How to unleash PHL’s agricultural potential

The Philippine Statistics Authority (PSA) released last month a report on the country’s crops production from 2017 to 2021, which indicated that palay production rose by an average annual rate of 0.9 percent. From 19.28 million metric tons in 2017, production expanded to 19.96 MMT in 2021. During the five-year period, production of the staple contracted in 2018 and 2019, the year when President Duterte signed Republic Act 11203 or the Rice Tariffication Law.

Unmilled rice output fell to 18.81 MMT in 2019 as harvest area contracted to 4.65 million hectares, from 4.8 million hectares the previous year due to typhoons. Typhoons and monsoon rains were also the culprit behind the lower rice output in 2018, according to the Department of Agriculture.

Rice production recovered in 2020 and 2021, when it reached 19.29 MMT and a record 19.96 MMT, respectively. Output hit all time high despite the fact that harvest area was the same as the 4.812 million hectares recorded in 2017, indicating an improvement in productivity. A separate report on the agriculture sector’s performance released by the PSA, however, showed that palay production fell to 19.75 MMT last year.

The increments in the production of the staple were not enough to cut into the country’s rice imports during the five-year period. The increasing need of the Philippines for the staple coupled with the ease with which traders could import rice caused purchases to balloon to more than 3 MMT. The Rice Tariffication Law made it easier for traders to bring in rice, as they only have to secure phytosanitary import clearances from the Bureau of Plant Industry. The relative ease with which traders could import rice coupled with the increasing need of the country for the staple caused purchases to balloon to more than 3 MMT.

The Philippines would continue to import rice if the necessary reforms to make production more efficient are not put in place. According to the National Economic and Development Authority, investments in technology and modern equipment are key to improving the productivity of the sector to wean the country from imports (See, “Cutting rice imports needs time, tech–Neda exec,” in the BusinessMirror, February 6, 2023). The latest rice production data, however, indicate that the Philippines is lagging behind in terms of equipping its planters with the necessary tools to cope with various challenges, including climate change and skyrocketing production costs.

The Rice Tariffication Law has created mechanisms such as the Rice Competitiveness Enhancement Fund for the exclusive use of rice planters. It allocates P10 billion to four component programs: mechanization (P5 billion), seeds (P3 billion), extension (P1 billion), and credit (P1 billion). Its primary goal is to improve the competitiveness and increase the income of Filipino rice farmers through yield improvement, cost reduction, reduction of postharvest losses, and rice value-addition.

While there are factors beyond the government’s control, such as adverse weather events, timely implementation of these mechanisms will enable farmers to survive the crises, such as the Russia-Ukraine war that caused fertilizer prices to soar. If these mechanisms are in place and are working, planters would not have a difficult time adjusting to the vagaries of the weather and the whims of politicians.


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