No rush in crafting IRR of the Rice Tariffication Act

Published March 2, 2019, 12:00 AM

by manilabulletin_admin

Dr. Emil Q. Javier
Dr. Emil Q. Javier

The ongoing consultations on the Implementing Rules and Regulations (IRR) of the newly enacted RA 11203, otherwise known as Rice Tariffication Act (RTA) provide a timely illustration of the theme of the last two columns: That what ails our agriculture is not so much lack of appropriate policies and enabling legislation but more of the inadequacy in the nitty-gritty of program planning, implementation, and monitoring and feedback. And, relatedly, lack of accountability (inadequacy of program safeguards) and lack of program continuity from one administration to the next.

The RTA has two clear purposes: 1) to bring down the retail price of rice to make the staple more affordable to the poor, and 2) to raise the productivity and competitiveness of our rice farmers to protect their incomes. Attaining the first purpose is relatively straight forward but achieving the second is challenging and problematic.

For the second purpose Congress included in the RTA a Rice Competitiveness Enhancement Fund (RCEF) with an annual appropriation of P10 billion for the next six years. Additional funds are forthcoming if and when the rice tariff collections exceed P10 billion.

Out of the P10 billion RCEF, Congress stipulated that each year P5 billion be set aside for farm mechanization, P3 billion for high yielding inbred seeds, P1 billion for subsidized credit and P1 billion for extension and farmers training.

These allocations make business sense although the specific fund breakdown may not be the best use of public funds. Anyway, we can live with the law for now because there is a provision for automatic review of the allocations after the third year of implementation. Besides the Department of Agriculture (DA) has regular funds for rice under the annual general appropriations acts (GAA) with which to re-balance the allocations.

So far, so good as far as objectives and policy are concerned. But as always the problem is with the details.

Free distribution of farm
machines and equipment

Our rice farmers are not competitive with their counterparts in Thailand and Vietnam from which countries we import most of our rice because of our high cost of production. It costs us roughly P12.00 to produce a kilogram of palay compared with P9.00 and P7.00 per kilogram for Thailand and Vietnam, respectively. The big difference is the cost of labor. Hence, the imperative to further mechanize to defend our rice market.

But actually the provision for farm mechanization in the RTA is not new. The rice program under the Benigno Aquino administration (2010–2016) provided P12 billion precisely for the same purpose. Now Congress is ready to pour in another P30 billion in the next six years but it is clueless to what happened to the previous P12 billion.

In the hearings on rice tariffication, there was hardly any mention of the accomplishments of the previous rice mechanization program. We have yet to see an accounting by the DA of how much was really spent, for what kinds of machines, who and where are the recipients, the utilization rate of the machines, and how well were they maintained. Who were the better stewards of the machines — the farmers associations, the cooperatives, the local government units (LGUs)?

The feedback and observations we have received mention alleged instances of ghost deliveries, overpricing, under-specifications, and absence of after-sales services and dearth of spare parts. Moreover, since the machines were communally owned by farmers associations and cooperatives, without proper maintenance, and lack of spare parts, the machines were soon run down and became white elephants. Did the LGU-administered equipment depots perform better?

Had there been proper program monitoring and evaluation both in-house, and by independent third parties of the previous rice mechanization program(s), we would know by now the strengths and weaknesses of these initiatives and be guided accordingly.

Development and promotion
of inbred seeds and organization
of seed growers associations

Similarly, the objective and policy of further development of high yielding inbred varieties, including support for farmers seed growers associations are appropriate. However, the exclusion of rice hybrids is myopic. Hybrids outyield inbred varieties, and therefore more and more of the progressive farmers are switching to hybrids. Fortunately DA Secretary Emmanuel Piñol is very much aware of this technological shift.

Again these activities are not new. The Bureau of Plant Industry (BPI) and later the Philippine Rice Research Institute (PhilRice) had been doing these for the past 50 years. That the rice seed industry after all these years still need public support suggest all is not well.

Before we pour in another P18 billion for the next six years, we should take stock of where this seed subsector stands vis-à-vis the rapidly growing corporate seed industry. For the small farmers’ seed growers to stand up to the competition, they must measure up to the increasing stringent standards of genetic purity, seed quality and germination, and timeliness of distribution. The implementing rules and regulations precisely should address these issues.

Provision for credit on soft terms

The new law provided for P1 billion each year for credit to rice farmers with minimal interest and minimum collateral requirements to be managed equally by Land Bank of the Philippines and Development Bank of the Philippines.

Again the intention is good but truth to tell, this is meaningless. Had there been a serious analysis of what need to be done to make these banks more responsive to the needs of small farmers it should come out that additional lending funds is the least of their concerns.

Both Land Bank and DBP are flushed with cash. Land Bank’s net income for last year alone was P15 billion. Another P500 million for Land Bank will not make much difference.

Since both Land Bank and DBP are government-owned banks, Congress instead should have set a quota for small farmers lending beyond the 20% requirement under the Agri-Agra agriculture lending law.

Rice Industry Road Map

Given the above reservations the worst we can do now is to rush the promulgation of the Implementing Rules and Regulations (IRR) of the RTA. In the first place the concerns and needs of rice farmers ought to be fully heard because after all they will bear the brunt of adjustment to market liberalization. It will be a mistake to assume that the needs of all farmers are the same. Our planned interventions should take into account these differences. Hence the need to give enough time for regional stakeholders consultations which DA is now conducting.

Secondly as suggested in the preceding, none of the planned interventions are new. We should pause and assess what have been done before and learn from our mistakes. Before we go any further, we should mobilize our technologists and social scientists to conduct the appropriate studies/surveys/projections to establish the technology and equity bases of the programs needed to achieve the law’s purposes.

The details of programs, projects, budget personnel and schedules will have to be reflected in the Rice Industry Road Map which Congress tasked DA, NEDA, DBM and other relevant agencies to craft to restructure the delivery of government services under the new rice regime. Deadline is six months (180 days) from the enactment of the law.

So there is still time. No rush.

Dr. Emil Q. Javier is a Member of the National Academy of Science and Technology (NAST) and also Chair of the Coalition for Agriculture Modernization in the Philippines (CAMP).

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