RICE: Importation
On the demand side:
Statistically, the Filipinos consume about 32,000 metric tons per day. Annually, therefore, the Philippines' rice requirement is 11.68 million metric tons (derived by multiplying 32,000 metric tons by 365 days).
On the supply side:
According to published reports, Philippine rice production is about 15.33 million metric tons in 2006 and 16.24 million metric tons for 2007.
Analysis:
If we produce about 15 to 16 million metric tons and we require some 11 and a half million metrics tons, then we have what is called a production surplus of about 5 million metric tons (16-11=5).
Conclusion:
There is no need to import rice.
Well...not quite. As I've indicated in one of my earlier posts, the rice issue is a little bit more complicated.
Other Issues:
- Post-harvest losses
The estimated rough rice or palay to be harvested goes through a series of what is called post-harvest processing, such as the harvesting itself, threshing (a process of separating the rice grains from the rice stalks), called "ginik" in the bicol dialect, winnowing or the process of pouring the grains from a certain height such that the blowing wind blows away the light materials separating the full from the empty grain. It will then be dried usually by laying the grains in a concrete pavement or the famous roadside palay drying method. (NOTE: All these can be done either manually or mechanically, and in most cases, manually). Up to this point, and immediately before milling the dried rough rice, published estimates of up to thirty percent (30%) of the volume of the total estimated harvest is lost (cumulatively) through all these stages of post-harvest process, which is collectively called, post-harvest losses.
Arithmetically, this means about 4.8 million metric tons are lost or go to waste. So, that means only about 11.2 million metric tons is the effective volume of rough rice or palay that is harvested. But prior to it's being sold to the market and eventually to the consumers' tables, the rough rice still has to go through one more important and necessary process called milling, where the rough rice cover or husk is removed, and the resulting brown rice is polished to produce the white rice that we are all familiar with. Milling, in effect, is the process of transforming the grains into its edible form since the husk covering it is not edible by humans. By volume, the husk is about 10% of the grain.
So, after milling, the resulting white rice (assuming we mill all of the 11.2 million through the same mill or mills with the same efficiency), is about 10.08 million metric tons of table-ready rice. One possible measure to reduce, if not totally eliminate post-harvest losses, is the adoption and wider utilization of more efficient mechanical post-harvest processing equipment, such as threshers, dryers, etc.
- Seasonal Variations
The seasonal variation in the Philippines is basically based on the rainfall pattern or conditions. The wet season is characterized by heavy rainfall (starting about August or September), while the dry season is characterized by low rainfall volume (December to May or June). In the rice industry, this is referred to as lean or surplus periods. Since water is a main factor in rice production, about 70 to 80% of harvest comes from the wet season, while the remaining 20-30% comes from the dry season. Under this conditions, supply of rice for the leans months may not be enough to sustain rice demand, while the opposite may happen during the wet season. This is indicated usually by higher rice prices during the dry season compared to prices during the wet season. This challenge of an uneven supply availability, and the unstable price conditions can be met by providing more, and rehabilitating many other existing, irrigation facilities so that water can be made available evenly throughout the year.
- Farm to market roads
In spite of the supposed continuous money being poured into road infrastructure build-up and development, there still remains a great requirement for the establishment of farm-to-market roads. The current state of these roads do not allow for an easy and quick transfer of the rice produced in from the production area to the consumption area. And in some cases where such roads are built, the construction is so sub-standard that they fall in disrepair easily making transport sometimes even more difficult.
- Multi-layered marketing channel
Given the state of farm-to-market roads, and the non or low-availability of storage and post-harvest processing equipment, the farmer is forced to sell his produce to whoever comes to him first even if the price is not commensurate with his "investment," i.e. labor, fertilizer, seeds, pesticides, etc. The buyers (or the market), is also replete with a number of middlemen, who, while vital to the over-all marketing chain, tries to maximize their profit, either by offering low prices to the farmers or selling at high prices to the next level of buyers, or both. The multi-layered marketing channel is composed of the assembler (the first person who gets in touch with the farmer), then the "assembled" produce is sold to a "viajero" or a mobile buyer who then sells the stocks to the wholesaler, usually located in the towns. These wholesalers are then the source of the stocks by the rice millers who are oftentimes also the source of rice by the retailers who are found in the "palengkes," who in turn are the source of the consumers. Each of these levels add to the eventual retail price that the consumer will have to shoulder. Collectively, the players in this multi-layered marketing channel is what can be called the "private" commercial trade sector. When the rice stocks are in the hands of these private commercial traders, they are in a position to influence the movement of rice prices by controlling the volume they release to the market.
The above-mentioned factors, particularly that of post-harvest losses, are just some of those that so negatively impact on the total supply of rice in the market, such that in the end there's still a need to import additional volume from other rice producing countries. And under the current situation, and under current rice import laws, it is only government, through its rice marketing arm - the NFA - which can undertake rice imports. This will be so until and unless the law, which has been passed in 1972 during the martial law period, is amended.
NEXT: Corruption and other schemes
Statistically, the Filipinos consume about 32,000 metric tons per day. Annually, therefore, the Philippines' rice requirement is 11.68 million metric tons (derived by multiplying 32,000 metric tons by 365 days).
On the supply side:
According to published reports, Philippine rice production is about 15.33 million metric tons in 2006 and 16.24 million metric tons for 2007.
Analysis:
If we produce about 15 to 16 million metric tons and we require some 11 and a half million metrics tons, then we have what is called a production surplus of about 5 million metric tons (16-11=5).
Conclusion:
There is no need to import rice.
Well...not quite. As I've indicated in one of my earlier posts, the rice issue is a little bit more complicated.
Other Issues:
- Post-harvest losses
The estimated rough rice or palay to be harvested goes through a series of what is called post-harvest processing, such as the harvesting itself, threshing (a process of separating the rice grains from the rice stalks), called "ginik" in the bicol dialect, winnowing or the process of pouring the grains from a certain height such that the blowing wind blows away the light materials separating the full from the empty grain. It will then be dried usually by laying the grains in a concrete pavement or the famous roadside palay drying method. (NOTE: All these can be done either manually or mechanically, and in most cases, manually). Up to this point, and immediately before milling the dried rough rice, published estimates of up to thirty percent (30%) of the volume of the total estimated harvest is lost (cumulatively) through all these stages of post-harvest process, which is collectively called, post-harvest losses.
Arithmetically, this means about 4.8 million metric tons are lost or go to waste. So, that means only about 11.2 million metric tons is the effective volume of rough rice or palay that is harvested. But prior to it's being sold to the market and eventually to the consumers' tables, the rough rice still has to go through one more important and necessary process called milling, where the rough rice cover or husk is removed, and the resulting brown rice is polished to produce the white rice that we are all familiar with. Milling, in effect, is the process of transforming the grains into its edible form since the husk covering it is not edible by humans. By volume, the husk is about 10% of the grain.
So, after milling, the resulting white rice (assuming we mill all of the 11.2 million through the same mill or mills with the same efficiency), is about 10.08 million metric tons of table-ready rice. One possible measure to reduce, if not totally eliminate post-harvest losses, is the adoption and wider utilization of more efficient mechanical post-harvest processing equipment, such as threshers, dryers, etc.
- Seasonal Variations
The seasonal variation in the Philippines is basically based on the rainfall pattern or conditions. The wet season is characterized by heavy rainfall (starting about August or September), while the dry season is characterized by low rainfall volume (December to May or June). In the rice industry, this is referred to as lean or surplus periods. Since water is a main factor in rice production, about 70 to 80% of harvest comes from the wet season, while the remaining 20-30% comes from the dry season. Under this conditions, supply of rice for the leans months may not be enough to sustain rice demand, while the opposite may happen during the wet season. This is indicated usually by higher rice prices during the dry season compared to prices during the wet season. This challenge of an uneven supply availability, and the unstable price conditions can be met by providing more, and rehabilitating many other existing, irrigation facilities so that water can be made available evenly throughout the year.
- Farm to market roads
In spite of the supposed continuous money being poured into road infrastructure build-up and development, there still remains a great requirement for the establishment of farm-to-market roads. The current state of these roads do not allow for an easy and quick transfer of the rice produced in from the production area to the consumption area. And in some cases where such roads are built, the construction is so sub-standard that they fall in disrepair easily making transport sometimes even more difficult.
- Multi-layered marketing channel
Given the state of farm-to-market roads, and the non or low-availability of storage and post-harvest processing equipment, the farmer is forced to sell his produce to whoever comes to him first even if the price is not commensurate with his "investment," i.e. labor, fertilizer, seeds, pesticides, etc. The buyers (or the market), is also replete with a number of middlemen, who, while vital to the over-all marketing chain, tries to maximize their profit, either by offering low prices to the farmers or selling at high prices to the next level of buyers, or both. The multi-layered marketing channel is composed of the assembler (the first person who gets in touch with the farmer), then the "assembled" produce is sold to a "viajero" or a mobile buyer who then sells the stocks to the wholesaler, usually located in the towns. These wholesalers are then the source of the stocks by the rice millers who are oftentimes also the source of rice by the retailers who are found in the "palengkes," who in turn are the source of the consumers. Each of these levels add to the eventual retail price that the consumer will have to shoulder. Collectively, the players in this multi-layered marketing channel is what can be called the "private" commercial trade sector. When the rice stocks are in the hands of these private commercial traders, they are in a position to influence the movement of rice prices by controlling the volume they release to the market.
The above-mentioned factors, particularly that of post-harvest losses, are just some of those that so negatively impact on the total supply of rice in the market, such that in the end there's still a need to import additional volume from other rice producing countries. And under the current situation, and under current rice import laws, it is only government, through its rice marketing arm - the NFA - which can undertake rice imports. This will be so until and unless the law, which has been passed in 1972 during the martial law period, is amended.
NEXT: Corruption and other schemes
"about 10.08 million metric tons of table-ready rice" ------> kulang na nga...
ReplyDelete"The multi-layered marketing channel is composed of the assembler (the first person who gets in touch with the farmer), then the "assembled" produce is sold to a "viajero" or a mobile buyer who then sells the stocks to the wholesaler, usually located in the towns. These wholesalers are then the source of the stocks by the rice millers who are oftentimes also the source of rice by the retailers who are found in the "palengkes," who in turn are the source of the consumers. Each of these levels add to the eventual retail price that the consumer will have to shoulder."-------------> eto ang bummer...ahahay!!
tapos Chito, may la ninya at el ninyo pa...which aggravate the situation...i am sure we will find a way to maximize our potentials and to make things better...
ReplyDeleteRight, MeAnne. Climate is indeed another big factor that impacts on our rice production. The Climate Factor will be subject of another blog. Let me just say for now that the current climate change has really also changed the weather pattern around the globe and countries which have not previously been so negatively affected by weather are now affected differently.
ReplyDeletei just got into your rice posts tonight. this interests me lalo since pamilya ng magsasaka sa ilocos norte ang father side ko. im staying tuned for the next installment
ReplyDeleteThe way I hear it, some traders are taking advantage of the scarcity scare and jack up the price even there is enough supplies. They do that with sugar, flour, cement, etc.
ReplyDeleteThis is very educational, Chito. A well written thesis from the viewpoint of one who knows. Thank you for sharing this blog with us.
ReplyDeleteHi Mags. A well-written thesis it is not. It's more like a random ramblings of a middle-aged man whose idealism has given way to realism. Every day is really a struggle for me, i.e. to succumb or not to cynicism or bitterness. And I tell you, it's pulling me quicker and quicker to way beyond my biological age. But it surely helps and is somewhat therapeutic for me when I write about it.
ReplyDeleteA solution to eliminate multi-layered marketing channels is the creation of a Marketing Board for rice, similar to Marketing Boards in Canada and the US. The Marketing Board will be taking the role of the Assembler, Viajero, wholesaler. Price is controlled and set by the Marketing Board. Farmers are also given subsidies to reduce their operating costs, or when natural disasters affect production.
ReplyDeleteMarketing Boards might not work well in the Philippines because of massive corruption.
ReplyDeleteMarketing Boards might not work well in the Philippines because of massive corruption.
ReplyDeleteHi Hugz. This is really the story, be it in the sugar, flour or cement business. But these "some traders" are faceless and nameless and difficult to trace or get reaction from. Besides they are also big patrons or spenders when it comes to media advertisements. On the other hand, the government (and the specific agency concerned), are highly visible and have very little or limited means of counteracting negative publicity. So it is quite obvious as to who gets to be crucified.
ReplyDeleteBakit nga ba laganap ang multi-layered marketing dito to cover even basic commodities, and it seems (at least to me) to be well tolerated? Is it because we have the tendency to accommodate anyone who comes to us with a sad story (the usual--kailangan kong kumita para sa pamilya) to tell and so we give them a chance to make a cut?
ReplyDeletepati sa pagtransport, may "unofficial" middlemen pa--yung mga tinatawag nilang nagbuburike ng rice/grains.
Can anything be done to lessen post harvest loses? Will these measures be cost effective? Will cooperatives work for the farmers to get them the right price for their produce? Can production be increased to compensate for the post harvest loses (if this cannot be reduced)? Improving the method of weeding out retailers who are not in the business anymore so they cannot transact with NFA. How about NFA rice outlets that sell rice at cost to the public (with limit as to how many kilos they can buy to prevent hoarding)? I know this competes directly with the private sector but this is a way of helping minimize the artificial increase in price of rice. Ovedrall, it is tough unless the culture can be overhauled. Where do we begin? Individually. Tough!
ReplyDeleteIs NFA the former NARIC?
ReplyDeleteHello Padi. The quick answer to your question is - Yes. Something indeed can be done. As a matter of fact measures to reduce post-harvest losses have been the subject of many research projects locally and internationally. But I will have to devote more than one blog to give you more details. Thanks for
ReplyDeleteHi BNK. The NFA or National Food Authority is actually the National Grains Authority (NGA) which was created the first week of martial law (Sep. 26, 1972). This (NGA) was the entity created as a result of the merger of Rice and Corn Administration (RCA) and RICOB or the Rice and Corn Board, both under President Macapagal. RCA did the marketing functions, i.e. importation and distribution, while RICOB was the regulatory body. The NGA absorbed both the regulatory and marketing functions. It (NGA) was renamed NFA in 1981 when it's commodity coverage was expanded (from just rice and corn) to include other grains such as wheat, soybeans, sorghum and other food commodities, such as cooking oil, raw eggs, some vegetables and meat, etc. By 1985, then President Marcos, upon the instance of the World Bank, returned to rice and corn, the commodity coverage but the name NFA was retained. NARIC or National Rice and Corn Commission was the precursor of all of these agencies and was created during the time of President Quezon and remained as the government's rice agency until RCA and RICOB were created under Pres. Macapagal. During the Japanese occupation, NARIC was replaced by BIBA or Bigasang Bayan (and reverted back to NARIC after liberation from Japan). So, in this sense, NFA can be said to be the former NARIC.
ReplyDeleteYou either have a long memory or good on your history lessons to be able to remember NARIC.
Here's a link with some more details: http://www.nfa.gov.ph/nfa2.html
Hi Sally. This commodity flow (multi-layered marketing), is one symptom of what's wrong with our rice industry. Maybe it's easier to analyze it if we pose a question, i.e. why can't the farmer/producer sell directly to the consumer? Well, to answer this questions, we have to consider a number of issues, among which are the availability of farm-to-market roads, the availability of post-harvest facilities and equipment, availability and access to credit, and access to market information. Simply put, maraming dapat daanan o gawin para mai-benta ng magsasaka ang kanyang palay at ang mga pangangailangang ito ay sadyang wala sa kanya. That's why the gap between the farmer and the consumer is filled by what are called "middlemen."
ReplyDeleteI have an excellent memory, and quite photographic too. Got it from my Mom. Thanks for the brief lesson on the evolution of the NFA.
ReplyDeleteI have an excellent memory, and quite photographic too. Got it from my Mom. Thanks for the brief lesson on the evolution of the NFA.
ReplyDeletepadi,why is the philippines have to import when in fact it was once a rice producing country? i am just curious? and so as with sugar?
ReplyDeletePadi, first of all let me just clarify that we are still a rice producing country. It's just that our production output has increased at a very low rate compared to the rate of increase in our population. The Philippines has one of the highest population increase in Asia but it's food production capacity has lagged behind. Gulpihon na talagang ang mga tawo padi. So ang simbag kan gobierno is to import rice from other countries. By the way, we have been importing rice traditionally, i.e. even before the 70s. There was a slight respite from this during the so-called Green Revolution (remember Masagana 99?). But since then, population pressure, land conversion, high cost of production, as well as continued losses due to continued use of antiquated and inefficient post-harvest facilities, have combined to significantly reduce our production capacity, hence we have an annual deficit which is being resolved through importation. By the way, kumusta ko na lang saindo diyan gabos lalo na ki Anne.
ReplyDeletePadi, I'm still not ready to charge all these rice problems to cultural factors/causes. But I agree with you that culture is a key factor.To illustrate, let me use the example of farmers' cooperatives. The idea that farmers will have a better chance in the brutal market competition, they have to organize. And the better organized they are, the better position they can get in the market. However, in reality, our farmers remain organized or assumes a semblance of organization only until the election and induction of officers. And worse, it is usually these officers or board directors who benefit primarily from the cooperative's services and/or benefits. And worse still is that these officers disappear after they've squeezed the coops of the last centavo.
ReplyDeletepadi, does importation solves the problem? costwise?
ReplyDeletePading Raul, a quick answer: if what you mean is whether the Filipino consumer will spend less pesos for rice (thru importation) vis-a-vis buying locally produced rice, the answer is yes. Because the cost of production of rice is higher than the imported one, i.e. Thai rice (or Vietnam rice for that matter) is produced at around seven pesos per kilo while Philippine rice cost about ten pesos per kilo, mainly because of the high cost of fertilizers and pesticides which is mainly imported as well.
ReplyDeletePadi,
ReplyDeleteWhen I said it's tough unless culture can be overhauled, it wasn't just the rice problem I was thinking of. It's the pervading culture of "when I can, I'll take whatever for myself". It's what's being practiced by people from the highest position of the land and by the poorest people, each with their own reasons, be it greed or for survival. How to effect the change I cannot tell you but it might take a "Lee Kwan Yu" type to get us out of the rut. Do we have such a person? Or will that person initially promise to be such only to end up wanting to stay forever and allowing patronage and corruption just to stay in power?
This is just my $0.02 cents worth of opinion: I think among the Pinoy leaders past and present, only Marcos had the makings of a Lee Kwan Yu. Unfortunately...well. you know the story.
ReplyDeleteYes, indeed!! Unfortunately....
ReplyDelete