CAMARINES Sur Rep. LRay Villafuerte has lauded newly appointed Sec. Francisco Tiu Laurel Jr. for meeting with the governors of the country’s Top 10 palay-growing provinces on how to boost harvests, expressing the hope that this initiative would give the government more reason to take “a long, hard look” at his game-changing subsidy-cum-contract-growing proposal to let the government sell rice for as low as P20 per kilogram (kg) starting next year.
“I take my hat off to Secretary Kiko (Laurel) for taking the proactive step of meeting with the governors of our biggest palay-growing provinces to discuss ways on how to dramatically raise rice productivity,” Villafuerte, National Unity Party (NUP) president and a former governor of Camarines Sur, which is one of the country’s top producers of staple, said.
The representative of Camarines Sur’s second district in the House expressed the hope that the Department of Agriculture (DA) Secretary’s initiative to meet with the local chief executives ahead of the next planting season would “give more reason for our agriculture officials and the rest of the Mr. Marcos’ economic team to give a long, hard look at an out-of-the-box proposal meant to enable the government to sell rice beginning in 2024 at the President-aspired retail price of P20 a kilo.”
“This proposal to provide a subsidy equivalent to P40,000 per hectare for small farmers tilling a million hectares (ha) combined in the country’s Top 10 palay-growing provinces—on condition that they then sell their produce to the government at P9 per kilo of palay—would enable the Marcos administration to sell 1.5 billion kg of rice to low-income and other vulnerable sectors at P20 a kilo in Kadiwa sa Pangulo outlets and another 1.5 billion kg at a higher P30 to other consumers all over the country,” Villafuerte said.
In a speech read for him earlier this week by Laurel at the 35th National Rice Conference in Nueva Ecija, President Marcos reiterated his commitment to build more rural infrastructure and adopt the latest farming technologies to boost palay yields, cut imports and pull down the retail cost of the staple.
According to the end-November price monitoring report of the DA, local regular milled rice (RMR) was being sold in Metro Manila markets for P33 to P52 a kilo while imported special rice retailed for as high as P65 a kilo.
Villafuerte said that should the government adopt his novel proposal to boost palay yields and slash rice prices in the market as early as next year, “it would be an antidote to projections of elevated rice prices in the world market next year arising from international factors beyond our control.”
These international factors include the decision of India—the world’s biggest exporter of this cereal grain—to keep its rice export ban till 2024, and the projected lower global supply possibly resulting from the onslaught of the El Niño phenomenon of a prolonged dry spell, he said.
Last September, the US Department of Agriculture (USDA) revealed that the Philippines had overtaken China as the top rice importer in the world, with its “Grain: World Markets and Trade” report expecting Philippine imports to hit 3.9 million MT for the 2022-2023 period, or higher than China’s 3.5 million-ton imports.
At a recent briefing for members of the House committee on agriculture, DA officials said that with the bigger produce from this main harvest season, the price range of the staple is projected to ease this December to P41 for a kg of RMR to P48 for well-milled rice (WMR).
But Villafuerte noted that this per-kilo price band of P41 to P48 for RMR and WMR stocks is still half to a third costlier than if the government were able to sell it retail at P20 to P30.
Laurel said he met with the governors of the 10 biggest palay producers—Nueva Ecija, Isabela, Maguindanao del Sur, Pangasinan, Cagayan, Bukidnon, Tarlac, CamSur, North Cotabato and Iloilo—in San Juan City last Nov. 17 as these provinces account for 48% of the country’s total production.
In a November statement about the San Juan City gathering, the DA quoted Laurel as saying that the governors agreed to coordinate efforts to bring rice prices down by increasing production,” and said the participant-local chief executives found the consultative meeting to be a “good first step towards a concerted effort to boost rice production.”
Villafuerte said earlier that with the government spending about P40 billion in yearly subsidies on the rice subsector, he proposed to the DA to tap this amount for a subsidy for small farmers tilling an initial total land area of one million ha in the “Top 10” producers at P40,000 per hectare for every target farmer-beneficiary.
Villafuerte suggested that the target farmer-beneficiaries in the “Top 10” palay-producing provinces be selected by the DA in tandem with the local government units (LGUs).
“Contrary to the contention of our agriculture officials that selling rice at P20 a kilo, although possible, cannot happen in the near future, market rates of P20 and P30 a kilo are actually doable starting next year, if we were to adopt now a novel palay productivity program involving the grant of a pre-planting subsidy of P40,000 per hectare to target farmer-beneficiaries, but on condition that these farmers sell their produce to the government at P9 a kilo,” Villafuerte said.
“With a projected total yield of 5 billion kg of palay from the one million ha, based on an average output of 5 MT or 5,000 kg per hectare, this novel subsidy-cum-contract-growing proposal will translate into 3 billion kg of rice, at the palay-to-rice, after-milling conversion rate of 60%,” he said.
Villafuerte explained that under his proposal, farmer-beneficiaries will be required to sell their produce to the government at a fixed rate of P9 per kg of palay, which means the government will have to set aside P45 billion for this proposed procurement component of the subsidy plan.
In buying the farmers’ produce after already giving them P40,000 each before the start of the planting season, Villafuerte said this will encourage the target beneficiaries to produce more from their respective farms as they will be paid P9 for every kilo of palay they are able to produce.
On Villafuerte’s watch as three-term CamSur governor from 2004 to 2013, the province—according to the Bureau of Agricultural Statistics (BAS)—became the country’s 12th biggest rice producer in 2008 and a higher No. 8 in 2011. CamSur went up to No. 4 rice producer in 2016.
To further incentivize the farmer-beneficiaries to produce more of the grain from their croplands, Villafuerte said that cash prizes and/or farm machinery like power tillers and harvesters, fertilizers and other inputs can be offered under this rice productivity plan to the beneficiary-farmers garnering the highest per-hectare yields in the chosen provinces, he said.
Cash prizes or other rewards can likewise be given to the local government units (LGUs) of the provinces where their farmer-beneficiaries achieved the highest yields per hectare of land, he added.
“Of the final, post-milling rice output of 3 billion kg of the staple, the government can sell 1.5 billion kg or half of it at P20 a kilo through the President’s pet project Kadiwa ng Pangulo outlets nationwide for poor and other low-income families, and the remaining 1.5 billion kg at a higher P30 via retail markets for the benefit of other consumers,” Villafuerte said.
The government will earn P30 billion from selling 1.5 billion kilos of rice at P20 and P45 billion more from selling the other 1.5 billion kg at the higher P30 kilo, or a total of P75 billion, he said.
“Thus, at the end of this undertaking, the government will have spent just P10 billion in subsidies for the rice productivity program—in lieu of the current P40 billion—after collecting P75 billion in rice sales and deducting this amount from the P85 billion set aside for the farmers’ subsidy-and-grains-procurement plan,” said Villafuerte.
He said it would be up to the DA, in coordination with the concerned LGUs, to decide on whether to give the P40,000-per-hectare subsidy to the target farmer-beneficiaries in cash, in the form of inputs like high-yield seeds and fertilizer, or a combination of cash and farm inputs.
Villafuerte suggested limiting the pilot phase of this proposed program to target beneficiaries in the biggest palay-growing provinces because the farmers in these places have already been tested-and-proven to produce higher yields.
However, after the pilot year, this program can be expanded over the succeeding years to cover additional beneficiary-farmers in another one (1) million to two (million) ha in provinces other than the “Top 10” palay-growing provinces, he said.
“With this palay-procurement component, the proposed rice productivity project might even produce more than the projected 5 billion kilos of palay from the one million hectares because the beneficiary-farmers will be incentivized to produce more palay so they can earn more money from their farms at the buying rate of P9 per kilo,” he said.
The farmers will likewise be encouraged to produce the biggest harvests from their lands in the hope of winning the cash or in-kind rewards that await the project beneficiaries who come up with the highest yields per hectare, he added.
Alongside the P40-billion outlay for the subsidy plan that will be given to the target farmer-beneficiaries in the 10 biggest palay-producing provinces before the start of the planting season, this P45-billion budget for buying the farmers’ produce will add up to a total of P85 billion for the entire project.
Funding for this rice productivity program can be sourced from the annual General Appropriations Act (GAA), a Congress-approved supplemental fund, or from the collections from rice import tariffs in excess of the P10-billion allocated annually for the Rice Competitiveness Enhancement Fund (RCEF) under Republic Act (RA) 11203 or the Rice Tariffication Law (RTL).
“This is an excellent solution because we will be providing needed production assistance to our palay growers that will stop them from seeking pre-planting loans from usurers or unscrupulous traders and then selling their produce to them at dirt cheap prices, while at the same time boosting our harvests and enabling rice consumers to buy the staple in retail markets at only P20 to P30 per kilo,” Villafuerte said.
“We must not forget that our farmers will benefit, too, from cheaper rice because they themselves eat the staple and eventually buy their rice from the market like other Filipino consumers,” he said.
According to a Bloomberg News report, India is expected to maintain its rice export cuts into next year, which the news outfit described as “a move likely to hold the staple grain at close to its highest price levels since the food crisis of 2008.”
The report said that Prime Minister Narendra Modi, who will seek reelection next year, has “repeatedly tightened restrictions on shipments in a bid to curb domestic price rises and shield Indian consumers.”
It quoted Sonal Varma, chief economist for India at Nomura Holdings Inc., as saying that, “As long as domestic rice prices face upward pressure, the restrictions are likely to stay … Even after the elections, if domestic rice prices do not stabilize, these measures are likely to get extended.”
Citing the United Nations’ Food and Agriculture Organization (UN-FAO) as source, the report said that the cost of rice in October 2023 was still 24% higher than where it was a year ago.
The same Bloomberg News report said that the onset of El Niño “may further tighten the global rice market, at a time when world stockpiles are heading for a third straight annual drop.”
Even the Bangko Sentral ng Pilipinas (BSP) projects that if El Niño were to remain till mid-2024, headline inflation for next year might go up to 3.7%, from the previous estimate of 3.5%, because the dry spell could hurt farm productivity worldwide and spur higher rice prices in the international market.
On top of higher international rice prices arising from a drought-induced lower global production feared drought, the BSP expects the cost of this grain to be affected, too, by “the implementation of export restrictions … These factors are assumed to persist in the first half of 2024 and contribute to the inflation forecast for the year,” said the BSP.