Why is there a Rice Shortage in the Philippines?
Rice Shortage in the Philippines
Like its Asian neighbours, rice is the staple food in the Philippines. It is safe to say that Filipinos cannot live a day without rice – they have it for breakfast, lunch, and dinner. However, despite being a highly agricultural country, the Philippines imports rice from suppliers abroad, such as Vietnam and Thailand. It has even become more welcoming to more importers with the recent passing of the Rice Tariffication Law (RTL) in 2019.
What Are The Factors Causing A Shortage Of Rice?
Many would find it ridiculous to know that while the country produces rice locally, the Philippines ends up being heavily reliant on imports; in fact, it is the second largest importer of rice, next to China.
Depending on imports is indeed a key indicator of rice shortage. There are many reasons, however, as to why the Philippines resorts to sourcing rice from other countries.
As an archipelago, the Philippines has its rice producers scattered in different provinces, thus the uneven distribution of local produce. Central Luzon, which includes Pampanga and Tarlac, is regarded to be the biggest producer of rice in the country. It is followed by the northern provinces in Cagayan Valley and Ilocos.
Western Visayas is also a top producer of rice, followed by mainland Mindanao provinces such as Sultan Kudarat and SOCSKSARGEN.
While a tropical country, the environmental conditions in these provinces vary, and they affect the type of rice variant to plant and the amount of yield during harvest. Climate conditions such as typhoons also put a toll on agricultural production, including rice.
Historical context of rice shortage
Apart from geography and climate conditions, the current rice shortage in the Philippines can be considered a generational problem, given its historical backdrop.
The Green Revolution of the 1970s had a major impact on the rice shortage issues being faced by the country at present. Back then, President Ferdinand Marcos, through the Green Revolution (which was also adopted by other countries during this period), introduced high-yielding rice varieties to local farmers.
While initially a success, the Green Revolution failed by not being able to withstand the onslaught of strong storms that heavily damaged the agriculture sector. The flooding that drowned central plains and farmlands saw irrigation problems, which today’s farmers continue to cope with.
The succeeding administrations were likewise marred with rice shortage problems. The Corazon Aquino era faced droughts that affected local rice production, and the growing demand for rice was carried over to the Fidel Ramos administration.
While local rice production was able to slightly reduce demand during the Joseph Estrada administration, prices of rice still fluctuate because of competition from imports. The Gloria Arroyo regime meanwhile had to face the global rice shortage crisis in 2008, which also pulled up the prices of rice.
The Benigno Aquino administration also failed in its promise of making the Philippines self-sufficient on rice production. Despite being warned of a looming global crisis due to changing international food markets and weather conditions, he did not act accordingly to prevent the country from being affected by the said catastrophe. At the end, the country resorted to more imports in order to address consumer demand, with rice prices per kilo reaching up to a minimum of Php40 (similar to that in 2008).
Ongoing political tensions
Rice shortage is also a result of unresolved political tensions in different parts of the country. The ongoing armed conflict in Mindanao has put a toll on rice production and transportation. Instead of rice becoming a market staple in the region, it is often held hostage especially when there are military encounters and transportation operations are stopped.
Armed conflict is also present in other regions, particularly the rural and mountainous areas of Luzon and Visayas. These areas are mostly farmlands, and with community groups occupying their environs, marketing and distribution of rice and other agricultural produce also becomes problematic.
Slow infrastructural development
Another factor that contributes to rice shortage in the country is slow infrastructural development. While during the Marcos administration there was a heavy focus on constructing farm-to-market roads and inter-island bridges, many of these projects were put to a halt during the 1980s, beginning with lifting of martial law and the subsequent change of political leadership in 1986.
There was slow growth in infrastructure during the Aquino government onwards. At the same time, public infrastructure highly depended on the current national and local government leadership. A change of local government executive would mean new projects, and those left in the previous administration (including infrastructure) become subject to continuity.
Apart from problematic construction of public roads that link farms to markets, irrigation systems remain backward in Philippine farmlands. Rice farms are mostly situated in low-lying plains and valleys. Due to rapid urban development and the repurposing of agricultural lands, irrigation systems and water flow in farmlands become damaged. They fall short of water supply during the summer months, and become flooded during the monsoon season.
Restrictive trade and regulatory policies
Local undersupply of rice has been a given in the Philippines, even during the colonial period. Importation has been seen as a solution to address rice shortage in the country, even from as far back during the Spanish colonial period wherein rice is purchased from Indochina.
The country however, continues to experience rice shortage from time to time despite resorting to imports because of rent-seeking and restrictive trade and regulatory policies that hinder the Philippine rice sector from developing.
For many years, the National Food Authority (NFA) has been implementing quantitative restrictions that limits the volume of rice imports entering the Philippines. Quantitative restrictions place a higher tariff when importing outside volume restrictions, which back then was at 35%.
The problem with quantitative restrictions is that not only does it put limits on rice imports; it also bars the ability to stock rice during times of crisis. Rather than opening doors to accommodate suppliers amid crisis speculations, quantitative restrictions only made the flow of incoming supply more difficult, and which led to hoarding, illegal stockpiling, and smuggling. At the end, rice, regardless of quality or nutritional value, is sold at higher prices to consumers.
Opportunities for Rice Importers
With the passing and implementation of RTL, it goes to show that the Philippines’ key solution to address rice shortage is through importation. With quantitative restrictions already removed and replaced with tariffs, rice imports have been observed to grow significantly and the country has become among the world’s largest rice importers. Rice surplus has been reduced, and prices were stabilised.
One of the major advantages of the RTL became apparent during the pandemic, wherein palay production reached up to 19.44 million metric tons. It is expected that by the end of 2021, production yield would be at 20.4 million metric tons. It can be attributed that through easing up with the restrictions of rice importation, local farmers were able to have more freedom in cultivating and harvesting their produce, with imported rice supplementing what they could not cover while waiting for harvest.
Filipino consumers are also enjoying lower rice prices, with the average price per kilo of regular-milled rice at P34-36.00, unlike peaking at P40/kilo prior to RTL.
While rice shortage continues to be a problem in the Philippines, current laws have become friendlier to suppliers abroad. The recent signing of EO 135, i.e. Most Favored Nation tariff rates, aims to diversify suppliers of rice to the country. The Philippines hopes to come up with trade agreements from other countries for rice imports, since at present it relies heavily on Vietnam and Thailand.
If you are keen to import rice into the Philippines (wholesale and distribution), contact
Eunice Mae (CEO) +63 927 396 4140. Supplying Manila NCR and all Provinces in the Philippines. We can ship rice to any Port within the Philippines.
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