Cartel, GATT-WTO, Gov’t Polices to Blame for Rice Crisis


The Kilusang Magbubukid ng Pilipinas (KMP or Peasant Movement of the Philippines) said that the current rice crisis is a result of hoarding by the rice cartel, loopholes in the Comprehensive Agrarian Reform Law of 1988, and the government’s policy of liberalization, deregulation, and privatization, which is in line with its commitment to the General Agreement on Tariffs and Trade-World Trade Organization (GATT-WTO).

BY ALEXANDER MARTIN REMOLLINO
Bulatlat
Vol. VIII, No. 18, June 8-14, 2008

The Kilusang Magbubukid ng Pilipinas (KMP or Peasant Movement of the Philippines) said that the current rice crisis is a result of hoarding by the rice cartel, loopholes in the Comprehensive Agrarian Reform Law of 1988, and the government’s policy of liberalization, deregulation, and privatization, which is in line with its commitment to the General Agreement on Tariffs and Trade-World Trade Organization (GATT-WTO).

This crisis, KMP said, cannot be solved neither by the government’s aggressive importation of rice nor by the extension of the CARP.

President Gloria Macapagal-Arroyo, early last week, certified as urgent House Bill No. 4077, which provides for a five-year extension for CARP. HB 4077 provides for an allocation of P100 million ($2.27 million at the June 6 exchange rate of $1:P44.14).

The Comprehensive Agrarian Reform Law was signed in 1988 and was intended to be in force until 1998. CARP expired in 1998 but was extended for another 10 years. It expires again on June 10 this year.

Based on DAR data, only 3.96 million hectares out of the target 5.16 million hectares, or 77 percent, under CARP have been redistributed.

Usec. Gerundio Madueño of the Department of Agrarian Reform supported the extension of CARP saying that extending CARP will help improve the country’s rice production.

“By completing CARP, it will help in the increase in the production of rice ‘cause the farmers will be given the basic rural infrastructure, technology, the training and support for their cooperatives and training for themselves,” Gerundio said.

But Madueño’s claim was belied by KMP secretary-general Danilo Ramos. He pointed out that the country had experienced rice crises under CARP. This, he said, does not give a promising picture of CARP’s supposed ability to solve the rice crisis.

“When did we first experience a rice crisis?” Ramos said. “That was during FVR’s (Fidel V. Ramos) time (as President). 1994-1995. CARP ended only in 1998, before it was extended for another 10 years. That means that experience shows that CARP is not a solution to rice crises.”

The rice cartel

“In fact, during FVR’s time, rice supply increased by 350 percent, but prices nevertheless soared,” he added. “Why? Because of the cartel.”

The rice crisis of 1994-1995 was largely a result of the partial privatization of the National Food Authority (NFA), which then procured only 0.5 percent of total palay (unhusked rice) production. Private traders took advantage of the situation, creating an artificial rice shortage by hoarding supplies. This caused rice prices to jump by 90-100 percent.

The present rice crisis is also largely traceable to the activities of a rice cartel, known as the Big Seven, whose members, aside from being able to channel production to itself through a network of traders, are also allowed to import heavily.

The members of the Big Seven have been identified in Senate investigations as Joaquin Go Soliman (JOMERCO Trading), Pio Sy Lato (PNS Grains Center), Ramon Ang Syson (Family Native Supply), Gil Go (Jocardo Merchandising), Leoncio Tan/Janet Tiu (Leoneco Merchandising), Santos See (Manila Goodyear), and Teofredo Co (Teofredo Trading).

CARP and GATT-WTO

The depredations wrought by the rice cartel are aggravated by CARP’s loopholes and the government’s implementation of liberalization, deregulation, and privatization policies in accordance with the GATT-WTO (General Agreement on Tariffs and Trade-World Trade Organization) framework.

The Philippines is now the world’s top importer of rice, according to the socio-economic think tank IBON Foundation – a far cry from its status as a self-sufficient, rice-exporting country in the 1980s. IBON Foundation’s research also shows that the Philippines devotes only 4 million hectares to rice production – contrasting sharply with Vietnam, with more than 7 million hectares planted to rice, and Thailand which devotes more than 10 million hectares.

Lands planted to cash crops are exempted from CARP. The owners of lands planted to rice and corn, which are subject to CARP, have found a way out of the government’s agrarian reform program through crop conversion. This contributed to the decrease in rice production.

Under the WTO’s Agreement on Agriculture (AoA), which the Senate ratified in 1995, the Philippines has been forced to meet a minimum rice importation requirement, whether or not the country has sufficient rice yields. The Agriculture and Fisheries Modernization Act (AFMA), which Ramos signed into law in 1997, aims for further privatization of the NFA and increased private-sector participation in rice importation.

The NFA is mandated by law to procure at least 12 percent of palay production. From an average of 7.95 percent of palay production in 1977-1983, the NFA’s procurement dropped to 3.63 percent in 1984-2000 and from 2001-2006 was only 0.05 percent of total production.

Rice imports have increased from 257,260 metric tons (MT) in 1995 to 1.7 million MT in 2006. This year, the government has secured the importation of some 2.2 million MT of rice from Vietnam, Thailand, and the U.S. – the country’s largest volume of rice importation since 1998.

“The government’s ratification to the GATT meant full liberalization of Philippine agriculture, particularly the emphasis on export crops and, on the other hand, rice importation,” Ramos said. “That is why in 1994, when the GATT was being deliberated upon in the Senate, we put forward a position urging them to reject it.”

The government’s Medium-Term Agriculture Development Plan (MTDAP) aims to reduce rice and corn production from 5 million MT to 3.1 million MT. Meanwhile, the Medium-Term Philippine Development Plan (MTPDP) for 2004-2010 aims for “the development of 2 million hectares of new agribusiness lands through multi-cropping, the cultivation of idle and marginal lands, the expansion of fishery production in unutilized offshore and inland waters, and expansion of the product mix through high value crops and value-adding through innovative packaging and agro-processing.”

The reduction of rice production and the country’s increased dependence on rice importation have placed the people more and more at the mercy of private traders, who control rice prices.

HB 3059

The KMP is calling for the passage of House Bill No. 3059, or the Genuine Agrarian Reform Bill. Principally authored by the late Anakpawis (Toiling Masses) Rep. Crispin Beltran, the bill provides for free distribution of land to farmers, the expansion of agrarian reform coverage to include all agricultural lands, and government support services for beneficiaries. Bulatlat

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