Palay production crisis: A battle of development frameworks

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A national day of protest against the Rice Tariffication Law was held on November 20 by a huge coalition of peasant unions, Party-List groups, civil society organizations and sympathetic cause-oriented formations. Their unified demand: suspend and repeal RTL to stop the downward spiral of palay farm-gate prices below production cost. Their collective warning: The domestic rice industry is collapsing and exacerbating mass poverty and hunger in the countryside.

In response, President Duterte immediately announced the government’s intention to suspend the RTL, dubbed by the farmer organizations as rice trade liberalization law. And yet, within the week, Malacañang reaffirmed its support for the law to the delight of the country’s economic technocrats, principally from the National Economic and Development Authority (Neda) and Department of Finance (DOF). Accordingly, the affected palayfarmers shall instead receive credit, seed, mechanization and other forms of assistance, including conditional cash transfer. The administration also asked the National Food Authority and select LGUs to increase domestic palayprocurement, which, ironically, is the exact opposite of what the RTL is trying to promote, that is, for the NFA to get out of the market and do nothing else but simple “buffer stocking.”

Those who participated in the November 20 protest action are angry. They have vowed to continue with their campaign for the suspension/repeal of the RTL and the overhaul of what they see as the subversion of the whole agricultural sector under the “agricultural deregulation” policy, a policy that has been in place since the 1980s (introduced by the IMF-World Bank’s “structural adjustment program” or SAP, and has been reinforced by the Philippine liberalization commitments to the World Trade Organization made in 1994-1995.

On the other hand, the economic technocrats and their neoliberal supporters from the academe are firm in their belief that the RTL and other agricultural deregulation/SAP measures will strengthen the rice sector by making the domestic palayproducers more efficient and competitive. Accordingly, RTL, by opening rice production to global competition, shall help unleash agricultural productivity and modernize the slumbering agricultural sector.

It is clearly a battle of opposing development frameworks between two camps—the camp that espouses national agricultural sovereignty and food sufficiency (Sovereignty Camp) and the camp that seeks agricultural modernization via integration in the global market (Globalization Camp). Both seek the overall upgrading of the agricultural sector and, yet, differ on how this can be approached. Below is a quick summary of where the two camps stand on three issues of agricultural development.

On food security

TO the Globalization Camp, food security means “market accessibility.” Their thinking: market liberalization leads to the circulation of cheaper goods, which, in turn, prompts producers to become more efficient in order to compete. Additionally, food security means having ample supply of food on the table wherever it is produced. Hence, part of food security is having disposable income needed to import such food. Prime example: Singapore, which is food-secure and yet has no agricultural land.

To the Sovereignty Camp, food security means self-sufficiency and sovereignty of the people and farmers to determine development priorities. Self-sufficiency is also critical in palayproduction because the global rice market is a thin market (roughly 10 percent traded globally), which means production setbacks in Vietnam and Thailand can trigger a full-blown rice shortage in rice-deficient Philippines.

On government support and subsidies

The Globalization Camp detests subsidies and price assistance to producers. This is the primary reason why, through the years, the NFA, once a giant government corporation, has been the subject of budgetary downsizing and reduction of its role in the cereal, wheat and other food markets. The downsizing culminated in the passage of the RTL, which removes wholesale the regulatory functions of NFA.

The Sovereignty Camp cites how governments, worldwide, are providing support to their respective farming populations. The United States has been renewing every five years a US Farm Bill that supports American agriculture, while the European Union has a Common Agricultural Policy that has encouraged overproduction of certain products because of guaranteed price support to the farmers. In Asia, all the big rice producers with limited importations (example: China promotes self-sufficiency with 5-percent imports) maintain a price support system that tries to balance the interest of domestic producers and consumers. This system is managed by state-owned enterprises.

On roots of rural poverty

The Globalization Camp traces rural poverty to low productivity and low investments. Hence, the Camp calls for greater investment liberalization and the freer entry of those capable of making the farm or land more productive. They cite the theory of Robert Coase—“let efficient farmers buy out the inefficient ones.” The export-oriented banana industry in Mindanao that has bloomed under the system of contract growing promoted by the multinational banana exporters is cited as a success story under this theory. On rice production, some are even saying that after two or so years of “production adjustment,” the more efficient ones, in partnership with interested investors, shall prevail and stabilize domestic production.

The Sovereignty Camp counters that after two years of RTL, many of the losing palay farmers would have given up rice farming and would probably have sold their lands to the big land speculators and realtors. The RTL is seen as another policy that is likely to deepen rural poverty, which is generally blamed on social and economic inequality in the country. The small farmers and landless rural poor have weak or no access to education/HRD, credit, irrigation, market and technology assistance needed to transform farm lands into productive ones. This is compounded by the slow-moving land distribution program under the Comprehensive Agrarian Reform Program. Moreover, after three decades, CARP still has to deliver on the objective of transforming the CARP areas into progressive agro-industrial communities.

From the foregoing, it is abundantly clear that the two camps supporting and opposing the RTL take diametrically opposite positions on how to save a failing rice industry and a comatose agriculture sector. The question: Saan papanig ang mga mambabatas—sa mga globalizers o sa mga magsasaka?


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