On the Privatization of the Rice Sector

Bantay Bigas agrees with Sec. Proceso Alcala’s statement (PDI June 30) that a large percentage of the country’s harvest of palay is wasted as it goes to the milling process as consumable rice due to inadequate and low-technology post-harvest drying and milling facilities. According to Herculano “Joji” Co of the Philippines Confederation of Grains Millers and Retailers, most of the rice milling facilities in the Philippines does not have the capacity to mill rice in huge volumes. Rice milling capacity in the country can only mill out 10 tons (10,000 kilos or rice) per hour, while smaller capacities can only mill between 3 to 7 tons per hour. The country’s average capacity of 5 tons to 10 tons per hour is very backward compared to the rice milling technology in Vietnam, Cambodia and Thailand. Thailand’s rice milling capacity is 100 metric tons per hour. Our national average in rice milling is 60% recovery (for every 100 kilos of palay, on 60 kilos are milled out as consumable rice) compared to 66% to 70% recovery using modern technology in Thailand, Vietnam and Cambodia. From our current rate of recovery, seven percent is even wasted. Add to this our inadequate post-harvest facilities. We do not have mechanical driers. Most of our farmers dry palay in streets and sidewalks. In the past our Vietnamese suppliers were delighted at supplying us with rice milling equipment of 10 tons / hour capacity but as the years passed, Vietnamese suppliers laugh at us because not even their farmers use 10 tons/hour rice milling technology. It is already obsolete in Vietnam.
However, what is not mentioned by Sec. Alcala is the country’s shrinking rice lands because of continuing land use conversion to other uses such as commercial and residential areas by private business in the real estate sector.

Bantay Bigas is likewise averse to government’s thrust of passing on to private sector the provision of post-harvest facilities needed by the farmers including the necessary support services for farmers to improve their livelihoods. These are government’s responsibilities to ensure the farmers are not exploited by scrupulous and profit-oriented private businesses.  As it is, the Philippines’ rice industry is under the control of private traders and landowners who have monopoly control over rice farms, rice seeds and inputs, credit and capital including post-harvest facilities as rice mills and warehouses. They control prices of the country’s basic staple from the farm to the market while the rice farmers remain indebted and poor.

Hunger and poverty remain widespread among the country’s primary food producers. They cannot even afford to buy what they have produced. This is because government has privatized the country’s rice industry early on until today and as such, it is under private control and monopoly.

Thailand, Vietnam, including the US and EU all maintained government support and subsidy for their farmers and agriculture. The Philippines can never attain rice self-sufficiency unless the Philippine government does it part well – support the country’s primary food producers through capital and inputs subsidies, develop the rice industry, implement genuine agrarian reform program. Otherwise, the Philippines will remain the number one importer of rice in the world.#eof#

(Bantay Bigas letter to the PDI editor, July 3, 2011)

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Profit-driven private sector non-solution to rice self-sufficiency

BANTAY BIGAS is averse to government’s thrust of passing on to private sector the provision of post-harvest facilities needed by the farmers including the necessary support services for farmers to improve their livelihoods. “These are government’s responsibilities to ensure the farmers are not exploited by scrupulous and profit-oriented private businesses”, said Bantay Bigas spokesperson Lita Mariano.

Mariano is reacting to the call made by Agriculture Secretary Prospero Alcala to the private sector in a rice industry forum last June 27, 2012 held at the Banco De Oro (BDO) corporate headquarters, in Makati City, where he presented the Aquino administration’s Food Staples Sufficiency Program (FSSP). The forum was attended by top officials of BDO, Land Bank of the Philippines, and rice industry agribusinessmen.

Secretary Alcala enjoined the private sector to consider investing in grains handling and processing, and farm services outsourcing that could result in more efficient rice production, lesser post-harvest losses, and more profitable operations.

“As it is, the Philippines’ rice industry is under the control of private traders and landowners who have monopoly control over rice farms, rice seeds and inputs, credit and capital including post-harvest facilities as rice mills and warehouses. They control prices of the country’s basic staple from the farm to the market while the rice farmers remain indebted and poor”, Mariano said.

“Hunger and poverty remain widespread among the country’s primary food producers. They cannot even afford to buy what they have produced. This is because government has privatized the country’s rice industry early on until today and as such, it is under private control and monopoly”, Mariano also said.

The National Food Authority (NFA) for instance incurred debts importing rice instead of buying palay from Filipino farmers as should be its mandate, procuring 10% of local palay production. It sells the imported rice at subsidized prices to private traders who in turn sell these at commercial prices to consumers, including the poor farmers. Private traders buy and sell more than 90% of the country’s local production and supply of commercial rice.

Thailand, Vietnam, including the US and EU all maintained government support and subsidy for their farmers and agriculture. “The Philippines can never attain rice self-sufficiency unless the Philippine government does it part well – support the country’s primary food producers through capital and inputs subsidies, develop the rice industry, implement genuine agrarian reform program. Otherwise, the Philippines will remain the number one importer of rice in the world”, ends Mariano.#eof#

(Bantay Bigas statement released July 3, 2012)

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Bantay Bigas sells Php16/kilo rice, lambasts govt’s US$1-B loan to IMF

BANTAY BIGAS distributed Php16/kilo of rice in front of the Department of Agriculture (DA) to reiterate its demand for rice subsidies for the Filipino consumers and increase the budget of the National Food Authority (NFA) for palay procurement from the country’s local rice producers.

Lita Mariano, spokesperson of Bantay Bigas, lambasted President Noynoy Aquino’s administration for lending US$1-billion to the International Monetary Fund (IMF) as it denied its strategic government agencies such as the Department of Agriculture (DA) and the Department of Agrarian Reform (DAR) sufficient budget for effective implementation of their programs.

“This is outrageous and only shows the insensitivity of the President Noynoy Aquino’s administration to the plight of our Filipino farmers and consumers, expressed Lita Mariano, spokesperson for Bantay Bigas.

At an exchange rate of Ph42.00 to the US$1, Php42 billion could have bought 2.53 million metric tons of palay bought at Php17.00 / kilo or 53.8 million sacks of rice subsidized at Php16/kilo and sold to poor Filipinos.

NFA Employees’ Association National President Roman Sanchez said “The NFA needs at least Php15 billion to fulfill its mandate of procuring 10% of local palay production and process it into rice for infusion at the local market to make affordable rice available to Filipino consumers especially the millions of poor farmers that produced the country’s primary staple.”

In 2011, the government originally did not intend to provide a single centavo to the NFA but was only forced to allocate Php2 billion that later on became Php4 billion upon pressure from the farmers and concerned sectors. It is pushing the NFA to privatize its functions including pegging NFA rice to commercial rice prices.

“The government after all can allocate resources where it wants to, if it wills to. This further exposes President Aquino’s priorities and ‘real bosses’, obviously not the Filipinos”, said Mariano.#eof#

(Bantay Bigas statement released June 29, 2012)

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Govt’s Rice Self Sufficiency Program, A Hype Under WTO

BANTA Y BIGAS spokesperson Lita Mariano said as long as the country’s agriculture remains under the World Trade Organization (WTO), the government’s rice self sufficiency target is “nothing but hype and propaganda”.

“Secretary Prospero Alcala is conditioning the minds of the Filipinos for the option to lift the quantitative restrictions (QRs ) for rice because of costly concessions from WTO members. If President Noynoy Aquino is really serious with his rice self-sufficiency vision for the country, his administration should negotiate for unconditional retention of our rice QRs”, Mariano said.

The Philippine government is currently negotiating with WTO member countries for extension of the Philippines’ request for extension of the retention of Philippine rice QRs. Information gathered by Bantay Bigas reveal that country-specific concessions (CSC) under the minimum access volume (MAV) for rice under the WTO has reached 1 million metric tons (MT).

The WTO requires countries that enrolled their sensitive agricultural products under its “Special Treatment” clause to import minimum quantities of the product through the MAV. Countries are allowed 10 years from the WTO’s implementation to prepare the specific agriculture sector for eventual liberalization by replacing QRs with tariffs.

This is the third time the country has sought for retention of its rice QRs. The agreement for the first Special Treatment was given a MAV of 119,460 MT and ending with 238,940 MT in 2005.  Another extension of the Special Treatment was allowed with MAV reaching 350,000 MT that is scheduled to end by June 30, 2012. The national government through the Department of Agriculture expressed that the next negotiation will no longer push for the third Special Treatment. They believe that the concessions would be very high and too costly for this country to comply specifically for other agricultural products such as dairy and poultry.

Other than the CSC for rice, the US is pressuring the Philippine government to withdraw the DA’s Administrative Order No. 22 (AO No. 22). AO No. 22 sets the Philippine standards for importation of frozen meat to protect Filipino consumers. The US, together with Canada finds the AO too restrictive and threatens to block the Philippine’s request for extension of rice QRs.

Mariano supported   Secretary Alcala’s declaration that the Philippine government will not succumb to the US maneuverings to repeal AO No. 22. “The government should have a back-up plan. It should finally consider our calls for removing the country’s agriculture out of the WTO. Staying in the WTO will only compromise the country’s food self-sufficiency and any program for rice self-sufficiency would only be hype under an unfair liberalized trading regime with developed countries who continue to subsidize their agriculture even as they demand underdeveloped countries like the Philippines to liberalize their agriculture”, said Mariano.

Otherwise, “the road to rice self-sufficiency by 2013 through the Food Staples Self-Sufficiency (FSSS) Road Map is a much-hyped announcement of the Department of Agriculture”, Mariano said. “This is a road that would take us to nowhere because there is no concrete plan and program that would carry on improvement of agricultural productivity. For one, we have measly budget for the rice program that only allots 3% for rice and 0.34% for palay of the total national budget”, further added Mariano.

Bantay Bigas called for the implementation of the Rice Industry Development Act (RIDA) still pending in Congress. It is also pushing for the implementation of a genuine agrarian reform through the Genuine Agrarian Reform Bill (GARB) to replace the CARP-ER which it finds faulty and more pro-landlord than pro-farmers.#eof#

(Bantay Bigas statement released June 29, 2012)

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DA & LBP Php400M loan to rice farmers must be interest & collateral free

Bantay Bigas (Rice Monitor) welcomes the Php400 million loan assistance to rice farmers by the Department of Agriculture (DA) and the Land Bank of the Philippines (LBP), especially if the loans are extended without interest.

“If the government can afford to dole out Php billions through its conditional cash transfer (CCT) program for something unrelated to beneficiaries’ productive skills, it should all the more extend interest-free capital assistance to our farmers producing the country’s primary staple”, says Lita Mariano, Bantay Bigas Spokesperson.

Bantay Bigas also criticized the DA and the LBP for requiring farmers to put their irrigated rice farms as collateral for the loans they will avail from the government. “It is insensitive on the part of the government to collect such a high interest rate on loans from the farmers and even ask for collateral especially at this time when our rice farmers are among the most adversely affected by the typhoons that hit the country since 2009 through 2011”, Mariano says.

The DA and the LBP requires farmers to pay 15% interest per year for the first two cropping seasons to be gradually reduced by one percent in the succeeding cropping season up to the 6th cropping season.

“If the government is sincere in helping rice farmers get back on their feet and encourage them to produce more rice to help attain rice self-sufficiency for the country, it should provide these loans without interest and without collateral”, adds Mariano.

During the green revolution under the MASAGANA 99 program of the late dictator President Ferdinand Marcos, thousands of rice farmers ended up bankrupt and landless as they were unable to pay up their loans due to high costs of production from expensive insecticides and pesticides. The latter were needed by the high yielding varieties of rice they were required to purchase in exchange for subsidies.

The DA and the LBP is targeting the four provinces of Isabela, Nueva Ecija, Iloilo and North Cotabato as recipients of the Php400M loan.

Aside from interest- and collateral-free loans for rice farmers, Bantay Bigas also calls on the government to re-channel the Php billions allotted to its CCT program under the Pantawid Pamilyang Pilipino Program or 4Ps of the Department of Social Welfare and Development (DSWD) to increase the National Food Authority’s 2012 budget of only Php4 billion for palay procurement.

“The NFA failed to achieve its targeted procurement of 5% of the country’s total palay production in 2011 or 870,000 metric tons (MT) and instead only bought 280,382MT precisely because of its limited palay procurement budget which was only P2.5 billion in 2011” laments Mariano.

According to the NFA, it needed Php14.8 billion to buy the 870,000MT of palay it set to procure from local farmer in 2011. Ironically, while the government allotted only Php2.5 billion for local palay procurement, it allotted US $120.6 million or Php5.2 billion (at US$1 : Php43.31 average exchange rate for 2011) to import 251,300MT of palay in 2011.

It has also foregone Php billions in potential revenues from tariffs on rice importations by private traders through its tax exemption subsidy scheme (TES) provided to private traders for their imports of 595,874.36MT of rice (4,125.64MT short of its 600,000MT 2011 allocation).

“If the government is really serious about attaining rice self-sufficiency for the country by 2013, it should heed our specific calls which includes among others, free land redistribution under a genuine agrarian reform program”, challenged Mariano.

President Noynoy Aquino’s land acquisition and distribution (LAD) accomplishment through the extended comprehensive agrarian reform program (CARP/ER) by the Department of Agrarian Reform (DAR) is the slowest compared to the past administrations. Independent think tank  IBON Foundation calculated that at the pace of the DAR’s LAD of 8,957 hectares per month under President Noynoy Aquino, it would need an additional 5.6 years to complete the DAR’s target of distributing the whole of the 1.9 million hectares under CARP/ER.

“Amid the government’s target of rice self sufficiency is the slow paced LAD and continuing land grabbing and conversion of rice farms to non-food uses. Government’s reversal of these trends is yet to be seen as a gauge of sincerity in achieving rice self-sufficiency for the country”, ends Mariano. #eof#

(Bantay Bigas statement released February 4, 2012)

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“Improved technology should minimize rice wastage”

“Reducing rice consumption and rice wasted on the Filipino table will not solve the country’s rice supply problem as claimed by some officials of the Department of Agriculture and Philippine Rice Research Institute or Philrice”, says Lita Mariano, spokesperson of Bantay Bigas.

“Without doubt, it will help a lot if Filipinos are careful not to waste any of the rice they consume on the table. But what the government should recognize and give attention to is [on] improving the rice milling technology available in the country”, says Mariano, reacting to the proposal of PhilRice and DA officials in the article “Pinoys urged to reduce dependence on rice” published in the Philippine Daily Inquirer last November 5, 2011.

According to Bantay Bigas, huge volumes of rice is wasted in the whole process of rice production from planting, harvesting, drying and milling [process] of unhusked rice to commercial rice for consumption. Volumes more are wasted from transporting and handling of commercial rice.

Bantay Bigas data show that in the rice milling process alone, the country loses some 35% of the potential rice equivalent of the total volume of harvested palay (unhusked rice) because of poor technology. The country’s rice milling capacity and recovery rate is 30 years obsolete compared to those used in Thailand and Vietnam according PhilConGrains or the Philippine Confederation of Grains Millers and Retailers. The current capacity of rice mills in the country is 55-65% recovery rate. This means that for every 100 kilos of rice, some 35 to 45 kilos are wasted. Multiply this amount to the millions of tons of rice wasted from the total rice production. Assuming 16 million metric tons (MMT) of total rice production, around 5.6MMT or some Php1.62 trillion (at Php 29.00 per kilo) is wasted annually because of poor rice milling technology.

“Investing on improved rice milling technology would raise the recovery rate to 70-77 kilos of rice for every 100 kilos palay. This would translate to some 12 to 15 kilos additional rice recovery saving the government between Php348.00 to Php435.00 for every 100 kilos of palay milled using an improved rice milling technology”, adds Mariano.

Meanwhile there is not enough drying facility in the country. Oftentimes, farmers dry their palay in asphalted or cemented roads. Passing vehicles would sometimes run over the palay and some 36% are wasted, according to Bantay Bigas research.

Further according to Bantay Bigas, so much more rice production potential is lost because of inadequate irrigation facilities. Whenever these are present, they are in dire need of repair and rehabilitation. In the 4.35 million hectares rice area harvested, about 3.01 million hectares are potentially irrigable but only some 1.5 million hectares are with irrigation facilities. There are still some 1.51 million hectares that may be developed for irrigation. Should this area be developed, an additional 6MMT to 7.5MMT of palay would be produced or some 3.9 MMT of rice at 65% recovery rate.

“Most importantly, and the more urgent requisite for government to attain the country’s target for rice self sufficiency, is the implementation of genuine agrarian reform and stopping all land use and crop conversions.  Provide enough budget to support the country’s rice program including its rice procurement and distribution program under the National Food Authority (NFA)”, reiterates Mariano.#eof#

(Bantay Bigas statement released November 22, 2011)

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Rice Self-Sufficiency Attainable

Bantay Bigas strongly affirms its call for rice self-sufficiency for the Philippines. “Rice self-sufficiency is neither obsolete nor unattainable. Rice self-sufficiency is the only way the country can ensure food security for the millions of Filipinos without relying on the unstable supply of rice in the world market. Rice importation is only a temporary measure, a stop-gap measure to fill in the 10% shortage in the country’s rice production”, says Lita Marianospokesperson for Bantay Bigas.

Mariano is reacting to the paper of the government think-tank, Philippine Institute of Development Studies (PIDS), “Putting Rice on the Table: Rice Policy, the WTO and Food Security”.

PIDS recommends the country to implement full liberalization of the country’s rice industry and not to negotiate another extension for rice exemption on lowered tariffs until it reaches average tariff rates comparable to other countries. It argues that that food security can be had even if the country is a rice importer. Believing thus, it encourages farmers to shift to planting other crops where the country has more comparative advantage. This implies farmers shifting to planting cash crops rather than for food.

Further in its argument, it claims that domestic prices of rice has been consistently higher than world rice prices and that in the longer term it would be cheaper to import rice than to produce the country’s staple food. Hence, farmers should produce other staple crops such as cassava, white corn, sweet potato and plantain.

“It appears that the PIDS has a distorted sense of food security. It fails to consider that rice available in the global market is only seven percent of the total rice production. Continuous reliance on rice importation as the PIDS suggests will compromise the country’s food security. Furthermore, rice is not just a staple food crop but rice planting per se is also culturally imbedded among Filipinos”, said Mariano.

Mariano added that “The reason why the country has failed to attain rice self-sufficiency is because government has not fully implemented the mandate of the National Food Authority (NFA). The Philippine government consistently fails in providing appropriate funds for the food agency to procure its mandated 10% take on the country’s staple food production but instead increasingly resorted to rice importation as a policy rather than a measure of last resort”.

Because of this reliance on importation, the Philippine government has been remiss of its commitment of developing support infrastructure for agriculture primarily the irrigation of the rest of the potential irrigable rice lands. Worse, it allowed the conversion of prime agricultural lands (irrigated farm lands).

IBON Foundation, Incorporated research reveals that an average 167,000 hectares annually. To date, there remains some 1.6 million hectares of potential irrigable areas for rice production. One hectare of irrigated paddy is equivalent to three hectares of rain-fed paddy. Translating this to rice production, the average production of a rain-fed paddy is 2.69 MT or 2,690 kilos of palay. For the annual average of 167,762 hectares of irrigated paddy being converted to other uses, this translates to 1.354 million metric tons (MT) of palay or 879,995.571 MT of rice lost every year.

If only the government will develop the remaining potential irrigable area of rice lands, the country would produce an additional 5.6 million MT of rice on top of the projected 17.9 million MT of rice production for 2011! Moreover, the country is actually more productive in rice yield per hectare compared to major rice exporting Thailand. The latter has only more farms devoted to rice planting. In 2008, for example, Thailand’s rice productivity was 2.75MT per hectare compared to the Philippines’ 3.82MT per hectare.

“While PIDS blames the NFA’s costly program for rice self-sufficiency, the government think tank failed to mention that NFA incurred billions in debts precisely because of the privatization measures imposed upon the food agency as dictated by the country’s creditors led by the World Bank, the Asian Development Bank specifically through the Grains Sector Development Program (GSDP) it funded (which the PIDS mentioned in its paper as a step for reforms in the NFA), the International Monetary Fund (IMF) and the US Agency for International Development (USAid). The NFA has been slowly divested of its income-generating functions such as wheat trading while it is slowly transformed from a public agency fulfilling a social responsibility to a facilitator for greater private profit at the expense of the taxpayers including the poor. This year’s allocation of 660,000MT of rice importation by private rice traders cost the public Php9 billion in foregone revenues from tariffs exemption subsidies (TES), which the government would otherwise tax itself with the NFA’s rice importation”, Mariano further noted.

Asked for comment, Roman Sanchez, National President of the NFA-Employees’ Association (NFA-EA) said that “Reforms in the NFA should not translate to transferring to the private sector vital functions of the food agency. Neither should its assets be privatized as it would only further aggravate the private monopoly in rice marketing and trading which is one of the reasons why local rice is more expensive than world market prices. Reforms should manifest in the prosecution of the members of the NFA Council who decided on the over-importation of rice and allowed the continued demise of the NFA for the last decade. Moreover, legitimate losses of the food agency should not be considered as a public loss but rather a social cost”.

Bantay Bigas maintains that the call for rice self-sufficiency is timely, appropriate and attainable. The country can achieve this through the implementation of a genuine agrarian reform program that provides land to the tillers for free. If the government can forego Php9 billion to private traders who has the capital for business and profits generation, the government should all the more provide free land to the tillers. This program should be complemented by support subsidies for capital, inputs as well as provision of adequate post-harvest facilities and agricultural infrastructure support especially irrigation.#eof#

(Bantay Bigas statement released on June 14, 2011)

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