000 tons, was wasted. This translates to daily losses of P23 million, and an annual loss of P8.4 billion, enough to feed 4.3 million people.
It’s about time we contemplated a massive cultural campaign to consider other staples to reduce demand for rice, and to do away with “unli-rice” to minimize wastage.