You know that moment you read something and you know it is total bullshit. Today I was reading digitaledition.philstar.com/articles/2015-08-31/news/nfa-hit-for-excessive-rice-importation/118373
“MANILA, Philippines – The National Food Authority (NFA) is under fire for the excessive importation of 2.1 million metric tons of rice for this year.”
Had me thinking how can a country suffer both “excessive importation” and rice smuggling.
The Philippines consumes about 33,000 tons of rice daily. Approximately, 80% of the total population spends almost 1/4 of their income on rice alone.
THE National Food Authority (NFA) is in place by the government to to combat high rice prices and curb hunger. Another organization that is obviously corrupt and not doing its job.
“As of June 1, the country had a total rice stock inventory of 3.02 million metric tons, Bayan Muna Representatives Neri Colmenares and Carlos Zarate quoted the Department of Agriculture (DA) as saying. Data from the Bureau of Agricultural Statistics show that the June inventory was 30.9 percent higher than the 2.31 metric tons the nation had in June last year, they added.”
That is 90 days of rice. Now if that is NFA only stock then there is a big problem as they are only mandated to have 30 days of rice in storage. So why do they have so much rice in storage?
As for price control, the price rice went down to p34 per kilo in December 2012, the government claimed it was the result of their policies. What these dunces didn’t realize was that there was massive smuggling of rice from Vietnam and Thailand, that in one celebrated case, the rice shipment of an entire ship disappeared after docking in the Batangas port and leaving for Cebu.
In December 2012, a column at the Philippine Daily Inquirer entitled, “Rice smuggling explodes under Aquino”, which reported analysis of the IMF trade figures showed that smuggled rice from Thailand could have reached a staggering P16 billion in Aquino’s two years in office.
Villar, chair of the Senate Committee on Agriculture and Food, said that the G2G scheme has been proven effective in fighting rice smuggling.
Under the G2G scheme, private traders are no longer given the permit to import rice. NFA imports rice through direct purchase from a foreign government, in this case, Vietnam and Thailand.
While world prices for rice has fallen Philippines pays more. No sane government in the world would dare risk shortfalls in their country’s staple food, so they worsened the situation by restricting the rice exports.
Sep 2010 $519.95 per ton to Jun 2015 $370.55, 28% lower, so when the price was p39 per kg in 2010 to we should have a street price today of p27 per kg.
The government should stop blaming rice farmers in their failure to address rice price increases, they are letting rice cartels rule and dictate price movements, the so-called market forces theory is nothing but pure fiction, I am sure that the eventual release of the imported rice, will fall into the hands of rice cartels, and they will further push rice prices up.
A study done in 1999 by the International Rice Research Institute (IRRI), indicates that the cost of rice production in the Philippines is almost 50% more than that of neighboring exporting countries’, Thailand and Vietnam. The annual cost of producing rice for Vietnam and Thailand is $683 per hectare and $636 per hectare, respectively. While in the Philippines cost of production is $888 per hectare.
In 2002, the price of palay in the Philippines ($171 per ton) was about 66% higher than in Thailand ($103), 51% higher than in Vietnam ($113), 29% higher than in Indonesia ($132), 47% higher than in India ($116), and 21% higher than in China ($141). A joint IRRI-PhilRice study from 1994 to 1999 found that Filipino farmers were paid almost double what farmers in nearby countries received.
The Philippines’ higher price is due to a lower supply of palay and higher production costs. In fact, production per capita (168 kg) is less than half that of Thailand (431 kg) and Vietnam (405 kg).
Philippines cultivate about 3 metric tons of rice per hectare. According to the PHILRICE, this figure is insignificant compared to the country’s production potential which is 12 metric tons per hectares.
Farmer groups in other countries are encouraged by local and country governments to form cooperatives to engage in rice processing and trading. The idea is that farmers benefit from the profits of value added activities. Most countries have succeeded with cooperatives where Philippines has failed. Some of the difficulties relate to lack of organization, and poor management of resources, and of course in the Philippines the lack of ethical and financial systems and procedures to safeguard against a conflict of interest between the farmers and their enterprise has been a primary cause of business failure. Then there is the problem of lazy people who rather drink than work. As for foreign investment, the corruption and lack of property protection to foreigners creates uncertainty and provides little incentive for the private entrepreneurs to invest in more efficient processing technologies. Big business has always shieded away from the rice processing business in countries like the Philippines.
So there you have it why rice costs so much, and why the Philippines will continue to fail.Published in