IN 1984, the government imported around 160,000 metric tons (MT) of rice. In the following years, this rose to more than 200,000 MT and reached almost 300,000 MT during the fateful year when the "People Power" revolution broke out in 1986. Those importation levels were a major source of embarrassment for the Marcos Sr. administration, which had boasted of attaining rice self-sufficiency through its "Green Revolution" program.
Fast forward to four decades later and nearly 5 million MT of rice was imported by the country last year. The United States Department of Agriculture, which runs a relatively reliable forecasting model on agricultural exports and imports, estimates that the Philippines will import more than 5 million MTs this year.
The downward trend in agricultural productivity is unfortunately not confined to rice alone. The country was formerly a major exporter of sugar. It was, if we are to read Australian scholar Alfred McCoy's historical account of the Philippine sugar industry, the deus ex machina of local modern capitalist development. Ironically, the industry's embodiment of capitalist entrepreneurship is now just a ghost of itself. Now we import almost half a million MT of sugar yearly.
Similarly, the Philippines was a major coconut producer and exporter of coconut oil. Now, local coconut production lags behind Indonesia and Sri Lanka and our coconut oil export has been overtaken by palm oil in the global market. In fact, we even import half a million MT of palm oil yearly.
We are also importing around 2 million bangus (milkfish) fry from Indonesia when supposedly milkfish is the country's national fish. We are an archipelagic country with more than 7,000 islands, but we resort to massive importation of various fish species to plug supply deficits that are growing by the year.
Local corn production, meanwhile, can only meet 57-60 percent of total annual demand. We thus have to resort to massive importation of feed wheat, which is a poor substitute to corn as animal feed. Similarly, we import hundreds of thousands of tons of different vegetables per year from neighboring countries in Asia despite possessing the agro-climatic conditions to become a vegetable-surplus-producing country.
Our levels of meat importation are also growing every year despite having all the wherewithal to significantly increase production to meet the rising demand of fast-food chains. Recently, poultry producers complained about the massive entry of chicken imports that have depressed local prices and adversely affected local producers.
Our bananas, an agricultural export mainstay, are threatened by the continuing ravages of the "fusarium wilt" or Panama disease virus and the development of massive banana plantations in Cambodia and Laos funded by Chinese capital. The Philippines is slowly being dislodged at the apex of leading banana producers in the world by countries which never produced significant bananas for export before.
These are glaring proofs that Philippine agriculture is losing on all fronts, and yet we have not seen a sense of urgency among policymakers on how to turn around the unrelenting march to the abyss. What we are seeing are the same solutions applied in the past that are now being offered as remedies to address the underdevelopment of our agricultural sector.
Among them are:
– More "ayudas" to small farmers instead of focusing on raising farm productivity per unit of labor and land.
– A focus on production without substantial result and, in the process, neglecting to address the problems along the agricultural value chain.
– An obsession with attaining rice self-sufficiency with little positive results, despite pouring an average of 60 percent of the Department of Agriculture's yearly budget and, expectedly, providing little support to the development of crops where the country has a comparative advantage.
– The dispersal of funding for agricultural infrastructure projects is determined by our legislators instead of focusing their provision in areas where the highest returns in terms of productivity and incomes can be achieved.
– Providing support to local government units (LGUs) who are more interested in securing commissions from agri-infrastructure-related projects and not the development of their agricultural sectors.
– Never-ending implementation of agrarian reform, resulting in miniscule and uneconomic farm sizes.
– Inadequate investments in research, development and extension despite studies showing that the highest return in agriculture is in research and technological innovations.
– An absence of a rigorous monitoring and evaluation system to measure progress made by units (i.e., DA and agri-related agencies and LGUs) involved in agricultural development.
Albert Einstein, one of the greatest scientists of all time, once remarked: "Insanity is doing the same thing over and over again and expecting a different result!" If we are to avoid being labelled as foolish, and more importantly reverse the lagging performance of the agricultural sector, drastic changes in our development strategy must be implemented in the manner that our Asian neighbors did several decades ago.
Part II of the column will discuss how the Chinese and Vietnamese turned around the performance of their agricultural sector into the path of high and sustained growth.
Rice funding
in the 2025 budget
The bad news for the rice sector this year is funding for the rice productivity program in the 2025 budget was cut by P10 billion. The National Rice Program's (NRP) budget of P30.8 billion last year was trimmed to around P21 billion this year.
The cut is being justified because the recently signed new Rice Tariffication Law provided that funding for the Rice Competitiveness Enhancement Fund (RCEF) be raised to P30 billion yearly from P10 billion. The increase in the RCEF budget can then cover the reduction in the amount allotted for NRP.
The problem is that funding for RCEF comes from tariffs on imported rice. Whether the targeted P30 billion for RCEF can be attained is doubtful because the rice tariff has been cut to 15 percent from 35 percent.
Former agriculture undersecretary Leocadio Sebastian has observed that given that global rice prices are hovering around $430-480/MT and with the lower tariff, the country will need to import 7-8 million MT to be able to generate P30 billion for the RCEF.
A colleague, meanwhile, noted that the new RTL provides that any RCEF deficit will have to be plugged by the government from other sources.
Sebastian argued that while rice tariff proceeds from 2024 might be able to meet the P30 billion funding requirement for 2025 (as tariffs were at 35 percent during the first half of the year), tariff collections may not be able to sustain funding in 2026.
He added that government would find it difficult to plug in the deficit due to a revenue shortage, a long list of activities under the unprogrammed appropriations and that P2 trillion will have to be borrowed to cover the budget deficit this year.
From the looks of it, agriculture — particularly the rice sector — is starting inauspiciously this year.