"Limiting the entry of foreign rice, sugar and whatever-else to the Philippine market is the wrong answer to a correct question."
"Limiting the entry of foreign rice, sugar and whatever-else to the Philippine market is the wrong answer to a correct question."
The current troubles in the sugar industry are providing further confirmation—if that were needed—of the general inefficiency of Philippine agriculture.
First there was the coconut industry. The entities representing the coconut farmers had long presented Congress and the Executive Department—DA (Department of Agriculture) and PCA (Philippine Coconut Authority) with a listing of coconut industry woes. The litany was led by government failure to provide coconut farmers with the inputs necessary to enable them to undertake the massive replanting needed to combat the competition from other lauric oils, especially palm oil.
Then came the rice industry. The rice-farmer groups have for weeks been bombarding Malacañang, Congress and the media with their demand for the repeal of the Rice Tariffication Act of 2019, which replaced with tariffs the decades-old import quotas. The rice farmers and their supporters have been complaining of falling domestic-rice prices in the wake of an alleged surge of imports.
Now comes the sugar industry. The producers of this country’s sugar—the planters and the millers—led by the group Tatak Kalamay, are up in arms against a Senate resolution that will allow the members of the Philippine Chamber of Agriculture and Food (PCAF) and the Philippine Food Producers and Exporters Organization (PFPEO) to freely—i.e., without need for SRA (Sugar Regulatory Administration)—import sugar. “The deregulated entry of subsidized sugar into the Philippine market will be disastrous to our industry,” Tatak Kalamay has claimed.
The current travails of the rice and sugar industries—arguably this country’s two most important agricultural industries—have brought into focus the entire concept of international exchange of goods and services. Why do the producers and consumers of one country import goods and services from another country? And why are a country’s producers of goods and services able to sell their products to another country?
The answer may be that an exported product or service is unavailable in the importing country. But in the great majority of cases the answer is price-competitiveness. People buy goods and services from another country because, generally, the other country’s goods and services are less expensive; on the other hand, a country’s producer of goods and services are able to penetrate the markets of other countries because, generally, they are able to out-compete, price-wise, the producers of the same goods and services in the importing country.
It boils down to price-competitiveness. If the rice traders have been importing a lot of rice since the effectivity of the Rice Tarrification Act—making the Philippines the No. 1 rice importer in 2019, according to the US Department of Agriculture—it is because of their perception that they can out-compete this country’s rice farmers. And if the members of PCAF and PFPEO want to import their sugar requirements from countries like Thailand and Taiwan, it is because of their production costs, with resulting product affordability.
Limiting the entry of foreign rice, sugar and whatever-else to the Philippine market is the wrong answer to a correct question. Repealing the Rice Tariffication Act and making SRA less accommodating toward import requests is akin to the proverbial putting-a-finger-in-the-dike approach to problems. Or like a latter-day King Canute ordering the rollback of the tide.
Except for a brief period in the late 1960s, when the government went all-out to achieve self-sufficiency and an exportable surplus, the Philippine rice industry has received nothing but lip service and pious promises from the politicians in Congress and the Executive Department. Inputs like credit, irrigation and marketing support have been consistently short. Little wonder that the Thais, Vietnamese and Taiwanese can produce mankind’s No. 1 staple at much less cost than the Filipino rice farmer.
Once one of the world’s leading sugar industries, the Philippine sugar industry has been in steady decline since the expiry of the Laurel-Langley Agreement, which gave the Philippines a preferential position—a whopping market quota at US market prices—for 20 years. Unfortunately, the sugar industry, which is situated mainly in the islands of Negros and Panay, did not take full advantage of Laurel-Langley to modernize its facilities and upgrade its practices for the decades ahead. Again, little wonder that the beverage producers and food processors want to buy foreign sugar.
The rice and sugar planters and millers need the government’s all-out help. But withdrawal of the Rice Tariffication Act and SRA tightening of sugar imports are not the answer. The answer is for the government to make it possible for Filipino rice and sugar farmers to produce competitively.