Rice industry downplays ultimate impact of RCEF

By Vincent Mariel P. Galang
Reporter

THE Philippine Rice Research Institute (PhilRice) estimates that the cost of production in the Philippines was P12.72 per kilo between 2013 to 2014, while the Thai cost was equivalent to P8.86 and Vietnam’s P6.22. Only Indonesia performed worse at P15.74.

At such high cost levels, the Philippine Statistics Authority estimates that a farmer’s net return per hectare was P33,349 in 2018, up 43%.

The government’s main tool for addressing competitiveness is the Rice Competitiveness Enhancement Fund (RCEF), a feature of the Rice Tariffication Act (Republic Act 11203) signed in March. The fund will support farm mechanization, credit, training, seed provision, and other programs to help farmers eventually compete with their low-cost Southeast Asian neighbors.

RCEF is to be provided with P10 billion a year from tariffs of 35% charged on imported Southeast Asian grain. The fund will run for six years.

According to initial plans, the fund is to be distributed to about 55 rice producing provinces across the country, across 947 municipalities. It will fund about P5 billion worth of machinery via the handled by the Philippine Center for Postharvest Development and Mechanization (PhilMech); P3 billion for rice seed development to be undertaken by PhilRice; P1 billion for credit assistance via Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP); and another P1 billion for extension services for skills development to be provided by PhilMech, PhilRice, the Agricultural Training Institute (ATI), and the Technical Education and Skills Development Authority (TESDA).

“The Rice Competitiveness Enhancement Fund ay gagamitin para matulungan natin ‘yung ating mga farmer maging competitive (RCEF will help farmers become more competitive). When you say competitive, madagdagan ‘yung kanilang ani, mababawasan natin ‘yung kanilang production cost para at the very least madagdagan ‘yung kanila kita (we mean higher yields and lower production costs so at the very least the farmers will earn more),” Department of Agriculture Director for Field Operations Roy M. Abaya said in a November interview.

Through RCEF, Mr. Abaya said that the government hopes to reduce production costs by 30%, while increasing the average yield by about 50%, with a resulting doubling in farmer incomes. The yield per hectare target is 6 metric tons (MT) from the current 4 MT. The initial RCEF disbursements were made in September.

Mr. Abaya said that by the next harvest season, during this year’s dry season, he expects significant production gains with a corresponding decline in costs. By 2021, he said costs will drop further, leading to a corresponding drop in imports as the cost differential with imports narrows.

Philippine Institute for Development Studies (PIDS) Research Fellow Roehlano M. Briones said he expects the RCEF to start showing its effects next year, though achieving competitiveness ultimately remains an open question.

“Whether rice will be competitive by 2021, that is a matter of degree. I would say with all of these programs it would be more competitive than what it is today, but whether that is enough to match the cost of production (of the rest of AEAN)… You can close some part of that gap, but you will still have that gap,” he said in a December phone interview.

He said RCEF may also not be enough to reverse years of sluggish performances by the industry.

“They will get a competitiveness boost from the additional resources through the RCEF, but this is probably not enough to reverse decades of underdevelopment plus real geographic disadvantages,” he said.

Raul Q. Montemayor, national manager of the Federation of Free Farmers, also sees an increase in the yield of farmers by 2020, but he noted that the P10-billion annual fund is not enough to help the country’s rice farmers. The bottom line is that he lacks confidence in major gains.

“At least ‘yung mabibigyan, bababa (cost) and hopefully may konting increment sa yield. (Recipients can expect gains in bringing down costs and I hope a little increment in yields) That can happen in the next season so by dry season 2020…. ‘Wag tayong mag-e-expect ng malaking gains immediately kasi maliit lang ‘yung pondo and then starting pa lang (We should not expect big gains immediately because the funds are limited and the process is just starting),” he said in a November phone interview.

“It’s actually very small compared doon sa expected losses ng farmers kasi kung we produce 19 billion kilos a year ‘yung P1 drop in price is already a P19 billion loss to the farmers. ‘Yung sinasabi nila na ito na ang nakakasalba sa farmer. It’s very far from the truth (RCEF is very small compared with the farmers’ expected losses due to rice tariffication. If we produce 19 billion kilos a year each P1 drop in price is already a P19 billion loss to the farmers. When they claim that RCEF will save the farmers, it’s very far from the truth),” he said.

He added that any uneven distribution of the fund raises the risk that some rice-growing areas will become even less competitive.

He said farmers, as they develop, will demand different forms of assistance beyond what is contemplated in the law governing RCEF.

“The concept of RCEF in terms of earmarking an amount for the sector okay kami doon, pero ‘yung paggamit n’ya, dapat gawin s’yang more flexible… tingnan kung saan ‘yung pangangailangan (we are all right with the RCEF earmarking concept but the use of funds needs to be more flexible and responsive to the need),” he said.

Pampanga State Agricultural University Professor Roy S. Kempis also noted the importance of meeting the exact needs of rice farmers beyond one-size-fits-all measures.

“A substantial part of the fund (should be) used for ‘targeted’ rice competitiveness enhancement. What I mean by ‘targeted’ rice competitiveness enhancement is to extend assistance based on a thorough understanding of the needs of the rice farm (and) farmer,” he said in a November email.

He said in Nueva Ecija, farm mechanization should be the key focus, coupled with training for the farm workers left to operate the machinery. In Tarlac, loans or assistance to acquire herbicides should not be on the program as they negatively impact rice production.

“Syempre may effect naman ‘yung good seed, ‘yung irrigation during the dry season tsaka mechanization, pero at the LGU level, mag-o-orchestrate ‘yan doon kasi nandoon ang action (Of course good seed will have an effect, as will irrigation during the dry season and mechanization. But at the local government level, it all needs to be orchestrated because that’s where the action is),” Rolando T. Dy, executive director of Center for Food and Agri-Business of University of Asia and the Pacific (UA&P), said in a November phone interview.

He noted the importance of having a champion for the rice industry coordinating programs in every province, be it the governor or mayors.

He said the priority should be cash assistance, the most immediate need.

“Eh aantayin mo ba ‘yung tractor eh nagugutom na ‘yung farmer? Magtatanim yan kailangan may working capital sila (What’s the use of waiting for the tractor if the farmer goes hungry. The farmer needs to plant and needs working capital),” he said.

Rene Cerilla, legal and policy development officer of the Pambansang Kilusan ng mga Samahan ng Magsasaka (PAKISAMA), said it is difficult to forecast what’s in store for rice farmers given the unfavorable experiences of the past.

“Machines hindi angkop sa lugar, hindi rin tinuturan ‘yung mga farmer kung paano gagamitin ‘yung machines (It is possible the machinery will not suit local conditions; also, there is limited training in their use)” he said in a November phone interview.

“Dapat komprehensibo ang pagtingin sa mga magsasaka hindi lamang sa ani kung hindi pati sa pagpapababa ng gastos at tsaka iyong pagbigay ng full value chain doon sa produkto ng magsasaka (Farmers should be evaluated comprehensively, and not just in terms of yields but also production costs and access to the full value chain).