Crossroads (Toward Philippine economic and social progress)
Philippine Star, 24 April 2013
How is the price of rice? If we ask farmers – those who grow it for commerce – they will tell us that it is too low. If we ask the common urban resident, it is too high.
Price of rice for the nation not a simple subject matter. The price of rice is really more complex than conveyed by such simple summarization of the problem. For a start, there are many grades of rice sold in the market. However, the “gap” in rice prices (as perceived by farmers and consumers) hides a lot of issues in-between. The rice price is a kind of average that guides all other prices in general.
If we care for the welfare of the poor – factory workers and lowly government servants, other laborers, the poor in general, we have to think hard about the nature of rice price policy as we have it today. The level of price affects production quantities as well as those of demand. The gap in pricing suggests other issues.
Further issues are connected with marketing and post-harvest activities on the palay grain before the ultimate consumption. There is also the question of national food security. All nations want to protect their citizens from uncertain food supplies. Thus governments want to have sufficient buffers of rice supply to assure food security.
A reasonable outcome in which the price of rice is lower than the present situation is possible. This can be within a regime of market competition. Competition assures a fairer settling of price at the lowest possible level. Thus, the issue of rice is not wishful talk.
A book to read. A book that was published in 2006 by economists, social scientists, rice experts all can help us understand the rice price issue as I have posed it here. Written in simple language, it has the catchy title, Why Does the Philippines Import Rice? Two major institutions concerned with rice issues published the work: IRRI (International Rice Research Institute) and by PhilRice (The Philippine Rice Institute).
The book’s message, facts and analyses are as relevant today as then, and even before. In fact, its message is for the future, to improve the country’s handling of the rice issue and to understand certain facts so that we can find appropriate remedies or learn to live with their implications.
IRRI is an international institute that has wide knowledge on rice, both on the science of it and on the policies pursued by many nations. The PhilRice is the nation’s replica for IRRI, extending the research and development of rice varieties relevant for our food supply.
David C. Dawe, Pieded F. Moya, and Cheryll B. Casiwan, all knowledgeable experts in their work on rice, are main authors of the book together with a bevy of co-workers. They also edit the book. Dr. Dawe is the resident economist of IRRI. He has wide experience, including previous work with FAO (Food and Agriculture Organization and the United Nations).
This book is very enlightening on many aspects of the rice industry and how it affects Filipinos. It focuses not only on the efficiency issue (which is the traditional concern of economics) but also on the fairness or equity issue, especially as the rice issue affects poor Filipinos. It tells us about little known things rice farmers and analyzes who make the biggest gains within the industry.
Because of the complexity of the rice price policy, it is important that we convey some of the basic aspects of this problem so that we can understand its full message and the policy implications for our policy makers and leaders. In a few essays in the future, I will try to contribute to this question.
My intention in the future. I intend to devote some time toward examining the rice issue (every now and then), relying on the information conveyed from this useful book and extending the topic even more to other aspects of economic policy. Food policy is a critical component of the nation’s efforts to reach its development and social goals.
These goals include sustaining the level of economic growth and development, higher income and welfare for the citizenry, and a more efficient and productive use of the country’s economic resources.
For the remaining part of this piece today, I will simply summarize some important points that are important to bear in mind before we tackle the main problems associated with analyzing the rice problem for the country.
The gift of geography and its impact on rice production. One of the stark facts about our geography is that we are an archepelagic country with a narrow land mass and mountainous terrains. We share this geography with Indonesia, Japan, Korea, Malaysia. Add to this the smallness and relative size of people living in Singapore and in Hongkong, and we have something in common with countries that have been, for hundreds of years, importers of their most important staple food – rice.
The major exporters of rice are those located within the Asian mainland landmass, formed out of the river boundaries created by nature and serving as natural political barriers for delineating territories. Thailand, Vietnam, Cambodia, and Myanmar belong to this land mass that is traversed by the mighty Mekong River.
Not only is the land mass contiguous and fairly uniform in terrain. It is also naturally irrigated all year long. Thus, these countries can grow the rice crop easily and at low cost. This cost advantage gives these countries comparative advantage in the production of rice over other countries with more difficult terrains and more limited lands to which group we belong.
“The rice importers and their growth record.” What is the import record of the countries dependent on rice imports? Many of these have done very well in their development efforts. One reason is that, within the realm of the international economy, it is possible to be deficient in one important product, but it is possible to earn more by selling to the world what it can produce well.
In this context, Malaysia has been importing rice up to the level of 30 percent of its needs. Of course, Hong Kong and Singapore throughout their existence have been buying their food needs – including most of their rice – from the world economy.
The larger countries that produce enormous output in rice have also been net rice importers. For instance, Japan and Indonesia, very large economies in terms of population, have been importing as much as six percent of their yearly needs from imports. They have been consistent importers of rice. All these countries have done well in their economic growth.
In terms of the Philippines, we have been deficient in terms of our rice needs. During the late 1970s, we were at the margin of rice self-sufficiency. That was because we made major gains in investments in roads, farm to market roads, credit support, as well as major jumps in irrigation investments in terms of land hectarage. That was also during the early years of the Green Revolution that enabled the government to focus on the food production program. It is also to be noted that during those years, the population of the country was much less than today – about 30 million less people to feed then.
In recent years, the country has been a consistent importer of rice. The current administration talks again of self-sufficiency. To what extent can we give credence that such an effort is a wise objective? We will tackle this issue in the future.
