WRECKING the Malthusian docks bridging overpopulation and poverty in a 1998 essay titled Too Many People?, economist Jacqueline Kasun unearthed the irony of the Philippine situation to wit: “the government of the Philippines relies on foreign aid to control population growth but protects monopolies which buy farmers’ outputs at artificially low prices, and sell them inputs at artificially high prices, causing widespread poverty.”
Indeed, Kasun, author of one of the most read population-control disclaimers The War Against Population: The Economics and Ideology of World Population Control, may have hit the nail right on its head.
In the Philippines, at least, wrong and outdated economic policies are at the root of the food supply problem.
As expected, many advocates of population control through artificial methods have taken the rice crisis as an opportunity to advance their agenda, without looking deeper into the real problems.
Shooting verbal arrows at the chimera of a bloated human demography has long been proven a foolish enterprise which a horde of supply-and-demand economic managers in the land continue to peddle amid the people’s casual ignorance.
The problem is indeed deeper than the convenient population boom resorted to by knee-jerk analysts. The fact is the government has allowed a 30-year-old policy of maintaining a bloated and inefficient state trading enterprise to wreak havoc on the farm sector and the sustainability of food production in the country.
The rice crisis has exposed the folly of the National Food Authority (NFA), which has not only failed in its mandate to stabilize rice prices and supply, but also made rice farming unprofitable in the Philippines.
Rather than support palay farmers with higher buying prices, the grains agency has long pursued a policy biased toward its monopoly — rice imports, where big money is to be made.
It not only discouraged farming which has kept domestic production stagnant, but it has exposed the country to the vagaries of the world market by having to import more and more rice every year instead of investing resources to boost domestic production.
Over the years, the cash-strapped agency’s palay purchases have been dwindling, as farmers would rather sell to commercial rice traders who will pay them good money, than to the NFA which for so many years kept support prices low. The irony is that the NFA had been willing to take out high-cost loans to pay for imports, and sell the stocks at a loss to rice traders in the guise of keeping market prices stable.
The truth is that the NFA hardly influences the market despite incurring massive losses and debt just to keep the price of the low grade rice it sells at P18.25 per kilogram. And it will not be able to do so now, when stopping the market is like stopping the waves from hitting the shore.
The bottomline is that the outdated rice policy has kept farmers poor, and allowed rice traders to make money out of the government’s (and ultimately the people’s) expense. The result is this rice crisis that poor Filipinos will have to bear.
In the future, these same citizens will have to suffer again because the NFA’s debts will come back to haunt it. Like any government corporation, it will have to be rescued at the expense of taxpayers, which means either raising taxes, incurring more debt, or cutting social services.
Because of tremendous losses from day-to-day operations and ballooning interest payments as well as other financial charges, the NFA has been the biggest losing state enterprise since 2005, according to the BusinessWorld, the respected business daily.
Last year, the NFA lost P48 billion and has yet to settle an P80 billion in loans. Because world rice prices have gone up and the NFA has no choice but to buy high and sell low because of its “mandate,” this year’s losses are expected to hit P100 billion, a figure even higher than the deficit of the national government itself.
According to University of the Philippines economist Benjamin Diokno, the NFA is supposed to buy 15 percent of palay output to guard the market against local monopolies. Meeting this objective however is wishful thinking because the NFA doesn’t have the sums to finance the purchase in the first place.
This was one of the starting point of the food shortage. Palay farmers have since been abandoning the mill to cultivate other profit-bearing crops, or worse, selling their plots to real estate developers.
The NFA also has a “happy-all” rule in its bidding process for rice imports, that is, by awarding a huge volume of imports at prices lower than the highest bid, government auditors have found.
In many cases, the winning bid was applicable only for a small volume. The rest of the stocks can be bought for practically any price the bidder might deem fit. The NFA’s lame justification is consideration for the bidders’ “buying capacity.”
The farce that is the NFA’s bidding scheme does not end there. Third parties simply obtain a special power of attorney or authorization letters from the “winning bidders” (read: the dummies) to claim the stocks out of the NFA warehouse. Government auditors suspect the rice stocks had been sold long before they left the NFA. We could only guess how much these traders have made before the grains reached the weighing scale of the our wet market tindera.
It’s about time to call for the junking of this Marcos-era policy, rather than blame people for being too many and too hungry.
In a Philippine Daily Inquirer report last April 22, Sen. Edgardo Angara, a former agriculture secretary, pointed to “under-investment” as the root of the country’s “weak” agriculture sector, urging the Senate to relieve the NFA of its trading operations for the grains agency to focus more on “implementing the rice and corn support policy which serves as the country’s buffer stock in case of emergency and calamity.”
This being said, the country need not be a Dreaming Joseph to see the signs.
