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.

Pilipinas Forum 4: GMOs are good

Here is the collated and slightly edited exchanges in pilipinasforum@yahoogroups.com in February-May 2001. This is posted in inq7.net last March 20, 2001.

Exchanges on Genetically-Modified Organisms (GMOs)

Jeck, I read in the Manila Times that Bobby is anti-GMO. I suggest that he study the issue more carefully. I have done a 2 year study on the subject and I found that a good R & D program should be able to produce GMOs beneficial to our farmers much as they are to farmers in the countries where they are now grown. Farmers in General Santos City who monitored the Bt corn trial demonstrating 100% freedom from corn borer without pesticides feel strongly that they are being deprived of a very helpful technology by NGOs, priests and bishops who know nothing of their woes in corn farming.

Consider also: the planting of Bt cotton alone in 1998 in the USA reduced the use of pesticides by 450,000 kgs, GM foods have been sold in the US since 1996 and last year about 70% of their processed foods contain ingredients from GMOs. Food safety is not an issue because all commercially released GMOs are undergo stringent tests on allergenecity and toxicity in addition ot numerous feeding trials involving rats, chicken, cattle, fish, birds, etc. A recent report of a 10-yr study shows that GMOs cannot become weeds.

Despite the vociferous campaign of European NGOs, Europe remains an importer of certain GM crops and France, Germany, Spain have planted GM crops. Last year a large German company BASF, joined the group of multinational companies developing GM crops. The planting of GM crops further increased in Year 2000 to more than 44 Million hectares. Why? Several studies have already shown that economic benefits from the GM technology is spread to all stakeholders (farmers, seed producers, patent holders, consumers, importers) but that farmers gain the most from 35% to 75%.

So, what is the real issue here? Europe wants to catch up with the technology, hence the moratorium campaign which by the way has now been lifted (Tayo'ng gaya-gaya, nahuhuli kasi, hindi natin naiintindihan yung mga tunay na rason nila). Europe wants to have a strong bargaining position in farm trade with the USA. Other groups have their own reasons but I tell you never the interest of the Filipino at heart.

Bobby could be losing a lot of votes from the progressive farmers (Why deprive
them of a choice?) and the scientific community.

-- Nina Halos

Dear Nina & all, Your posting on GMO's is an eye-opener. To the uninitiated however, GMO comes
across akin to an alien life form (sounds familiar) that might mutate over time into something as dreadful as that extra-terrestrial in the senate.

You have mentioned astounding economic benefits as well as "positive" environmental implications. Could you please enlighten us some more (especially the possible mutation scenario) on GMO's.

-- Sam Aherrera

The most prominent GMOs I could think of are the various rice varieties developed by IRRI (intl.), PhilRice (Phil. govt's), and other rice research institutes of many countries in the world. Just last week, the "golden rice" was reported to be near-commercialization. Golden because it contains essential vitamins to supplement our bodies' other needs; this way, "may bigas ka na, may vitamins ka pa", cute!

I could think of some benefits of GMOs (applied in rice, livestock, cutflower, fishery, etc.):

1. It beats the Malthusian (Thomas Malthus, 1800s economist) bleak formulation that mankind is destined for hunger because while food production increases arithmetically, population increases geometrically. Bio-technology, micro-biology, genetics science, and GMOs are mankind's current, perhaps ultimate, answer to problem in food production. Biotech allows a land-poor country or community to grow its food needs through hydro-ponics and its cousin technology. It also allows an upland farming community produce rice, corn, etc. through less irrigation-dependent varieties, etc.

2. It could be cheap, as cited by Nina, where certain GMOs require less fertilizers, less pesticides, than other varieties.

3. GMOs have higher yield, and tissue culture is a lot more productive in plant propagation than the traditional method of propagation through seeds and the like.

-- Nonoy Oplas