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Davao City, Philippines

Support rice farmers now

September 10, 2019 - Tuesday 4:09 AM by Allan Nawal

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I happen to have tried rice farming several times and, not being boastful, I have survived because I have a job that can support my fresh attempt whenever there was failure in cropping.

In my case, the failure in cropping occurred because of pests, lack of irrigation water, and other factors, such as El Niño. But I always managed to bounce back without resorting to loan sharks or rice traders who often slap high interest – up to 20 percent – because of my work as an editor of a national newspaper. I used part of my salary to buy fresh farm inputs and pay laborers.

However, my neighbor-farmers – some of whom lost twice in a row – had nothing to spare. 

So what they did was go to loan sharks or rice traders and secure a loan anew – even if they still had previous loans left unsettled. After all, these lenders are always open to borrowers – at a hefty price.

Loan sharks would lend up to 20 percent in interest while traders were willing to lend at a much lower rate. 

When harvest time comes, farmers would give 20 percent of their produce to loan sharks as a form of repayment. The calculation would be based on prevailing farm gate price. Sounds fair? Nah. A farmer who harvested 100 bags of palay (at about 60 kilograms each) would have to let go of 20 bags so he can repay his debt. Yes, usurious indeed because monetizing that at P17 per kilogram translates to about P40,000. The actual loan could be three quarters of that amount or less.

Rice traders on the other hand might just collect 12 to 15 percent for the principal money that a farmer owed but will find every reason to price the produce low. The catch is the farmer has no choice because under the loan agreement, the produce has to be delivered to the trader.

Repaying loans would always make the farmers in the losing end – more often than not, ending up with little money to sustain the family until the next harvest that there is nothing more left to buy fresh farm inputs such as seed, fertilizers, and pesticides. So the cycle continues – borrow, plant, harvest, and sell at outrageously low prices.

Experts were not remiss in reminding government that what our farmers needed are blanket subsidies. True, there are lending institutions that would cater to farmers, but only a few could avail themselves of their services because of the tedious documentation process. Some lenders also make additional requirements that it would appear they were not really eager to lend after all.

In 2014, Piedad F. Moya, an economist with the International Rice Research Institute, said something must be done to the costly rice production in the country.

The Philippine Rice Research Institute agreed that the rice production in the country was expensive. In 2017, PRRI said Filipino farmers had to spend P12 to harvest just one kilogram of palay. This meant that for every hectare, our farmers had to spend over P40,000 to be able to harvest 3.4 metric tons.

In contrast, Thailand, Vietnam, and Chinese farmers only spend about P6 per kilogram of harvest because their governments subsidize the rest – in addition to price control on seeds, fertilizers, pesticides, and irrigation.

To prevent the unfair distribution of subsidy, Asia's rice producing giants do not give farm inputs directly to the farmers. What they do is directly pay seed producers and fertilizer manufacturers and farmers can withdraw from them.

“In this way, every farmer benefits from the subsidy compared to giving seeds directly to them because it is difficult to track if the seeds are fairly distributed,” Moya said in 2014.

Even grain retailers saw the need to provide subsidy to our rice farmers, especially with the influx of imported rice due to the liberalization of the rice industry.

In the real sense, the liberalization only tends to benefit importers and will slowly kill the Filipino rice industry – unless the government starts subsidizing all of our farmers.

The reality, according to the Grain Retailers Confederation of the Philippines (Grecon), is that with low production cost in Thailand, Vietnam, and China, our farmers would always have a hard time to compete.

Grecon president James Magbanua said the reality is that the cost of producing rice in the country remains high, even double than that of farmers in Vietnam, Thailand, and China.

“Our worry is that this may discourage local farmers to plant later on, and the government should always be ready against the threats of climate change. We need to be able to produce our own rice,” he said in a press briefing in February.

“Even if we become productive, unless the production cost is lowered, farmers would still be on the losing end,” Samahang Industriya ng Agrikultura (Sinag) chair Rosendo So agreed.

Until the situation changes, our farmers are indeed headed down the abyss.

Subsidy now or we will surely see the day when we will be singing an elegy to the rice sector instead of belting out celebratory tunes.