Hungry for Rice


China Business Editorial Team

July 25, 2011





Thailand has 67 million people and devotes 10.7 million hectares to rice. The Philippines has a growing population currently estimated at 92.2 million, yet it only allocates 4.4 million hectares for rice production. Where did we go wrong?


Images of people lining up for hours under the hot sun to buy rice from outlets designated by the National Food Authority (NFA) filled front pages and the evening news. That was nearly a year ago.
Most major dailies, television and radio stations ran stories on the rice shortage. Suddenly, everybody was talking about how unstable the country’s food supply was.

The debates even touched on land conversion and how areas suitable to rice production had been turned into golf courses. Politicians you wouldn’t expect to talk about food sufficiency soon had their faces plastered on TV screens—they were both blaming Malacañan and offering solutions on how to deal with the scarcity. The coverage lasted for weeks.

Because the shortfall was acute, the government had to limit the sale of cheap NFA rice to a maximum of three kilos daily for every family. (NFA outlets sold them at 18.25 pesos or US$0.38 per kilo.) The crisis got so bad Agriculture Secretary Arthur Yap even had to suggest on national television that fast-food chains offer customers half servings of rice. Many are light eaters anyway, explained the Chinese Filipino cabinet member, and it would be a waste to give them a regular order (amounting to about a cup) if they couldn’t finish it all.

For some analysts, telling the public to cut down on its rice consumption was a telltale sign of how grim the situation truly was. Despite repeated assurances from the Department of Agriculture (DA) that the government was in full control, it appeared the administration was running out of options.
Today, the specter of another rice crisis seems detached from the national psyche. No one seems worried that the 2008 shortage could happen again. The attention of both government and citizenry is focused on next year’s elections. To the experts, this short memory can be a dangerous thing.

High Rice

Even prior to the 1995 rice crisis, experts were saying the country’s repeated failure to meet its own rice demand was just short of catastrophic.

When major rice producers Vietnam and India imposed export bans in April 2008, many countries panicked. Frightened there may not be enough to go around, importers scrambled for the little that was left in the world market.

The tight supply along with the ensuing panic buying raised rice prices to record highs. Prices doubled and, in some cases, even tripled. Thai 100% B grade, for example, shot up from US$335 per ton in 2007 to US$963 per ton in 2008.

University of Asia and the Pacific (UA&P) agricultural economist Rolando Dy explains that what actually happened last year was a rice-price crisis. “It was caused by panic, not by supply and demand.”

Fortunately, the crisis was cut short when Vietnam, India, and other exporters lifted export bans. Some countries doubled production, resulting in increased global rice stocks. With supply levels stabilizing, rice prices gradually declined. But not before wreaking havoc in countries like the Philippines.

And it’s clear why we are vulnerable. The government augments the frequent local production shortfall by buying 10% of its rice needs from the world market, spending billions of pesos in the process. It’s no surprise the Philippines has been labeled the biggest rice importer in the world. (See related story on overpriced Vietnamese rice imports on page 14.)

So the question now is if our Asian neighbors like Thailand, Vietnam, and even China (to some extent) can be self-sufficient, why can’t we?

Road Blocks

In an interview with China Business, farmer Jaime Tadeo says the country’s perennial rice deficit can be attributed to a confluence of factors: a growing population, limited area allotted to rice production, lack of irrigation, and government neglect.

Thailand has 67 million people and devotes 10.68 million hectares to rice. Vietnam has 86.97 million mouths to feed and plants 7.35 million hectares with rice. The Philippines has a growing population currently estimated at 92.23 million, yet it only allocates 4.4 million hectares for rice production.
China, on the other hand, dedicates 29.2 million hectares for rice. The mainland is recognized as the world’s top rice producer and accounts for over a third of the global supply. Yield per hectare reaches an average of 6.61 tons. It is also the acknowledged world leader in hybrid rice production.

But here in the Philippines, buildings and subdivisions now stand on land once covered with rice paddies. As of 2007, the Department of Agrarian Reform allowed around 40, 000 hectares of agricultural land to be converted into residential, commercial, and industrial uses.

Aside from farms lost to land conversion, poor soil quality in some areas is another problem. According to UA&P’s Dy, “Quite a number of rice areas are already acidic because of constant cultivation.” Too much pesticide and chemical use has left the soil nutrientdeficient and affects harvest volume.

Water is another issue. Dy says unlike Vietnam, which has the long Mekong river, the Philippines doesn’t have big river systems that can supply water to farms. Irrigation comes mainly from relatively smaller rivers and dams.

Data from the Bureau of Agricultural Statistics show the country has a combined irrigated area of around 1.5 million hectares. Additional irrigation systems are needed to sufficiently water the 4.4 million hectares of land currently devoted to rice.

Apart from making and repairing canals, however, the government also has to address a more serious matter: watershed denudation. Irrigation canals, no matter how big, would be useless if water deposits from forests are totally gone.

As if these aren’t enough, local farmers also have to deal with post-harvest losses; a problem that can be solved with sufficient access to advance milling facilities and farm-to-market roads.

Tadeo says farmers often have to dry their grains on the road instead of having them processed in high-tech mills. They also have to pay haulers high fees due to bad road conditions.

Moving Target

If there’s one good thing that came out of the crisis, it is the higher DA budget. From 25 billion pesos (US$521.06 million) in 2008, it rose to 44 billion pesos (US$917.06 million) in 2009. And while a bigger allocation for the department is viewed as a step in the right direction, there are far more pressing problems to be tackled. Government neglect is one.

Pundits blame the long years of government inattention and underinvestment in agriculture for the country’s food security problems. Although several measures are already in place, such as the Agriculture and Fisheries Modernization Act of 1997, farmers have yet to see more tangible results.
In 2008, the DA also launched its FIELDS program. (It stands for Fertilizers, Irrigation, Extension services, Loans and financial assistance, Dryers and Seeds.) Under the program, farmers will receive seed and fertilizer subsidies, year-round irrigation supply, rice production extension services, soft loans, as well as flat bed and solar dryers.

The FIELDS project is part of the DA’s Rice Self-sufficiency Program, which aims to provide major support services to farmers and make the country 98% sufficient in grain by 2010. But the plan didn’t push through so the department moved the self-sufficiency target to 2013. Joyce Sierra of Rice Watch and Action Network (R1) called the self-sufficiency goal a “moving target” since years are simply adjusted when deadlines are not met.

Side Dish of Solutions

There are different schools of thought on how to approach the country’s low rice production.
“We will condemn farmers to a life of poverty if we will bind them to rice farming so the country will be 100% self-sufficient in rice,” notes former NFA administrator Romeo G. David.

“Intensive planting of high-value crops like vegetables on just a 300- or 3,000-square-meter plot could be sufficient to give livable income for the farmers. This strategy would give rise to more middle-class farmers instead of the present poor-farmer communities,” David explains.

Dy shares David’s opinion, saying it’s not enough to aim for self-sufficiency. He points out, “The key is income security.

But Romeo Royandoyan of the Philippine Center for Rural Development Studies has a different take on the issue. He believes government should give more support to rice farmers to reduce rural poverty. Agriculture, particularly rice production, is still a major income source in the countryside.

Royandoyan also thinks the budget for the agriculture sector should be “comparable to the national defense allocation. Why? Because we’re talking about our food here!”

Other farmer groups say the government should do more than just allocate a budget. It should also ensure that funds get to where they’re needed. Policies have already been set in place, it’s a matter of “political will” and “implementation,” says Tadeo.

Farmers are also pushing for more investments in organic rice. They say it is more sustainable, nutritious, and healthier for the soil because it requires less, if not zero, pesticides.

As for irrigation systems, David notes the government allocates funds to build new ones, but can barely maintain those existing. He says, “The country can be self-sufficient if we address the repair and maintenance of existing irrigation systems.”

Apart from spending on irrigation systems, rural infrastructure (such as farm-to-market roads) ought to be a priority. “Providing [farmers] with water and roads is a short-term agenda. But these basic needs will improve their quality of life and the economy of rural communities,” argues David.
Accessible, well-managed, and well-watered rice fields could help farmers double their income. They can have two crops a year instead of one. David says farmers with disposable income can “be the engine of growth for the nation.”

Beijing, We Have a Problem

If the clamor of farmers for added support is not heard, we will be faced with the specter of another shortage.

According to non-profit group R1, the worrisome thing is China’s rice production is tapering off. There was hardly any significant movement in production figures recorded between 1990 (189.33 million tons) and 2004 (179.09 million tons). The numbers are alarming when compared to the phenomenal growth posted between 1965 (87.72 million tons) and 1985 (168.57 million tons). This could mean production volume will not be as high as in the past decades.

The stark scenario is not without basis. In both China and the Philippines, areas devoted to rice are shrinking. Also, many farmers in both countries have switched from rice to other crops that could guarantee higher income, such as fruit trees.

Although China is the global leader in rice production, it has been a consistent net importer of rice, much like the Philippines. At one time, China even imported a record breaking 237,000 tons of rice from Thailand.

All this put an even greater strain on the already limited rice supply available in the world market. Moreover, these changes put into serious question the chances smaller countries like the Philippines have in securing its staple food from foreign sources.

And between the Philippines and China, there’s no need to guess who stands the better chance of feeding its people when another crisis hits.

Told You So

Oddly enough, the linchpin of the government response to the rice sufficiency problem is to depend on imports. This, of course, did not sit well with farmer groups and advocates who argue that importation is both dangerous and expensive.

“Rice is our national staple and it’s a big mistake to rely on others to produce food to feed us,” says Royandoyan. Some economists believe we should just import instead of producing our own food. But he thinks that’s a myth. The available rice in the world market is only less than 5%. China alone could easily take that measly 5% away if it faces a major rice shortfall.

More alarming, Royandoyan adds, is that even countries with surplus rice production tend to hold on to their stocks the moment the world supply shows the slightest sign of instability. He may be right. After all, the Cold War did not lead to the fall of Russia; the US wheat embargo did.

Print ed: 08/09





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