The food challenge

I am starting to appreciate the nature of President Marcos’ management style. He does not seem to have the bloated ego of his predecessors that prevents him from correcting his course and effectively admitting mistakes.

His appointment of Usec Leo Sebastian to head the administration’s efforts on rice is very reassuring. First of all, he assigned Usec Leo to do what he has done best in his career: rice production.

Secondly, even without an official admission of his mistake in listening to Migz Zubiri on the sugar imports, the President effectively acknowledged the error that unnecessarily shamed a good professional like Usec Leo.

He has also absolved Usec Leo of any wrongdoing and has also authorized a larger volume of sugar importation. The President simply saw proof that Zubiri was dead wrong: the retail sugar price hovered at about P100/kilo the whole time indicating a supply shortage.

Usec Leo has been awarded the highest honor given to foreign individuals by Vietnam for his contribution to helping Vietnam avoid the impact of climate change on rice farms. Before Usec Leo’s work, Vietnam lost more than 200,000 hectares and one million metric tons of rice due to salinity intrusion as a result of El Niño.

Incidentally, since the President loves to travel, may I suggest a visit to Vietnam so he can see why Vietnam, a war-torn country not too long ago, overtook us in agriculture and industrial development. We have lessons we should learn, and most importantly, implement.

It is timely for the President to do what should have long been done to improve our country’s food production capacity. The recent 8.7 percent inflation, the highest in 14 years, looks bad. But more alarming is the impact on the poor.

Inflation for the bottom 30 percent income households zoomed to 9.7 percent. These are the people least able to afford rising food prices.

Food and non-alcoholic beverages went up 10.7  percent in January from 10.2 percent in December. Corn is at 27.2 percent; meat and others at 6.8 percent; fish at eight percent; milk, other dairy products and eggs at 14.1 percent. Sugar had constant inflation at 40 percent.

The numbers are telling us that we, as a country, have a major problem. We have an agricultural ecosystem that is not conducive to growing the food we need.

We have an agriculture department that is not organized to get their hands and feet dirty in the paddies, but simply to work in their airconditioned offices. Devolution of DA’s technical assistance function to LGUs made matters worse.

LGUs seem to have little interest in growing our food and are focused on raising money for politics. My colleague Cito Beltran wrote about a complaint he received that document official extortion at the barangay level in Batangas, but is likely happening elsewhere too.

“Last week, I was to renew my business permit and lo and behold, there is this new requirement from my town that I need to install fire prevention facilities amounting to more than P1 million from their accredited supplier for me to be given a business permit.

“As if this is not enough, my barangay now requires me to get a ‘Chick Acceptance Permit’ with a fee before they allow any chicks to enter my farm. I have called my friends about this and it seems like they are in the same boat as I am.

“Other farms were informed a day before the chicks were to arrive and had no choice but to immediately pay to avoid cancellation of chick arrival. Non-payment means no chicks and even revocation of the business permit.

“Aside from the annual business permits, LGU fees every harvest will amount to almost P20,000, excluding the associated expenses on the processing of these permits.”

No wonder egg prices are rising.

Clearly, the President must invest his political capital on fixing the ecosystem that is at the root of our problems. LGU extortion is one problem. Agrarian reform is another.

Acknowledging agrarian reform is a failure and scuttling it is a big step and hopefully, the President is up to it.

Former Agri Usec Fermin Adriano explains why fixing land reform is the first step:

“The average farm size in the Philippines is now barely one hectare. A farmer tilling land of that size, given his subsistence existence, will have little bargaining power vis-a-vis traders.”

Cooperatives? “More than half a century of promoting cooperatives by the government and civil society groups, padded with subsidies as incentives, has failed to make cooperatives a successful endeavor.”

There are other things that must be done requiring political capital from the President.

Dr. Adriano points out that “we need to recognize that we will never be self-sufficient in certain agricultural or food commodities because we do not possess a comparative production advantage.”

Food importation must be liberalized, but Dr. Adriano emphasized that revenues collected should be plowed back as support for commodities affected by the liberalization.

Then, as I have long suggested, we should encourage the more efficient corporate entities like San Miguel, URC, etc., to directly import agricultural and food commodities or directly buy them from farmers’ cooperatives and sell these at retail shops at agreed lower ceiling prices. San Miguel can sell produce at Petron’s gas stations and URC can use the network of Robinsons Supermarket.

As Dr Adriano observed, this will reduce the number of traders in the supply chain and pose real competition to the monopolistic inefficient entities at the local level.

If the corporates need to import, they have the facilities to import rice in bulk rather than in sacks, and directly transfer the rice from the ship to their humidity and temperature-controlled storage silos. Less handling, less costs. Proper storage means minimizing spoilage.

It is also easier to regulate corporates that are listed in the stock exchange than the unknown traders from Binondo.

Ah, so many ideas. So many things to do if we are only intelligent enough to stop doing the same old things that have not worked.

President Marcos has nothing to lose by trying new strategies and everything to gain in terms of redeemed reputation if he succeeds.

Boo Chanco’s email address is [email protected]. Follow him on Twitter @boochanco.