Theory versus Reality! ‘IMPORTED RICE BUMABAHA, PERO PRESYO HINDI BUMABA’

The Philippine Statistics Authority (PSA) in its First Quarter 2021 market report said that rice prices in the market continued to go up even as the farm gate prices continued to decline.

This is a complete reversal of the promise made by the country’s Economic Managers and supporters of an Open Rice Market who in 2019 pushed for the passage of the Rice Tariffication Law which allowed an unrestrained and unimpeded entry of imported rice.

Along with the opening of the rice market to imports, the Economic Managers also trimmed the powers of the National Food Authority in supervising and regulating the rice industry.

Proponents of the Senate version of the Rice Liberalization Law presented to President Rodrigo Duterte two years ago a beautiful and enticing scenario once the market is opened to the unimpeded importation of rice.

First, they said that by flooding the market with as much rice as available abroad, the prices would go down making it affordable to the 105-million consumers and inflation would be tamed.

Second, the tariffs collected from the unimpeded importation could be used to fund programs which would boost local rice production thus making Filipino farmers competitive.

They ignored the stakeholders’ position supported by the DA that the volume of importation should only be enough to fill up the supply shortfall so as not to injure local rice farmers.

What the proponents of Rice Liberalization failed to realize is the fact that Rice is not a highly perishable commodity like tomatoes.

Rice could be stored and hoarded.

Most of all, rice trading is controlled by big businessmen with huge storage facilities who could manipulate the volume of rice to be released in the market.

By emasculating the NFA, the Economic Managers and proponents of the RTL allowed the rice cartel and the big traders to do things as they wished, including the branding and pricing.

Bakit hindi bumaba ang presyo ng bigas sa palengke in spite of the fact that there is a virtual flooding of imported rice?

The answer is very simple.

What is being brought in by rice importers now is the Premium Class, especially the Jasmine Rice which is sold at prices ranging from P50 to P60 per kilo.

There are actually three rice milling classifications – the 25% broken which has a landed cost of about P24 per kilo; the 15% broken which is a tad higher than 25% broken; and the Premium Rice or 5% broken.

The 25% Broken was what NFA used to import which was sold at P27 per kilo, a price that effectively stabilized the selling price of commercial rice in the market.

When the NFA was finally transferred back to the Department of Agriculture in 2018 and I chaired the NFA Council, I issued a policy that imported rice should be mainly 25% Broken and that the Premium Rice in the market should be supplied by Filipino farmers.

Of course, the importers complained because they made a killing in importing and selling Premium Rice as this was not covered by the price cap which the NFA Council under me instituted.

With the passage of the RTL, the NFA is now relegated to a buffer stocking agency of government and it could only buy from local farmers at P19 which if sold for P27 means massive losses for the agency.

With NFA defanged and taken out of the rice industry, importers and traders are now bringing in Premium Rice because of the huge profit margins compared to the cheap 25%.

Big rice traders now prefer imported rice because of the huge profits they generate, literally closing their warehouses to locally produced rice.

Now, Filipino rice farmers are forced to sell at prices as low as P10 to P12 per kilo in some areas.

The greatest irony now is the fact that before, rice traders mixed the cheap imported rice with Premium Local Rice to generate bigger profits.

Now, it is the other way around.

Good quality local rice bought from the farmers at very low prices is mixed with imported Premium Rice sold for as high as P60 per kilo, a price which following the rule of thumb would have meant a farm gate price of P30 for unmilled palay.

It is a free-for-all in the market today.

While the NFA in the past made sure that the rice varieties sold in the market are authentic to protect consumers, traders today give their rice any name, from Jollibee Rice, to Texas Senandomeng and Golden Lion, all non-existent rice varieties.

This is now a nightmare that the proponents of the Rice Liberalization Law would like to ignore as they insist on the perceived benefits of their disastrous decision.

Indeed, the distribution of free high-yielding seeds under the RCEP had resulted in an increase in production, a historic high of 19.44-million metric tons in 2020, higher than the 19.28-MMT achieved in 2017 without the RCEP.

But with farm gate prices plunging from a high of P20 in 2017 to as low as P12 today, that hardly makes a difference in the the lives of rice farmers today.

So today, the RTL stands as a monument of the great disconnect between Theory and Reality, between decision making in air-conditioned offices and crafting programs by walking on ricefields.

The ball is now in the hands of the proponents of the RTL and the only way out is to admit that it is flawed and that it needs review and improvement.

#GovernanceIsCommonSense!

#SometimesTheFarmerIsRight!

(Image grab from the Philippine Daily Inquirer report shows the indiscriminate branding and pricing of rice sold in the public market.)