Special Features Agriculture What needs to be done to make homegrown rice farmers richer
What needs to be done to make homegrown rice farmers richer
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- Published on Friday, 22 June 2012 00:00
- Written by PAUL M. ICAMINA
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MUñOZ, Nueva Ecija – There will be no rice imports next year.
Rice self-sufficiency is a “done deal,” said Dr. Eufemio T. Rasco Jr, Executive Director of the Department of Agriculture’s (DA) Philippine Rice Research Institute (PhilRice).
This year, the Philippines will import 200,00 tons of rice from Vietnam. Next year, there will be “no importation at all,” he told Malaya Business Insight.
“I don’t doubt that at all, it’s doable with the investments now being made,” said Rasco. “If we can’t do it now, we’ll never be able to do it.”
In 2012, he pointed out, the DA budget hit P60 billion for the first time, the biggest allotted so far to support farming. To put in context, about half of that or P24 billion is for irrigation, mainly for rice land.
The budget this year for PhilRice – rice farming’s technology side – is P340 million. Next year, PhilRice is asking for P1.2 billion to jumpstart the next phase of rice industry development, which is global competitiveness.
“Our budget request can easily be justified,” said Rasco, a plant breeder. “If you break down the yield increases in recent years, 25 percent comes from irrigation investments; 25 percent from technology, the product of research and development, which is PhilRice’s concern; and the rest is for policy, extension and so on.
“The P1.2 billion we’re asking for is not so much, considering that irrigation gets P24 billion,” he said.
Rasco is more concerned about the next stage, which is to make rice farming competitive so ultimately the country will be able to export rice, and not just aromatic, high-value rice which it is already sending to a limited niche market, mostly in the United States and Europe.
He wants to make rice farming profitable enough so that growers can have enough money to make a decent living and so that they can invest in owning land, as many of them still don’t own the land they till.
And to encourage many more of them to plant more. And use current rice technology to get more yields. At the same time, consumers can be provided with cheap rice.
The way it is, imported rice is much cheaper than the homegrown cereal.
Self-sufficiency doesn’t mean many more people gets to eat rice automatically, Rasco said, “it only means that we don’t import anymore.”
If you want cheap rice today, he added, you get it not from local farms but from Thailand and Vietnam, he explained.
“We need competitiveness to achieve and sustain food security,” Rasco said. “Sufficiency by itself may not be enough if rice is sold at a high price.” Meaning, many people will hardly be able to afford local rice. “Then self-sufficiency cannot be sustained.”
The contract that the country signed recently with Vietnam is priced at about $400 a ton for milled rice. At a P45 exchange rate, this is P18 per kilogram of milled rice.
Dr. Flordeliza Bordey, a socio-economist at PhilRice, points out that local unmilled rice is already sold at P15 per kilogram, so the wholesale price for well milled rice is P32. It can even reach as high as P35 per kilogram at retail.
The price of 25 percent broken rice in Thailand costs about the equivalent of P22.50 per kilogram. The cheapest rice here, from the National Food Authority, sells for about P28 per kilogram.
If market forces are allowed – meaning rice is bought at international rates and factoring-in some transportation and storage costs – Filipinos should be paying around P18 to P23 per kilogram of rice, said Bordey, who is the official spokesperson of the DA’s banner Food Staples Sufficiency Program.
“The cost of production per unit has to go down,” she said in a separate interview. “When you increase the yield or make farming efficient so that production cost per hectare is reduced, the unit cost goes down.”
This way, she said, “farmers can sell cheaper unmilled rice so that milled rice is also cheaper for consumers. And still, farmers get to profit from planting rice.”
Today, however, planting rice doesn’t seem fun.
“Even if we want to, we cannot lower the price of local rice unless we sell it at a loss,” Rasco said, pointing out that growing rice here is more expensive than in countries like Thailand or Vietnam.
One reason is that rice farming in the Philippines needs a lot of manual labor. Because of mechanization, it takes only one Thai for the equivalent of every 10 Filipinos working in rice fields. In addition, the wage rates of rice farm workers here is higher compared to Thailand.
At about 1.5 hectare, the average rice farm is the same in Thailand and the Philippines. But the Thais have consolidated their fields, getting rid of paddy dikes so that machineries can better maneuver in bigger planting areas, Rasco said.
Cooperatives own the machineries; big trucks haul produce on very good farm-to-market roads.
“The solution is not just technology,” Rasco cautions. “It is social engineering as well to convince farmers, for example, to consolidate rice lands so that less dikes could make way for machineries.”
On the processing side, Bordey pointed out, the cost of capital that is used in putting-up milling equipment, trucks and warehouses is only about 4 percent in Thailand compared to about 9 percent here.
Furthermore, the cost of working capital or those used for buying unmilled stock can be as high as 18 percent. These jack-up the cost of processing unmilled rice which further increase the price of local milled rice in the market.
The bottom line: rice production from the farm to processor needs to be competitive. “Otherwise, there is always the pressure to import,” Rasco stressed. “Once imported rice comes in, the price of local rice will fall at a loss to Filipino farmers, discouraging them to plant more.”
Self-sufficiency is okay if supplies are stable but not if there is a gap, he said. “Then we need to import.”
Self-sufficiency, however, is very important because only 5 percent of world rice production is traded. “You are gambling the future on a thin margin of the global rice trade. So self-sufficiency is needed just the same, but it should be profitable to farmers.”
“The potential is there. PhilRice experimental farms yield as much as 10 tons to 15 tons per hectare while the average actual yield in rice fields is about 3.5 tons per hectare,” Rasco pointed out. “We’re still far off from the ideal.”
