Why not subsidize local millers instead of rice imports?

May 26, 2008 00:41:00
Philippine Daily Inquirer

MANILA, Philippines – Reading two articles in the Inquirer’s April 19 issue, “GMA job on the line” and “Planting rice is never fun,” made me wonder whether the billions of pesos the government has budgeted to respond to the rice crisis would be put to good use.

Please allow me to put forward some food for thought for Agriculture Secretary Arthur Yap and other policymakers. Why will the National Food Authority subsidize the 2.1 million metric tons of imported rice by P21.75 for every kilo in order to bring down the selling price to P18.25 from the purchase price of P40 per kilo? Why would the government not just use this subsidy to support the rice millers of Nueva Ecija whose breakeven price is P31.39?

By subsidizing rice millers, the NFA would just need to shell out P13.14 per kilo instead of P21.75 to bring down the selling price to P18.25. This translates into a savings of P17.3 billion for 2.1 million metric tons. Added to this, local rice production would be given a boost making the country less dependent on imports and thereby, less vulnerable to the vicissitudes of the international market.

This would also address the concerns of Edgardo Alfonso about losses from his commercial rice trading, which, he said, is due to the lesser demand from Manila wholesalers (read: cartels); the lower demand, in turn, affected, farm-gate prices because, according to Alfonso, his agents had to buy at a lower price from farmers to minimize losses. With the shifts in subsidy to favor local rice production, Alfonso would be able to purchase rice at higher farm gate-prices—thereby increasing the income of farmers—and likewise sell his commercial rice at a subsidized price while earning a reasonable profit.

Also, by minimizing rice importations, taxpayer money would not be wasted on commissions, which, according to former Speaker Jose de Venecia Jr., amounts to $50 per ton. This would translate to $100 million or P4 billion less of the money greasing the pockets of some unscrupulous NFA officials and their Malacañang co-conspirators.


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