TO IMPORT OR NOT: NOTES FROM THE RAMOS YEARS

More than 20 years ago, in 1995, then agriculture secretary Roberto Sebastian found himself in a firestorm. Activists, NGOs, and even media opinion-makers demanded his resignation. His purported fault? Failing to avert a rice crisis that gripped the country.

With a previous career steeped in corporate farming, Sebastian introduced in the agriculture department what is now known as the Key Production Approach (KPA) and went on to lead the policy momentum for what was to become the Medium-Term Agricultural Development Plan. He was obviously no armchair bureaucrat, and perhaps because this was so, he quietly left the cabinet in 1996 to serve as Special Envoy for Agriculture to the World Trade Organization.

But Paul Dominguez, Ramos’s presidential assistant for Mindanao, thought Sebastian was fit for the job. The latter had “performed well as agriculture secretary for the last three years. What should be taken into consideration is the three-year overall performance of the Department of Agriculture,” he was quoted to have said then.

True enough, Mindanao agriculture itself was on a roll. Between 1993-1995, according to DA estimates, Mindanao’s annual palay output grew by 30 percent, which was triple the national average of 10.30 percent.

Dominguez noted that several factors led to the rice shortage, among which were the crippling El Niño [1] and the lack of irrigation facilities [2].

And then there were the cartels to contend with.

Two cabinet officials, justice secretary Teofisto Guingona and interior undersecretary Alexander Aguirre, both conceded to the existence of rice cartels, and both stopped short of addressing the problem head-on.

In a report by the now-defunct Manila Newsfeatures and Commentaries, Guingona was said to have “received flak from lawmakers from an earlier remark made in apparent powerlessness of the national government as the rice shortage escalated into a full-blown national crisis. He said the country lacks the necessary laws to pin down big rice traders believed to be hoarding the staple.”

Aguirre, for his part, admitted there was, indeed, a powerful clique behind the hoarding and the price manipulation, “but as to whether there is sufficient evidence to charge them in court is a different matter,” the Philippine Daily Inquirer quoted him as saying.

At the end of it all, rice importation saved the day. Consumers almost clawed their way to the 3,000, and then 12,000 sacks of imported rice initially brought to Cagayan de Oro City in August 1995. A daylong multi-sectoral strike on August 24 had paralysed 90 percent of the city’s transport system, according to official communications obtained by Resurgent, just as the rice sacks were being unloaded at the pier. By September, government shipped 100,000 sacks from Bangkok, Thailand at the city’s Macabalan Port. A Consumers Protection Committee in Davao declared the situation “under control.” And it was imported rice from then on, across the country.

One month later, when the prices of rice had stabilized, Roberto Sebastian spoke before Ramos’s cabinet meeting and vowed to pursue rice self-sufficiency. He told his peers this was the only way to guarantee food security in the long term and to avoid another crisis.

Since then, the mantra of self-reliance has been uttered again and again, usually by politicians.

But most economists disagree. 

Fermin Adriano, who lectures at the UP Los Banos’ College of Public Administration, says people should get over the stigma of importation. Writing for Resurgent last month, he argued that “if we could not become efficient (competitive) rice producers after 25 years and after spending nearly three-fourths of the DA’s budget on rice productivity enhancement programs throughout those years, there is no assurance that we will ever be able to be competitive rice producers in the future.”

He added that it is not because we are inefficient as producers or wanting in funds, but rather because we are simply “not naturally endowed to become competitive.”  

“Unlike Vietnam, Thailand and Myanmar which have vast tracts of contiguous land irrigated by the expansive Mekong river, the Philippines is an archipelagic country whose islands are mostly mountainous and sloping.  It will take more resources to irrigate its lands given the relative difficulty of accessing fresh water sources,” wrote Adriano, who once served as senior policy adviser under the Ramos Administration. 

Cielito Habito, who served as NEDA Secretary-General in 1992, was almost bristling in his April 18 column in the Inquirer.

“Our Stubborn Rice Policy,” he curtly entitled his piece, and in it he bewailed the fact that he had been pounding on the same position on the matter over such a long period of time and that “it has been tiring and exasperating.”

What’s gotten his goat?

Public officials’ continuing intransigence in believing that the country can achieve rice self-sufficiency, was one. More to the point, Habito believes that the Palace has no business getting into government-to-government importation. “(W)e have a long enough history . . . to know that the government is a bad judge on when or how much to import, which only led to highly volatile prices for rice,” he wrote.

Besides, leaving the importation solely to the NFA will incur huge debts which Filipino taxpayers will ultimately have to pay. 

Instead, Habito believes that the private sector ought to have been brought in to lead the importation of rice, but this time under a new tariff regime.

“We should have long ago permitted the private sector to import the commodity subject to an import tariff that sets domestic prices to wherever we want it, balancing the interests of farmers and consumers. Not only would we stop government coffers from bleeding due to the NFA’s perennial losses from its commercial operations (P167 billion at last count); it will actually gain substantial revenues from the tariff on rice imports, that can then be used to help our rice farmers raise productivity, and lower costs,” he wrote.

All this brouhaha has come on the heels of last month’s fiasco in Malacañang when when a Palace official, Maia Chiara Halmen Valdez, was dismissed, some say unceremoniously, by President Duterte for siding with her boss, Cabinet Secretary Leoncio Evasco. 

The latter chairs the powerful National Food Authority (NFA) Council, which was predisposed to allow private traders to import rice.

Evasco has been at loggerheads with the NFA’s Jason Aquino, who is in agreement with agriculture secretary Manny Piñol in pushing for a government-to-government (G2G) importation, an arrangement scoffed at by Evasco who prefers importation by private entities for greater transparency and to generate, not lose, much-needed revenues.

What may be the stakes, if any, from such complex transactions?

It is said that corruption in rice trading yields at least $30 per metric ton.

“Normally, 25-35 centavos per kilo is given as commission to a wholesale buyer by government trading companies of Vietnam or Thailand. That means a whopping sum of P2.5-3.5 billion commission. Having the private sector import rice at an announced tariff will be more transparent. It will gain government tax proceeds and will not involve public expenses. G2G will require a P24 billion public expenditure and add to NFA's debt,” says a source close to Resurgent.

The next few weeks will be instructive as to whether or not the country pursues importation and in what form.

In the meantime, Filipinos wait with bated breath the practical outcome of the political infighting: will long queues reminiscent of 1995 be just around the corner, say in July? Or will we be able to avert such a crisis? 

(Mr. Gomez, Resurgent editor-in-chief, served as senior aide to Mr. Dominguez during the Ramos Administration.) 

 
[1] The Department of Science and Technology and the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (Pagasa) reported in 1994 that the drought that hit the country between 1991-1993 was “comparable with that of 1992-1983,” which severely damaged crops in Central Luzon, Southern Tagalog, Northern Vsiayas, and Western Mindanao.

[2] In Mindanao alone, during that period, potential irrigable areas stood at 959,000 hecteres or 30 percent of the country’s total irrigable area of 3.126 million hectares. To make matters worse, only 28 percent of the island’s agricultural lands were actually irrigated, compared to 51 percent in Luzon and 45 percent in the Visayas.