No RCEF funds allotted for farm mechanization

Published February 20, 2020, 12:00 AM

by manilabulletin_admin


A year since Rice Tariffication Law was implemented, no fund has been funneled into the country’s farm mechanization efforts, which would have helped Filipino rice farmers cope with the influx of imported rice by lowering their production cost.

As of February 18, nothing from Rice Competitiveness Enhancement Fund (RCEF) have been obligated and disbursed for the mechanization component of the Rice Tariffication Law (RTL) despite having ₱5-billion allotment, a data from the Department of Agriculture (DA) showed.

RCEF is where all the tariff from rice imports should go and is supposed to be injected with ₱10 billion annually from 2019 to 2024 or a period of six years as part of the implementation of RTL, which allowed the unimpeded entry of cheaper imported rice into the Philippines.

Out of the ₱10 billion, ₱5 billion is allotted to mechanization, ₱3 billion to seed distribution, ₱1 billion to provision of extension services, and ₱1 billion to credit.

So far, based on DA’s data, only ₱1.5 billion of the RCEF has been disbursed since last year and ₱4.50 billion has been obligated.

DA explained that as for mechanization, the review of the 944 farmers’ cooperatives and associations (FCA) that will initially benefit from RCEF is still ongoing, while their technology requirement is still being assessed.
It also said that the Special Allotment Release Order (SARO) for RCEF’s mechanization component for 2019 has lapsed.

Mechanization is the most crucial step in making farmers competitive because it can significantly lower their production cost.

Right now, the country’s farm mechanization level only stands at 2.1 horsepower per hectare, which means that 16 percent of the farmers’ total production go to waste due to post-harvest losses.

Because of this, the cost of producing rice in the Philippines remains high. To produce a kilo of rice, Filipino rice farmers have to spend ₱12.72, while it is only ₱6.22 per kilo in Vietnam and P8.86 per kilo in Thailand.

If mechanization does not happen soon, rice farmers will have to bear the same level of production cost, while the surge of cheaper, imported rice in the local market keeps pulling down price of locally produced palay.

During the fourth week of January, the farmgate price of palay went down by 19.2 percent to ₱15.49 per kilogram (/kg) from ₱19.73/kg during the same period last year, a data from the Philippine Statistics Authority (PSA) showed.

Meanwhile, the biggest actual disbursement under RCEF went to seed and credit distribution.

Of its ₱3-billion allotment, as much as ₱2.63 billion has been obligated for seed distribution while actual disbursement stood at ₱552.3 million. More than ₱500 million has already been disbursed for credit.

The seed distribution particularly covered 709 municipalities and distributed 1.2 million bags of high quality seeds.

Last week, as the government boasted of the declining retail price of rice, farmers suffering from low palay prices were also subsequently promised a significantly lower production cost though it will not happen anytime soon.

Agriculture Secretary William Dar said that with the help of RCEF, the cost of producing rice in the Philippines should significantly go down in the future.

To be exact, he wants it down by more than 60 percent from 12 per kilogram (/kg) to ₱4/kg by 2026.