Ex-NEDA head Habito says pursuit of rice self-sufficiency raises prices

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Cielito F. Habito

STRIVING for rice self-sufficiency is expected to drive prices for the grain even higher, according to economist and Ateneo de Manila University professor Cielito F. Habito.

In an interview with BusinessWorld on the sidelines of the Management Association of the Philippines (MAP) forum, Mr. Habito said: “It is our insistence of producing 100% which is making rice more expensive because we end up tapping marginal land where it is expensive to produce rice.”

Mr. Habito, a former economic planning secretary, noted that Singapore is the second most food-secure country in the world, yet imports 90% of its food requirements.

“We need to stop chasing 100% self-sufficiency, which drives prices higher. We need to invest in other resources like cacao, coffee, and all these exportable products,” Mr. Habito added.

On Monday, Agriculture Secretary Emmanuel F. Piñol announced that the National Food Authority Council approved the importation of 750,000 metric tons (MT) of rice for this year, and standby authority to import 1 million metric tons next year.


The 750,000 MT includes an initially approved 250,000 MT plus an additional 500,000 MT.

According to Mr. Habito, there is nothing wrong with this level of importation as long as the private sector is in charge.

“Why spend public funds to directly import rice? When private firms import they will also pay tariffs, which means the government earns money, which will finance rice competitiveness enhancement,” Mr. Habito said.

He also said that the directive of President Rodrigo R. Duterte to maintain a 60-day buffer stock of rice, which he called a “safe” level, need not all be NFA rice.

In his presentation at the forum, Mr. Habito noted that the Philippines is one of the most vulnerable countries to climate change, and adding land planted to rice exposes the industry to greater damage.

“The Philippines is agreed to be the most vulnerable to climate change among ASEAN countries. We are only making ourselves more vulnerable to disaster the more rice farmers that we have,” Mr. Habito said.

Philippine Confederation of Grains, Inc. president Herculano C. Co, Jr. said that the recently-approved imports are not enough, adding that the real problem in the rice market is the mistiming of NFA imports.

In his presentation, Mr. Co said that the current rice crisis is similar to the state of the market in 1995.

“We never learned our lesson,” Mr. Co said, noting that in 1995, “imports came late” and that while the shipments did arrive they could not be unloaded because of the rains.

He said the function of the NFA is not to compete with the private sector, but to stabilize the price of rice.

“That is not their mandate. If the price of palay (unmilled rice) drops below P17, that’s where the NFA comes it. When the price of rice goes up, that’s also the time the NFA (releases inventory),” Mr. Co said.

University of the Philippines economics professor Ramon L. Clarete said that the government should address the NFA’s finances. The NFA has said that it was not able to procure palay as it had used its funds to service maturing loans amounting to P5.1 billion.

Mr. Clarete also said that the NFA has an inherent conflict of interest “as a market participant and a regulator.”

He said stabilizing food prices is a prerequisite for industrialization.

“There can be no successful industrialization without bringing the food cost down. Let’s translate the direction of our policy to bringing food costs down,” according to Mr. Clarete. — Reicelene Joy N. Ignacio