RECENTLY, the Philippine Statistics Authority (PSA) projected that our palay production was set to decline by 15 percent to around 3.9 million metric tons (MMT) in the third quarter of this year — the July-September output in seven years.
The PSA attributed the decline to the onset of El Niño, but this lacks plausibility given the heavy “habagat” (southwest monsoon) rains we have been experiencing. Besides, May-July is traditionally the “wet” planting season for palay, which is then harvested from late August through its October peak lasting till November.
Expectedly, we obtain higher yield during the wet planting season compared to the dry planting season, which starts around December and ends in March. The simple explanation is that rain-fed farms (no irrigation) can be placed under cultivation due to bountiful rainwater. Rain-fed farms are mostly fallow or planted with other crops during the dry planting season because palay is a water-intensive crop. Agronomists calculate that to produce a kilo of a palay, 2.5 to 4 cubic meters of fresh water is needed.
A severe El Niño is predicted to hit the country during the latter months of this year till April 2027. The last severe one approximating the gravity of the El Niño threatening us now was in 1997-1998. Palay production contracted by around 24 percent during that period. Combined with the rising fertilizer and fuel prices as a result of the ongoing Middle East war, the anticipated El Niño is sure to cause a serious shortfall in local palay production.
The country consumes over 16 MMT of rice annually; our palay production is less than 20 MMT. Using a very efficient palay to rice conversion ratio of 65 percent, 20 MMT of palay will yield around 13 MMT of rice. This leaves a gap of more than three MMT to satisfy our annual rice consumption demand.
Expectedly, rice importation becomes an indispensable policy tool if we are to sufficiently meet domestic rice requirements. Populist demagogues and ideologists who argue that we can be rice self-sufficient, in the short or even medium term, are either peddling lies to advance their cause or just simply scientifically ignorant.
The recent Department of Agriculture (DA) decision to stop issuing sanitary and phytosanitary import clearances (Spsics) for rice imports from Vietnam, Thailand and Myanmar therefore comes as a big surprise. The justification is to prevent palay prices from falling as October is the peak wet harvest season. The DA claims this will protect our small palay farmers as imports will not be flooding the market at a time when they are harvesting, thus propping up local farm gate prices. However, there are serious flaws to the argument.
First, those who are familiar with the rice trading business know that it takes around 60-90 days after the issuance of Spsics before actual imports arrive. This is due to the paperwork involved, including negotiating with wholesaler exporters, opening letters of credit, obtaining clearances, bagging, transporting, etc. Thus, the effect of this month’s ban on rice imports will only be felt sometime in December and January, long after the October peak wet harvest season. In the meantime, rice imports will continue to arrive in October and November for batches that were awarded Spsics during the second quarter.
Second is the “moral hazard” problem brought by the DA’s arbitrary decision. We source almost 90 percent of our rice imports from Vietnam, Thailand and Myanmar. Vietnam fretted over last year’s DA decision to impose a rice import ban from September to December, at a time when their farmers were harvesting their produce in August. This led to a drop in the Vietnamese rice prices and Vietnamese authorities had to scamper for alternative markets to avoid a further decline in prices and worse, rice stock spoilage.
Once the severe El Niño hits us, resulting in a significant decline in local production, the country will be desperately searching for more imports from various sources. By that time, traditional exporting countries like India, Vietnam and Thailand will also be adversely affected; they might even decide to stop exports to prioritize their food security. As the DA has treated countries that traditionally supply the bulk of our rice exports in a nonchalant manner, under the guise of protecting our small farmers, it is not far-fetched that future requests from us will be treated with sympathy once global supply has tightened as a result of the El Niño.
Trends are obviously not in our favor. Local palay production is expected to significantly decline this year to early next year. Global rice prices are starting to rise. The peso is depreciating fast, making imports more expensive. El Niño, combined with the rise in fertilizer and fuel prices, will push rice prices up and we can no longer rely on the generosity of “suki” exporting countries because of our shabby treatment of their past concerns. As a friend who is an internationally recognized rice economy expert said, “If the Philippines wants to have a reliable supplier, it has to be a reliable customer.”
Absurdly, the solution being offered by the DA, its allied legislators and populist groups is an increased budget for next year. It already commands more than P200 billion, with sectoral allocations across all agriculture programs expanding toward P297 billion. They keep on forgetting the fact that the budget for rice alone already stands at around P70 billion, more than the combined budgets of agencies such as the Department of Science and Technology (P31.7 billion) and the Department of Environment and Natural Resources (P27 billion).
Curiously, the in-house research unit of Congress, the Congressional Planning and Budget Research Department, revealed in a study that while the rice budget significantly increased during the last two decades, our rice self-sufficiency ratio actually declined to just over 70 percent. Sinking more billions of pesos into the underperforming rice sector while underfunding national research and development and climate resilient agriculture projects isn’t an agricultural development strategy, it’s a fiscal sinkhole.
In other words, our policy makers seem to be trapped in that insanity loop, supposedly described by Albert Einstein, as doing the same things over and over again yet expecting a different result. This is indeed a tragedy for our rice farmers and people.
fdadriano88@gmail.com