Business World, 29 January 2018


The rice self-sufficiency program of former secretary Proceso Alcala was the banner program of the Department of Agriculture. No less than former president Aquino bragged about it twice in Congress in his state of the nation addresses in 2012 and 2013. He announced in 2013, “in all likelihood, even the private sector will no longer have to import rice because we are still on track to becoming self-sufficient in rice.”

Most of previous DA administrations typically allocated the bulk of resources set aside for agriculture and fisheries modernization to raising the productivity of rice, hoping that if they are successful the country may move closer to the goal of self-sufficiency.

The explicit targeting of zero rice imports first figured in the FIELDS program of the Arroyo government. Immediately after the 2008 rice price crisis, former Agriculture secretary Arthur Yap came up with the program to attain “rice self-sufficiency in three years.” He failed. In 2010, the third year of FIELDS, the country imported 2.4 million tons of rice.

When former secretary Proceso Alcala replaced him in 2010, the “three years” target stuck in his mind. He circulated his administration’s rice self-sufficiency plan and targeted zero imports by 2013, giving himself 3 years to do the work. But he may fail, so he gave himself a second chance, another 3 years for the country to be self-sufficient in rice in 2016.

THE PLAN. The DA planned for the country to produce 21.12 million tons of palay in 2013 to meet the country’s palay requirement, or 22.5 million tons in 2016.

The DA identified the following sources of incremental production: gains in area harvested; higher farm yields; research, development and extension service; farm mechanization; post harvest loss reduction; and organic fertilizer application. The largest contributor of the targeted additional production is irrigation: expanding the area harvested, and 65% of the program’s cost went to repair existing and to constructing new irrigation facilities.

The estimated cost of the plan was P141.98 billion over a period of six years, or approximately nearly P23.67 billion a year. The actual cost may have varied through the years.

ACCOMPLISHMENT. The DA failed to attain both targets.

In 2013, the country harvested 18.44 million tons of palay, 2.67 million tons short of target. In 2016, the shortfall was larger, 4.86 million tons.

Former secretary Alcala acknowledged the failure but claimed credit in pushing the self-sufficiency ratio (SSR) to 96% and blaming supertyphoon Yolanda for the failure.

He said to Rappler reporter Ranada (2014) of the DA’s performance in 2013: “The Philippines is currently 96% self-sufficient in rice. It did not meet its target of 100% self-sufficiency in 2013 because of damage caused by typhoons, notably supertyphoon Yolanda.”

Let me deal first with the damage of Yolanda.

Yolanda destroyed 143,774 tons of palay planted in 77,476 hectares of land (Rappler, 2013). If this loss was added to the actual output of the country in 2013, the country would still be about 2 million tons short of target output in that year.

What SSR did Alcala use?

Secretary Alcala claimed his administration pushed the SSR to 96.82% in 2013 from 81.27% in 2010. He used the index of the Philippine Statistics Authority (PSA), which measures the percentage of the country’s actual rice output in a year to its actual use. Getting 100% of PSA’s index sounds good, i.e. we produce every rice ton we use in that year.

Not necessarily.

Even if we produce as much as we consume, it would still be bad policy to have zero imports or exports.

Instead of expensive storage, it is more efficient to export when domestic prices are seasonally low and import when they are high. The world can be our warehouse.

But there is even more fundamentally wrong with the index. In 1994, the index hit 100% because the NFA did not import rice saying that we don’t need to do so due to excellent production in northern Mindanao. But the country needed to import rice in that year; output in Mindanao was overestimated. True enough in 1995, rice queues formed at the gates of NFA warehouses, and the late Agriculture secretary Sebastian had to resign for the rice shortage.

The PSA’s self-sufficiency index is the wrong SSR to use.

If assessing the DA’s performance relative to its plan is the purpose, the appropriate score ought to be the actual output to requirement ratio. Using this, the 2013 SSR should be 87.33% not 96.82%.

The Alcala DA administration may nonetheless claim an accomplishment.

In 2010, this index was 77.88%, and moved up to 87.33% in 2013.

But the score was still 13.67 percentage points below target of 100%. Even if we adjusted the rice output due to supertyphoon Yolanda, the 2013 accomplishment would only be 90.5%.

The 2016 performance was slightly better, 78.38%.

FAKE RICE SELF-SUFFICIENCY.  With the PSA’s SSR, former secretary Alcala was the judge of his administration’s performance. The PSA index is 100 times actual output divided by actual output plus net imports. So we have not been exporting rice, so the index can go up to 100% by not importing rice as what happened in 1994. Secretary Alcala had a conflict of interest situation in this.

As the Secretary of Agriculture, he chaired the NFA Council, which decides how much rice import to recommend to the President for approval.

But deliberately eliminating imports of rice as in 1994 increased the rice price and caused hunger in 1995. Head of the Social Science Division at IRRI in the 1980s and 1990s and presently a Scientist Emeritus also at IRRI, economist Dr. Randy Barker used to say: “It’s easy to achieve rice self-sufficiency; just stop importing. But the people will suffer.”

Let us look at the movement of the rice price during the Aquino government. After spiking in 2008, international rice price represented by the price of rice in Thailand fell. However local price of rice in the Philippines continued its climb. The data show that local shortages of rice in the country were inadequately relieved by local harvest and imported rice.

If the country were to be truly self-sufficient in rice, it would have to be at stable, affordable price of rice. If prices move up with the PSA’s SSR, that rice self-sufficiency gain is fake.

The PSA reported the increase in rice prices in 2013 in various regions of the country.

For the entire country, the agency reported that the rice price index jumped to 4.1% in 2013 from 0.9% in 2012. In the National Capital Region (NCR), the index rose to 4.9% from -1.5% in 2012, while in other regions other than the NCR, the corresponding figures were 4% from 1.2%.

The PSA further reported that the highest annual average uptick was noted in Region V (Bicol) and Region X (northern Mindanao) at 6.1% while the lowest was in Region XI (Davao) at 1.7%.

Higher rice prices immiserize the poor, further.

In 2008 when global rice prices spiked, Mapa et al. (2015) reported that the CPI spiked from 2.9% in 2007 to 8.3% in 2008. The authors reported that the CPI for the bottom 30% of the population, who spends about 40% of their consumption basket on rice, was 67% higher than the headline CPI.

Self-rated hunger indicators by the Social Weather Station likewise increased in the first quarter of 2013 to nearly a fifth of the household population from 16.3% in December 2012. In Mindanao in the same period, the proportion of households experiencing involuntary hunger rose from 20% to 29.2% as reported by UNWFP and FAO (2013).

NFA IMPORT MONOPOLY. As we discuss these days what to do with the NFA following the end of our rice waiver in the WTO, all the above could not have happened if we did not have rice import monopoly in NFA.

Consider these mistakes in our history, errors that could have been avoided if there was a decentralized rice import policy with the private sector participating in rice imports on their own: 1994, the Ramos government did not import to court the support of rice farmers for the election in 1995; 2008, the Arroyo government panicked in the global rice crisis, importing over 2.4 million tons of rice in the first half of that year when world rice prices hit roof, and we wasted the extra rice at NFA warehouses and NFA’s liabilities ballooned to P133.3 billion in 2008 from only P68.6 billion in 2007; and the government of former president Aquino through his Agriculture secretary Alcala showing, at the expense of the poor, that he can get hold of rice self sufficiency. He failed, blamed supertyphoon Yolanda for his failure, but claimed credit for pushing the SSR to 96.2%. Unfortunately, his rice self-sufficiency gain is fake.

(Owing to space constraints, citations were removed but are available upon request. — Ed.)