BWorld 54, Rice farming, trading, smuggling and electioneering

* This is my article in BusinessWorld last April 14, 2016.

Several issues related to rice farming and trading in the Philippines hogged the news recently. The first of course is the big El Niño and crop failure in many provinces in the country and many other tropical countries. Second, the farmers’ rally in Kidapawan, Cotabato that turned bloody early this April. And third, on large-scale agricultural smuggling including rice.

The 2015-2016 El Niño indeed was huge, reaching up to 2.5 Celsius deviation from the average temperatures, but it is comparable to the 1997-1998 El Nino (see graph).

The Kidapawan rally that claimed two dead rallyists and two policemen in coma was unique because while this El Niño also adversely affected many provinces in the country, there was no highway occupation for days and bloody demonstration that occurred.

On the third item, Dr. Ben Diokno in his column here in BusinessWorld last April 6, 2016, quoted Bobi Tiglao’s numbers saying that “smuggled value averaging $19.6 billion annually, an explosion from the comparable figures of $3.1 billion and $3.8 billion yearly during the terms of Presidents Joseph Estrada and Gloria Macapagal-Arroyo, respectively.”

These three and related events in rice farming have become part of the issues raised by Presidential, Vice-Presidential and Senatorial candidates running for the May 2016 elections. We discuss these issues by asking these questions:

1. Is this El Niño so bad and “unprecedented” that prompted many people to demand doubling, even quadrupling of government spending in agriculture to help “fight man-made climate change”?

2. Is rice “self-sufficiency” a valid must-goal for the Philippines and hence, demand massive reallocation of resources from other sectors to agriculture in general and rice farming in particular?

3. Is continued rice protectionism valid, and agricultural smuggling really that bad against the Philippine economy and the consumers in particular?

From Graph 1, the answer to #1 is No. This big El Niño has a precedent, the most recent was the 1997-1998 El Niño and consistent with natural weather and climate cycles, we should expect another big La Niña to follow later this year like what happened in 1999-2001. That means another round of heavy rains and flooding that can cause another round of huge crop damages.

To answer question #2, the numbers here will help (see table). 

From the above numbers, the answer to #2 is another No. Our neighbors Thailand and Vietnam simply have plenty of rice land, around two times that of the Philippines, in contiguous and single land mass, with access to huge irrigation from Mekong River, Ton Le Sap River, other huge rivers that provide huge irrigation.

The Philippines has a comparatively small rice land area, slowly being converted to residential, commercial and industrial uses. Being an archipelago, there are very few large rivers that can provide continuing irrigation to wide rice lands.

Besides, Thailand and Vietnam get perhaps only about 1/5 of the number of typhoons that enter the Philippines, average of 20 typhoons a year, about half of which make actual landfalls and cause more damages and crop losses. These two countries are also done with their agrarian reform and forced land redistribution; the Philippines is not done yet, after 43 years of implementation, starting only in 1972 Marcos’ land reform, not counting earlier land reform programs.

So forcing rice “self-sufficiency” cannot be a valid goal. Instead, pursuing rice “food security” is more appropriate. We continue producing more rice with the help of more modern technology, and any deficit can be filled by rice importation at free trade, lower prices from our ASEAN neighbors.

And the answer to question #3 is another No. This is not to justify rice smuggling but bringing in cheap rice from Thailand and Vietnam and other ASEAN countries is pro-poor and pro-consumers, like the carinderia owners and customers (especially jeepney and taxi drivers, students, job seekers).

The government rice protectionism policy -- via rice quantitative restrictions (QR), imposition of 35% tariff for imported rice, the National Food Authority (NFA) rice importation monopoly -- is both anti-poor, anti-consumers. For many Filipinos, they want cheap rice, and such is readily available from our neighbors Vietnam and Thailand, and soon, Cambodia, Laos, possibly Myanmar.

The following are reform measures that the next administration may consider.

One, if the government should insist on rice “self-sufficiency,” then it should allow corporate, large scale rice farming. Economies of scale, tapping the knowledge and services of plant scientists and geneticists, use of more farm mechanization, will greatly improve the country’s rice output. Double or triple the current four tons per hectare average output, coupled with reduce post-harvest losses.

Two, decouple NFA’s marketing/proprietary and regulatory functions. Privatize the former and retain the latter, sell many NFA assets like warehouses, use the fund to help reduce huge NFA debt, about P155 billion as of mid-2014. Assuming a 3%-4% interest rate, we are paying around P5 billion each year on interest payment alone for the NFA debt.

And three, liberalize rice importation by removing NFA importation monopoly delegated to licensed importers and traders, removing the QR for rice, and significantly cutting the import tariff of 35% down to 5% or even zero.

Postscript on the Kidapawan demonstration: (1) The majority’s freedom of mobility is superior to rallyists’ freedom of assembly. Highway occupation and closure is wrong. To remove the conflict between these two freedoms, mass actions and demonstrations should be held in public plaza, or idle farms near big roads and highways. And (2) use of live bullets by the police to disperse the crowd is wrong. The state should be above the fray and avoid killing its people as much as possible, regardless of the provocation by rallyists. Exceptions would be when firearms are explicitly displayed and fired by the demonstrators against the police, the public, shops and other civilian structures.

Bienvenido S. Oplas, Jr. is the President of Minimal Government Thinkers, a SEANET Fellow and member of the Economic Freedom Network (EFN) Asia. minimalgovernment@gmail.com

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See also: 
BWorld 51, WESM as market-oriented, PEMC as bureaucracy-oriented, March 25, 2016 

BWorld 52, Tax reform proposals for the Philippines, April 01, 2016

BWorld 53, Population and growth projections, April 09, 2016

Agri Econ 21, Rice protectionism as poverty-maximizing policy, September 25, 2015

Agri Econ 22, Why "peak food" hypothesis is wrong, December 25, 2015

Agri Econ 23, Why forever Agrarian Reform should stop, March 09, 2016

Agri Econ 21, Rice protectionism as poverty-maximizing policy

The other day, September 23, I attended a forum on "Zero Poverty" organized by the AIM R.Navarro Policy Center, NEDA and UNDP, at Edsa Shangrila Hotel. I don't believe in "zero poverty" of course, but I went there to hear what the speakers have to say and see their numbers/data.

In the morning session, the focus was on food poverty and speakers were former NEDA chief Cielito Habito, UP School of Statistics (UPSS) Dean and Prof. Dennis Mapa (speaking in this photo), IRRI Dep. Administrator Bruce Tolentino, and  DTI Assistant Secretary Fita Aldaba.

Jess Lorenzo posted that photo in fb with a note, "Dr. Dennis Mapa explains how rice price shocks have a direct correlation in hunger incidence.... IN JUST ONE QUARTER! He also notes that the effect is becoming more dynamic."

Below, Bruce Tolentino of IRRI, also posted by Jess.

Dennis and Bruce showed one chart, global and  PH rice prices over the past 15 years or so. Notable in that chart was that around 2008 or 2009 until today, world rice prices were declining and remained low but PH rice prices were high. 

During the open forum, I stood and commented the following:

1. "Zero poverty" is not possible under a rice protectionism policy (via quantitative restrictions or QR in rice imports, NFA importation monopoly, taxation of imported rice) which significantly contribute to higher local rice prices. 

2. Huge National Food Authority (NFA) debt, about P160 B as of end-2013 and could be around P170 or P180 B now. At just 3% interest rate, we are paying P5B or more each year on interest payment for the NFA debt. 

3. Need to allow large scale corporate rice farming. This will contradict the endless, no time-table, agri investment-busting agrarian reform (AR) program. Rice farms then will use science-based, biotech and mechanized farming and allow 5-10 MTs/hectare vs. current productivity of around 3.8 tons/hectare. Plus lower post-harvest losses.

  

For nature-created poverty, say a huge flood wiped out people's houses, crops and tractors, vehicles and other properties, government assistance will be useful and justified. For self-inflicted poverty like laziness and irresponsibility, no amount of government assistance and intervention will solve it.

That is why there should be more personal, parental, civil society responsibility in society, less government responsibility. The latter should focus on enforcing the rule of law and protecting the people's three basic freedom: freedom of private property ownership, freedom from aggression, and freedom of self expression and liberty.

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See also:
Agri Econ 17: Why NFA Marketing Function Should be Removed,  February 28, 2015 
Agri Econ 18: Israel's Modern, High Tech Farming, March 17, 2015 

Agri Econ 19: Charcoal Supply and Demand, May 01, 2015 

Agri Econ 20, On NFA-BOC Campaign for Expensive Rice, May 19, 2015

Free Trade 38: Liberalize Rice Imports and Demonopolize NFA

This is the 2nd part of my paper published by the Stratbase Research Institute (SRI) last April 18, 2014. The first part is about energy deficit in the Philippines. The full paper is posted in slideshare.
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(2) Rice prices. PNoy said (SONA 2014),

“…some greedy rice hoarders are stockpiling their supplies in order to sell them when prices eventually rise…. Our immediate solution: import more rice, supply it to the markets, reduce the prices and keep them at a reasonable level, and ultimately drive those who took advantage of the Filipino people into financial ruin.”

Last November, we imported 500,000 metric tons… all of this had arrived by March of this year. This February…  additional 800,000 metric tons,... This July we approved the immediate importation of 500,000 metric tons of rice through open bidding….  Standby authority to import an additional 500,000 metric tons…”

The anomaly actually here is the Philippine government's continuing rice protectionism policy and monopolization or heavy regulation of rice imports, that largely explains for high rice prices.

Rice protectionism via (1) National Food Authority (NFA) rice importation monopoly and (2) maintaining quantitative restrictions (QRs) of our rice imports, and (3) forcing rice "self-sufficiency" policy, are  wrong policies that contribute to expensive rice. They are anti-liberal policies that the Liberal Party should in fact discard while PNoy Aquino is still in power.

Below is a picture of how big our neighbors Vietnam and Thailand are as rice exporters. They simply have huge production relative to their  consumption.

Table 2. Rice Production, Trade and Consumption in East Asia, in ‘000 Metric Tons

Myanmar and Cambodia are fast catching up as major rice producers and consumers, which is a good thing. 

These four countries – Vietnam, Thailand, Myanmar and Cambodia – plus Laos, are all in Southeast Asia mainland.  The rice import-dependent countries – Indonesia, Malaysia and Philippines – are all archipelagic and are outside the Southeast Asia mainland. Is this coincidence or not, that there is an explanation for this?

A paper from Dr. David Dawe of the Food and Agriculture Organization (UN FAO) and reposted in IRRI magazine, “Rice self-sufficiency: A question of geography?” says the answer is No. It is not coincidence.  

Chart 5. Rice Production per Capita vs. Share of Crop Area Devoted to Rice, ASEAN

Source: IRRI. http://irri.org/rice-today/rice-self-sufficiency-a-question-of-geography

Countries on SE Asia mainland have dominant river deltas that provide huge water and flat lands, they get big irrigation from Mekong River (water flowing from China down to Laos, Cambodia, Thailand, Vietnam), also from Ton le Sap river (mainly in Cambodia). This flat lands plus huge irrigation are highly  suitable for rice cultivaton.

Rice land in particular,  Vietnam has almost 2x while Thailand has almost 3x that of Philippine rice land area.

Productivity wise, Filipino farmers’ is actually larger than that of their counterparts in Thailand, although lower than those in Vietnam. If Vietnam has the same number of typhoons per year as the Philippines, its productivity would possibly be similar to the Philippines. Vietnam has only about 5 typhoons a year or less, vs. the PH's 19 typhoons a year on average, about half of which make actual landfall and knock down thousands of hectares of often harvestable rice, resulting  in high crop losses.

Table 3. Rice Land and Output, Comparison among the Philippines, Thailand and Vietnam

If we combine those natural factors – being in SE Asia mainland, have huge and wide flat lands, have huge irrigation  water – those in the mainland have high rice output relative to their consumption and hence, rice prices are lower than  those in the Philippines. Why should the Philippine government insist on expensive rice via trade protectionism?

Chart 6. Comparative Wholesale Rice Prices, Philippines, Thailand and Vietnam, 2000-2014

A report from PhilRice also noted this,

"According to the two PhilRice economists, domestic price of rice was up to 75% higher than average global rice prices in 2000. The gap reduced in 2008, but price differential widened again to around 30% in 2012 mainly due to higher import tariffs (of about 50% beyond quantitative restrictions quota) and higher production costs.' (source: http://oryza.com/.../philrice-calls-rice-competitiveness...)

To bring down rice prices and stabilize rice supply, the following modest proposals are advanced.

1. Government should liberalize rice trade and importation, abandon rice protectionism. Remove National Food Authority (NFA) monopoly in rice imports.

2. End the quantitative restrictions (QRs) and convert it to low tariff, ultimately leading to zero tariff, especially for rice imports from our neighbors in the ASEAN.

3. In exchange for rice trade liberalization and removing NFA import monopoly, its accumulated debt, around P155 billion,  may have to be assumed by the national  government. This means taxpayers including those who do not buy NFA rice, will pay for its debt.

4. Certain NFA assets like some warehouses should be privatized. Proceeds from such privatization should be used entirely to retire some of its debt and not be used for any old or new food subsidy programs. This way, NFA debt that  will  be passed on to  the national government and  will  be paid by taxpayers will be smaller.

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See also:
Free Trade 34: ASEAN's Bilateral and Regional FTAs, February 27, 2014
Free Trade 35: EU-FNF Forum on 'FDI Engine for Job Growth', May 15, 2014
Free Trade 36: Taxation, Regulations, Trade and Rule of Law in ASEAN, August 05, 2014
Free Trade 37: Multiple Concerns and Regulations in the ASEAN, September 11, 2014

Agri Econ 13: What and Where to Plant, Nature vs. Government Planning, June 24, 2014

Agri Econ 14: NO to Further Extension of Agrarian Reform, July 03, 2014

Fat Free Econ 55: The President's 5th SONA and Market-Oriented Reforms

* This is my article yesterday in interaksyon.com.
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Overall, the President's State of the Nation Address (SONA) was good. More statesman-like, less combative. He mentioned several liberal and free market-leaning policies, which is good and consistent with his party affiliation. But there was also an overall hangover belief that government can do and will do almost everything for the people.

Some liberal and free market reforms that the President mentioned in his address are the following:

1. More airline competition as a result of ICAO, European Union (EU) and US Federal Aviation Authority (FAA) upgrade of Philippine aviation security. Thus, more flights between Manila on the one hand, and Europe and the US on the other can be expected

2. More labor conciliation via Department of Labor’s Single entry Approach (SEnA), resulting in less strikes and industrial conflict, which will help attract investors.

3. More competition and less monopolization in Department of Public Works and Highways (DPWH) project contracts after the removal of letter of intent in public works bidding.

4. More competition in PPP projects like the Mactan-Cebu International Airport (MCIA) and NAIA Expressway. Winning bidders paid government a premium amounting to P14 billion and P11 billion, respectively.

5. Various infrastructure projects that will be undertaken by private developers at little or no cost to the government, such as (a) Tarlac-Pangasinan-La Union Expressway (TPLEX), (b) Metro Manila Skyway 3, (c) Kaliwa Dam, (d)  Laguna Lakeshore Expressway Dike, (e) LRT South and East extensions, (f) Busuanga Airport, and so on.

The President though made this opening statement which set the tone for the rest of his address: "It is as if you are watching two hundred TV channels at the same time. You need to understand not just what is unfolding before you—you also need to know what happened before, and where it could all lead.… you must have a response for every question, suggestion, and criticism—and you must have all the answers even before the questions are asked."

This is not so comfortable to hear because the President or the government is implying that they are playing God who knows everything and can provide answers to everything. It can be an invitation to central planning. I have no intention of attacking the President but would rather that he mentioned in his SONA, or in future speeches, things like the following.

1. More jobs were created by the private sector as the government has reduced business taxes and bureaucracies and other difficult/complicated requirements.

2. The projected power crisis starting next year can be addressed by DOE and other agencies stepping back from too many requirements and allowing more private power developers to come in with minimum restrictions and permits to submit.

3. Rice prices can go down by (a) deregulating rice importation and allowing more competition among legitimate importers and (b) reducing or removing the rice import tax of around 40 percent (previously 50 percent). The President mentioned that even rice importation, which should have been left to the private sector in a competitive environment, must remain: "This February, the NFA Council approved the importation of an additional 800,000 metric tons, in fulfilment of our buffer stocking requirement… This July as well, we approved the immediate importation of 500,000 metric tons of rice through open bidding. The NFA also has the standby authority to import an additional 500,000 metric tons to prepare for the effects of calamities on harvests and rice prices."

Government monopoly or full control of rice importation is so 80s or even early 90s, before the World Trade Organization (WTO) was created in 1996. We are stuck in a Jurassic philosophy that government must continue its rice importation monopoly. The protected groups in the government, both at NFA-DA and their accredited private importers, are the beneficiaries of this faulty policy. Rice should be as cheap as possible. If cheap rice should come from Vietnam, Thailand, Cambodia or India, so be it. Government should reduce or abolish the high import tax and abolish the NFA monopoly. The NFA can continue as a regulator but not as player and proprietor at the same time.

4. No need for a supplemental budget for 2014 to evade the DAP controversy. Additional budget request looks questionable. The total budget in 2013 was P1.88 trillion. This year, it is P2.41 trillion (P 1.61 trillion new appropriations + P 0.80 trillion automatic appropriation), or P530 B higher than last year's budget. This is not enough? Half a trillion peso increase in just one year and not yet enough?

Table 1. Outstanding Debt, Interest Payment and Total Expenditures (in billion pesos)

Sources: (1) Bureau of Treasury (BTr), http://www.treasury.gov.ph/statdata/yearly/yr_outstandingdebt.pdf.  

(3) and (4) BTr, http://www.treasury.gov.ph/statdata/yearly/yr_cor_expenditures.pdf

* DBM, General Appropriations Act (GAA) 2014  http://www.dbm.gov.ph/wp-content/uploads/GAA/GAA2014/Summary.pdf

** New appropriations P1,608.503 billion + automatic appropriations P796.029 billion.

It is true that the government’s interest payment burden has been declining. However, a P353-billion interest payment this year is no laughing matter. The public is angry at the reported P10 billion Janet Napoles plunder in over 10 years or so, but is indifferent to the P353 billion interest payment in just one year -- a big transfer of money from average taxpayers to rich institutions like private banks and bondholders, as well as huge government financial institutions like the SSS and GSIS.

5. Expanding the AFP’s pool of battle ships, navy cutters, jet fighters, combat choppers and other armaments, the huge resources to finance them should not come largely or entirely from additional taxes or huge borrowings, but from long-term lease or privatization of certain AFP/DND assets and properties.

6. Reforming the Bureau of Customs (BOC) and appointing officials who have more integrity is a good move. But as the ASEAN Economic Community (AEC) comes closer (more than one year to go) plus various bilateral and regional free trade agreements, the power of BOC to collect high import taxes and impose non-tariff measures that effectively discourage more international trade should be limited and restricted.

7. Extension of the no-timetable Agrarian Reform (AR) program or forced redistribution of certain private lands does not encourage early and big investments in agri-business and corporate farming. A Congressional bill of extended notice of coverage -- effectively an extended AR program -- should not prosper.

The President is a Liberal, not a socialist like Bayan Muna or Akbayan, nor a populist like the other political parties. Let us expect more liberal and market-oriented policies from him and his team in his remaining year.

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See also: 

Fat-Free Econ 17: SONA, the Budget and Debt, July 22, 2012

Fat Free Econ 51: Ten Things About the Meralco Rate Hike, December 28, 2013 

Fat Free Econ 52: Optimism in 2014, January 02, 2014

Fat Free Econ 53: WESM, Myths and Realities, January 22, 2014

Fat Free Econ 54: WEF and East Asia Growth Story, May 20, 2014

The President's SONA, 2010, July 26, 2010
The President's SONA 2011, July 24, 2011
The President's SONA 2011, part 2, July 26, 2011

The President's SONA 2012, July 23, 2012

Pilipinas Forum 16: On Rice Trade Liberalization

Here's another long discussion (16 pages long!) from different people, on liberalizing rice trading in the Philippines, made in pilipinasforum yahoogroups. As usual, get your popcorn or other favorite snacks while reading the exchanges 10 years ago.
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On Rice Trade Liberalization

August 2001

Theory: there is gain from trade. Trade allows people of countries who do not produce certain commodities cheaply, access to these products through imports; at the same time, trade allows people who efficiently & cheaply produce certain commodities to export these goods, giving them the foreign exchange revenue to finance their imports. Thus, countries' welfare increases.
NEDA favors early liberalization (convert present import quotas into tariffs, and later on, lower tariff rates) of rice trade since trade protection to the sector is time-bound. But DA wants to keep the quantitative restrictions (QRs) on rice.

Before, only the state-owned NFA imports rice from abroad. Starting this year, private traders will be allowed to import rice up to 20,000 MT. But they must pay a minimum "equalization fee" of P3,240/MT or P3.24/kilo for the March 2 auction, on top of the 50 percent tariff.

Current World Rice Prices. Prices as of end-February range at $190/ton for white Thai rice (5% broken, "class A") down to $150/ton (35% broken). At P48/$, this is equivalent to only P9,120/ton or P9.12/kilo for class A rice, and P7,200/ton or P7.20/kilo for lower class rice (vs. P14-P22/kilo local prices).

There is net gain from trade. The clear winners are the rice consumers, fisher folks and non-rice farmers, users of important agricultural inputs like machinery and fertilizers (the farmers themselves), among others. The losers are some Filipino rice farmers who cannot compete price-wise despite lower imported cost of agricultural inputs.
We need to hasten agricultural trade liberalization. Though the country still has 4 years to further prepare (aside from the last 6 years of preparation) for such liberalization, the perennial production deficit, and consistently high prices, of local grain and sugar, mandate that we should hasten the liberalization. The benefits generally outweigh the costs.

Rice "self-sufficiency" does not mean that we should grow all the rice that we need. Rather, we only need to ensure that rice will be made available at sufficient supply and cheap, stable prices for our consumers. This would imply a good combination of domestic production and importation. If we do our assignment well, meaning the efficient laying of important safety nets, particularly infrastructure and technology support system to our farmers, coupled with trade liberalization plan, we shall help improve our farmers' productivity and output.


-- Nonoy Oplas


Nonoy , et al,


I also strongly go for the liberalization of rice trade for the following reasons: (a) import quotas or quantitative restrictions (QR) only breed corruption, and politicking; and (b) shortages and steep local price (retail) of the stuff is imminent because its trading becomes speculative; this has happened time and time again. The unscrupulous traders and corrupt gov't officials benefit, while both the farmers and consumers suffer.


Instead of "self sufficiency," the policy and strategy should be "self-reliance" i.e. having the purchasing power. Thus the farmer may be assisted with alternative sources of income, and better infrastructure and management services. (Thanks for the facts and figures).


-- Roy P.


Pareng Nonoy and All,


I agree with the merits of rice trade liberalization, and I have to say as well that I am impressed by the neatness of the methodology used in quantifying the demand-supply gap.
Just some thoughts/views alongside the last paras of Pareng Nonoy's paper:


* Trade liberalization in general, as experienced in Latin countries (Chile, Argentina & Mexico?, 1994-1995) created some shocks esp. on the balance of payments. Often, econ analysts would suggest that long term policies like trade liberalization should be coupled with short term reforms to avoid the shocks. I hope that the government is doing some short term fine tuning as we edge towards the 10th year for rice trade lib.

* The rice trade lib should not be an excuse for government not to pursue efforts that would maximize yield of cultivated/irrigated rice lands. Land parcels are /should be classified according to best use. Those which are declared best suited for rice should be protected from conversion, and supported with infrastructure and support services to ensure productive efficiency. The demand-supply gap may be bridged by importation of cheaper rice, and the competitive price of imported rice should force local farms to be more efficient. But a widening gap through the years must not be relied more on bridging it with imports but more on achieving greater farm efficiencies. A slow adjustment to rice trade lib may kill "best-use" rice farms and force conversions. I'll make mention here the ill effects of the "impermanence syndrome". This is one of the primary killers of cultivated lands in Australia, and this syndrome has been the reaso behind major conversions in Laguna and Batangas.

Expats View 1: Some Drastic Government Moves

One of my favorite newspaper columnists is Peter Wallace, an Australian businessman who has been living and working here for more than three decades now. Peter writes a weekly column in Manila Standard.

Today, Peter's article is entitled, "A real to-do list",
http://www.manilastandardtoday.com/insideOpinion.htm?f=/2010/august/6/peterwallace.isx&d=/2010/august/6

Peter suggested the following to President Aquino:

1. Legalize jueteng you’ll never stop it. Bingo is legal, casinos are legal, why is just one form not? Legalize it, you can control it. Legalize it and the crime syndicates go bankrupt.

2. Abolish the National Food Authority use conditional cash transfers. With a debt of P177 billion, it’s a proven failure. Give the poor the cash to buy from a competitive market.

3. Mandate that all pork barrel funds should go to education and health.

4. Revive family planning and sex education in school ask the United States to provide free condoms again.

5. Add carriages to MRT-3 and reduce the number of buses on EDSA by half, controlled into the right-hand lane only LRT-7 will help greatly here.

6. Make English the primary language of learning but retain Filipino as a secondary language.

7. Negotiate power plants we know the cost. We need power NOW. Declare a state of emergency if necessary, because it is an emergency.

8. Order transparency in government a law can follow. All President Noynoy Aquino has to do is order all departments to open their books to anyone who asks.

9. Reduce cigarette taxes to one tier or, reluctantly, two the currently mangled law is depriving the government of billions. we need high taxes on cigarettes, they kill.

10. Increase VAT to 15 percent and greatly reduce personal income tax for salaries below P20,000 per month. I’d far rather pay tax when I spend than when I earn.

11. Scrap the idea of receipts and taxes for sari-sari stores they can come later, if at all. Let those with marginal incomes also maximize the use of what little they get.

12. Create a Department of Information and Communications Technology it’s going to be the biggest sector.

13. Split the Department of Environment and Natural Resources you can’t promote and regulate in the same office. The conflict this develops is emphasized by what’s happening in Tampakan now.

14. Scrap the Comprehensive Agrarian Reform program, 21 years was long enough it hasn’t worked and you need plantations, economies of scale in agriculture.

15. Resolve the Ninoy Aquino International Airport mess within 90 days, not 91 either through a final court decision or a unilateral decision by the Philippine government to just pay a fair price.
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Of the 15 items above, I support all except the following:

12. Create the DICT. It's another bureaucracy in the government, the BPO and ICT sectors grew even without a department in the past. Most new regulation on ICT becomes outdated within a year or less as that sector is very dynamic.

I haven't thought much on no. 4, revive family planning and sex education in public schools.

Free Trade 8: Global RIce Price

Politicization of pricing is where political processes like street rallies, media releases, and political horse-trading among political groups and NGOs, and politicians and government bureaucracies is the main determinant of how much (price) and how many (volume) should a commodity be sold or bought by the citizens. It is usually done by administrative measures (a particular government bureaucracy sets the price) or by legislation (enactment of a law by a Parliament or Congress of a particular country).

This is totally different from price setting via the free market system, where producers and consumers "meet" at a particular price point at a given time and place for each similar product or service. Thus, the price of a particular variety of tomato can vary from one province or village to another on the same month, or its price will vary from rainy season to dry season on the same province or village. The quantity and quality of a commodity change on a particular place and time relative to the demand by consumers, resulting in different
prices for the same commodity at different places.

Producers predict or speculate that the price of a particular product or service will rise, or the price might remain but the volume will increase by a big amount, on a particular week or month (say during Christmas, city festival, or village fiesta), so they put their money, time, and effort ahead to prepare for said period in order to make a good profit. This should not be considered as "market manipulation" or worse, "hoarding" on the part of traders because consumers can also behave the same way, say stocking certain commodities when the price is still low in anticipation of future price increases.

In the home front, politicization of many commodities and services – oil, medicines, housing, fare, wages, rice, others – is happening. In rice, the bureaucracy in charge of politicizing rice prices is the National Food Authority (NFA). It makes artificial prices both to farmers and consumers, courtesy of the billions of pesos of tax money every year being plowed to it by Congress in annual appropriation and subsidies. Whether it is really doing its job with zero corruption and hanky-panky is another story; the main story is its role in
politicizing rice price setting, although one can safely assume that zero corruption and price politicization is an oxymoron, a big contradiction in terms.

In the international front, there is a proposed body made last week, calling for the creation of an Organization of Rice-Exporting Countries (OREC), obviously inspired by OPEC, composed of Thailand, Vietnam, Laos, Cambodia, and Myanmar. These are all neighbors of the Philippines and all are member-states of the Association of Southeast Asian Nations (ASEAN), the ASEAN Food Safety Reserve Board, as well as
the East Asia Emergency Rice Reserve (EAERR).

The initiator of this proposal was Thailand's government officials, noting that while Southeast Asia is the "food center" of the world, the region has had little influence on the price.

This is politicizing rice prices at the international level. Company A that buys the rice output of average Thai rice farmers cannot just sell rice to Company B in the Philippines that imports and sells rice to Filipino consumers. Company C that buys the rice harvest of average Vietnamese farmers cannot just sell rice to Company D that imports and sells rice to Hong Kong consumers. All companies in rice exporting countries will need the approval of their respective governments before any voluntary exchange through trade can take place between them and their foreign buyers. Although the bureaucracy is mainly on the supply and exports side, the demand side is also affected because private importers will have to deal with rice trading bureaucrats of the exporting countries. Besides, many governments of rice-importing countries have a rice or food regulatory bureaucracy that controls the importation and distribution of rice.

Hence, the creation of the proposed OREC is a bad idea. But if the proponents and architects of this idea have bad intentions, then it will most likely become a reality. Although bad ideas are sometimes made out of good intentions, most bad ideas come with bad intentions – to control prices, control trade, control who can buy and who cannot buy, control who can sell and who cannot sell. In short, control and manipulate the lives of other people, directly or indirectly.

For ASEAN member-states that are net rice importers, they might think that the creation of a rice export cartel might not adversely affect them since they are just neighbors and belong to the same club of
nations, the ASEAN.

For the Philippine agricultural bureaucracy in particular, they will most likely not find this anomalous. The NFA for instance has been in the business of controlling rice prices, rice procurement and rice trading at a limited degree for many decades now. Dealing with another bureaucracy from its neighboring countries whose business is similar to what it is doing, should be easy for it.

The evil desire to control and manipulate other people through various price control schemes and price politicization, which indirectly alters people's behavior in their consumption and production habits, will always remain in the minds of people who despise individual liberty. Giving other people various choices and options of where they can sell at what price, perhaps makes them shudder. These people should be exposed for what they really are and their evil intentions.
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On April 10, 2008, I wrote this:

High Commodities Prices and Government Price Intervention

Are the agricultural producers in developing countries having a good time and good "chance at riches"? With the on-going hikes in prices of agricultural commodities like rice, seems that the answer is Yes.

But the “chance at riches for poor countries” have been there long before the current spikes in commodity prices, thanks to globalization. For instance, many fishermen have stopped fishing and became tour guides to foreign tourists out on scuba diving and/or island hopping. Or farmers who also become carpenters and construction workers during off-farming season to take advantage of construction boom by returning overseas workers who build new and/or expand their old houses with their savings.

What's happening now is “achance at more wealth for agri producers in poor countries”. For instance, major rice exporters Thailand and Vietnam are raking in big profit from the spiralling world rice prices. Although major rice importers like the Philippines are wobbling from the same phenomenon, but many (not all) rice farmers and traders here are earning well.

Many governments including that of the Philippines, are wasting taxpayers money with their rice price intervention. They have state grains trading monopoly corporation that monopolizes rice and corn importation. And they purportedly "buy high from local farmers, sell low to consumers", that's why they are losing big tax money every year. Subsidies often attract opportunists and corrupt government officials -- they corner these cheap and subsidized rice and sell high to big rice traders.
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See also:
Free Trade 1: Estonia's Free Market, Globalization, May 09, 2006
Free Trade 2: Unilateral Trade Liberalization, May 17, 2006
Free Trade 3: Protectionism Perpetuate Poverty, September 05, 2006
Free Trade 4: FTA in APEC, July 09, 2007
Free Trade 5: Business, Rock Music and Cycling Globalization, July 17, 2007
Free Trade 6: Counterfeit Drugs Worldwide, December 21, 2007
Free Trade 7: Class War, Eco-protectionism and Climate, April 02, 2008