: Super User; Philippines; 20 July 2011; Hits: 1124

Manila cranks up drive towards zero rice imports

ON JUNE 30, in a speech to mark his first year as the country’s most powerful man, Philippine President Benigno Aquino III repeated a promise that senior members of his administration had made several times since the new leader took office. By 2013, he said “we will no longer need to import rice”.

The drive to become self-sufficient in rice production is not new. But it does appear to be gaining greater attention under the new President, who has repeatedly blamed his predecessor for not tackling the problem in any systematic way.

Despite having a climate ideally suited for rice production, the Philippines has not been able to grow enough of the staple to satisfy domestic demand for decades. Last year, the country purchased 2.45 million tonnes on the international market, making it the largest rice importer in the world.

During the food crisis in 2008, the Philippines helped drive up global prices of the grain to record levels when it imported huge volumes of it. At the time, the country was also reeling from a decline in production due to unfavourable weather conditions.

There were also reports of irregularities. Millions of pesos in commissions and kickbacks were allegedly paid to middlemen, some of them government officials, who were involved in rice imports.

But this year, thanks largely to good weather and a bumper harvest, the Philippines plans to import no more than 860,000 tonnes of rice. In fact, rice output has been so good that Agriculture Secretary Proceso Alcala noted in a recent interview that enhanced production targets for this year might even be exceeded.

In a bid to increase mechanisation, and thereby improve efficiency, the government has announced plans to help farmers purchase equipment such as tractors, seed cleaners and mini combine harvesters. Farmers cooperatives nationwide will also get the chance to own more efficient rice mills through low-interest loans.

Such moves are seen as important because the current level of farm mechanisation in the Philippines is below par, even when compared to that of other low-income rice producing countries such as Pakistan, India and Thailand.

The government is also supporting farmers with seeds resistant to drought, flood and saline conditions. Another government programme is designed to teach farmers new technologies, particularly those related to water management.

Infrastructure deficiencies are also being addressed. In his June 30 speech, President Aquino declared that “240,000 farmers are now making use of 2,000 (additional) kilometres of farm-to-market roads, which have been constructed in only one year”.

Whether such efforts will be sufficient, however, remain to be seen. One key limit to the use of mechanisation, for example, is the small size of farm holdings. This is partly the result of various attempts at agrarian reform, which have placed severe restrictions on the amount of rice-growing land that can be owned by a single individual. But changing a central tenant of a policy many regard as essential to protecting the livelihoods of millions of farmers will not be easy.

The use of price control mechanisms has also distorted market forces, effectively imposing income restrictions on farmers while at the same time forcing them to rely on government subsidies that Manila can ill-afford to pay. Allegations of mismanagement and corruption in handling the system are also rife.

Then there are the limitations imposed by nature itself. Since most of the country is mountainous and consists of many small islands, the amount of additional land suitable for rice cultivation is very limited. And with an annual population growth rate of around 2 per cent – one of the highest in the world – the country is also chasing a moving target.

The ability of key officials to remain focused on the task at hand may also be in doubt. In several recent interviews, Mr Alcala has expressed a desire for the country to become known as an exporter of specialty rice products, notably black rice. Given the very limited resources available to pursue the primary goal of self-sufficiency, it is not at all clear that the country can afford such a distraction.

Meanwhile, efforts are being made to reduce demand by encouraging Filipinos to consider alternatives to their favourite staple. Mr Alcala is promoting the consumption of root crops such as taro and yam. In recent government-hosted seminars, local experts have described these crops as rich in beta carotene, minerals and various micro-nutrients.

Experience in other rice-consuming countries like Indonesia, however, suggests that such campaigns may have only a limited effect.

The events of 2008, when huge queues formed outside rice warehouses, strongly suggest that something needs to be done to reduce the Philippines’ dependence on imports. But major obstacles remain, and it may be some time before the goal of self-sufficiency in rice is achieved.

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Key Political Risks

President Benigno Aquino has stepped up efforts to lure foreign investors into the country, so far without much success. The country continues to be hobbled by widespread corruption and several long-running insurgencies.

However, the government has had some success in reducing the budget deficit. The president also remains popular with voters.

WHAT TO WATCH FOR:

Extent to which foreign and domestic investors show interest in big ticket infrastructure projects.
Increased spending on the air force and navy to counter Beijing's territorial claims in the disputed Spratly Islands. The issue could become an important point of contention at the East Asia forum in Indonesia in November.
The implementation of the "framework agreement" between Manila and the insurgent Moro Islamic Liberation Front announced in early October. If all goes well, a final peace deal may be signed by 2016.