Import more food to reduce inflation?

Just as the rice harvesting season begins, Super Typhoon Ompong is predicted to hit food-basket Cagayan Valley today. Rather belatedly, the Duterte Cabinet economic development cluster has been scrambling to finish drafting an executive order to deal with the prolonged crisis involving the supply and price of rice, and to mitigate the surging inflation which hit a nine-year high in August.

The EO will order the immediate release to local markets of the existing rice stock held by the National Food Authority (NFA) – 4.6 million sacks. More than half, or 2.7 million sacks, will go to the southernmost provinces of Zamboanga, Basilan, Sulu and Tawi-Tawi.

But the available NFA stock is good only for seven days, short of the 15-day standard reserve requirement. This situation has raised fears that the crisis may worsen during the immediate post-typhoon period. Already on Thursday local governments of Batanes and Catanduanes, both isolated islands in Luzon, appealed for additional shipments of NFA rice and other food supplies.

The issuance of the EO, agreed on by the Cabinet in its meeting Tuesday, is aimed at removing the administrative constraints and nontariff barriers on importing rice, fish, meat, sugar, and vegetables. In a bid to lower their domestic prices, the administration is betting on the easy importation of these prime food items – which together accounted for 2.4 percentage points of the August 6.4% inflation rate, per the National Economic and Development Authority (NEDA).

While massive importation of these items may abate the inflation surge, however, it will also have an adverse impact: Primarily it will benefit foreign producers and definitely will prejudice the livelihood of our local farmers and fishers, particularly the marginal ones.

As the first short-term policy recommendation, Duterte’s economic managers urged that, aside from the two million sacks of imported rice due for delivery before the end of September, five million sacks more should be imported to arrive in mid-November and another five million sacks in early 2019.

That’s altogether 12 million sacks of imported rice pouring into the local markets to compete with domestic rice produced by our farmers during the current harvest season (September 2018 to January 2019). And – take note — there’s no Cabinet cluster recommendation for the NFA to procure Philippine palay during this season.

A P10-billion supplemental budget must be given to the NFA so that it can raise its support buying price from P17 per kilo to P20 per kilo and procure more palay from our farmers. A resolution in this regard (Joint Resolution 28), has been filed by the Makabayan bloc in the House of Representatives. Seeking to top that, appropriations committee chair Rep. Karlo Nograles of Davao City’s own idea is to urge the NFA Council to convene at once and raise the agency’s palay buying price to P22 per kilo. But President Duterte, when interviewed on television by his chief legal adviser Tuesday, vowed to recommend to Congress the abolition of the NFA Council, saying “it has no purpose.”

Now consider these other short-term policy recommendations by the Cabinet cluster:

• Simplify and streamline the licensing procedures for rice imports by the NFA, form monitoring teams – to be composed of personnel from the Department of Trade and Industry (DTI), the NFA, Philippine National Police (PNP), National Bureau of Investigation (NBI), and farmer groups – for surveillance of imported rice from the ports of entry to the NFA warehouses and outlets;

• Urge the Senate to immediately pass (within September) the rice tariffication bill. The House of Representatives passed its version of the bill last month (HB 7735), ending quantitative restrictions on rice importation and replacing these with a 35% tariff (in accordance with the World Trade Organization Agreement on Agriculture, signed in 1995);

• Allow imported fish to be distributed in public markets in Metro Manila and in other parts of the country;

• Convene the poultry producers to decisively address the problem behind the gap between farmgate and retail prices for chicken (to be tackled by the Department of Agriculture and DTI);

• Set up public markets where primary food producers can sell directly to the end customers, and provide cold storage facilities for this purpose;

• Simplify procedures set by the Sugar Regulatory Administration in order to allow direct users to import sugar as a means of moderating its cost to consumers;

• Prioritize the release by the Bureau of Customs of essential food items arriving in the ports.

• Improve logistics, transport, distribution, and storage of vegetables.

It remains to be seen, after the issuance of the EO, how fast these short-term measures could be implemented.

As medium-to-long-term measures for agriculture, the Cabinet cluster has suggested 1) facilitating better access by farmers to farming technologies; 2) promoting research and development; 3) developing resilient and high-yielding varieties of rice; 4) reassessing the country’s planting season and crop viability in each region; and 5) aggressively imposing the idle land tax.

Question: Shouldn’t these measures – all aimed at improving and maximizing agricultural productivity – have been assiduously carried out in the past decades? Why haven’t they?

I recall that when I was in Congress during the Arroyo government and, at the appropriations committee hearings on the budget of the Department of Agriculture, I batted for increased funding for irrigation facilities to enhance our farmers’ rice production.

The reply from the DA resource person stunned me. He said that it was better to import low-priced rice from Asian neighboring countries rather than to try boosting local palay output because the production cost had already become too high.

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Published in Philippine Star
Sept. 15, 2018

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