The Food and Agriculture Organization (FAO) is a specialized agency of the United Nations that leads international efforts to defeat hunger. In 2018, it reported that for the third year in a row, “there has been a rise in world hunger. The absolute number of undernourished people, i.e. those facing chronic food deprivation, has increased to nearly 821 million in 2017, from around 804 million in 2016. These are levels from almost a decade ago.”
I cite these figures if only to emphasize the importance of agriculture, and how not only the Philippines but the rest of the world has been fighting hunger. Sadly, in the last three years, it appears to be a losing battle. And this, according to FAO, was largely because of climate change and the negative impact of natural disasters like drought on agricultural production.
This is the situation the world finds itself in right now, and I suppose one shouldn’t be surprised by the sense of urgency of some sectors in lobbying for changes in policies in Philippine agriculture. Former government technocrats, for instance, have been pushing for a “rice tariffication” law that they believe could “help resolve various issues afflicting the rice industry, including smuggling, uncompetitive production costs, and corruption.”
BusinessWorld reported that through a statement issued by the Foundation for Economic Freedom, the former technocrats noted that allowing the free importation of rice but imposing tariffs on them — as opposed to the present system of a government monopoly on importing rice and restricting the quantities brought in — would “be the most far-reaching reform in the history of rice policy. For decades, the interventionist strategy has been tried, tested, and has repeatedly failed.”
The group criticized “unwarranted government intervention” in the rice trade and noted that “by liberalizing the industry, the syndicate controlling the value chain will now be nullified by free entry and competition — including entry and competition from foreign rice suppliers.” The objective, they noted, was to allow free market forces to solve “the problem of gluts during harvest, and releasing stocks during lean periods.”
The government, obviously, is now between a rock and a hard place. And in an election year at that. Farmers, whether of rice or sugar or other crops, are voters, too. On one hand, we have economists and other experts who believe in the policy of liberalizing the agriculture sector to pave the way for its growth. But, farmer themselves are opposed to this idea.
BusinessWorld reported that the Federation of Free Farmers (FFF), for instance, is worried that by liberalizing the rice industry and removing the government monopoly on importing rice, and restricting the state to maintaining a minimum rice inventory, then the government would be “practically powerless” when rice prices turn volatile in case of another shortage.
Even sugar farmers are up in arms versus liberalizing their own industry, or allowing the private sector — particularly food makers — to import more sugar and sugar substitutes. They noted that the majority of sugar farmers were Agrarian Reform Beneficiaries (ARBs), and pushing for liberalization would only increase their poverty.
BusinessWorld reported on a position paper of the Confederation of Sugar Producers (CONFED), which said, “It is ironic that the government, after providing the opportunity for these former sugar workers to become producers through the agrarian reform law will — through these economic managers — consign them once more to poverty by concocting this liberalization plan.”
There appears to be much anxiety in the agriculture sector now, given the calls to open up the trade of rice and sugar. The obvious objective of such calls is to ensure food security. Liberalization and free trade aim to ensure sufficient food supply, given the growing demand for food of an increasing population. Sufficient supply will also help keep food prices down. Free trade aims to address supply disruptions. But apparently farmers believe this to be at their expense.
However, farmers are consumers, too, like the rest of us. While they need income, like the rest of us as well, they also need food. And the negative consequence of supply disruptions, as what we had experienced last year, was felt by everybody — farmers and food processors and consumers alike. Runaway prices, shortages, inflation, and slower economic growth affected us all. Farmers were hit both on income and consumption.
Protecting the livelihood of farmers, and ensuring their profitability, should not be at the expense of consumers. And it is precisely the prevailing mechanism of trading that needs to change, as it has allowed unscrupulous traders to benefit from supply disruptions. They have kept farmers poor, and have made food expensive even for them.
The situation is not without alternatives to farmers. We can risk opening up the rice and sugar trade to foreign supply. But we should provide rice and sugar farmers alternative sources of income — if at all liberalization will result in diminished incomes for them. However, both the rice and sugar industry should modernize and improve on production and efficiency. The country needs food, and so does the rest of the world. The 2018 hunger report proves this much.
We have Singapore’s Agriculture and Veterinary Agency (AVA) now in the country to inspect farms that can supply Singapore with vegetables, fruit, hogs, poultry, and eggs. Singapore has been searching for alternatives to food imports from Malaysia, particularly for high-value vegetables and fruit, pork and processed pork products, dressed chicken and eggs, and seafood including white shrimp. Our exports are also seen to address any domestic oversupply in the future.
On the production front, BusinessWorld also reported that Israeli agro-industrial firm LR Group is expected to submit a P44-billion proposal to the Philippine government this month to fund the deployment of 6,200 Solar-Powered Irrigation Systems (SPIS). LR’s “fertigation” technology — the injection of fertilizers using the irrigation system — is seen to help double production in about 500,000 hectares of rice and high-value products like sugarcane, corn, coffee, cacao, coconuts, and fruit-bearing trees.
I believe that all is not lost for Agriculture. But government policy and type of intervention play an important role in all this. A World Bank-funded project in Mindanao, for instance, called the Philippine Rural Development Project (PRDP), is targeting a 30% increase in income for its beneficiaries before the end of its sixth year of implementation in 2020.
BusinessWorld reported that PRDP has so far monitored a 15% income improvement since its launch in 2014, particularly among the 700,000 beneficiaries of farm-to-market road projects that allowed farmers to directly bring their produce to the market with ease. PRDP is composed of 248 projects in Mindanao, and provided P15.4 billion for infrastructure development, agri-enterprises, and local capacity improvement.
PRDP proves that the plight of farmers can be improved, that farming can also be profitable, as long as the right infrastructure and the right policies are in place. There will always be demand for food, and this is highly unlikely to diminish in the future. In short, even as we import, there will always be a market for local farm produce. The key to success is finding ways to improve production, and distribution to markets here and abroad. There are almost 900 million undernourished people around the world.
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.