Rice price subsidy won't solve the problem

KIBITZER
Rod Kapunan
4/25-5/1/2011



Maybe the increase in the price of rice is something we could not avoid. But instead of finding the right solution to the problem, those in charge of preventing famine are looking for a scapegoat.

The scapegoat the National Food Authority has found is the steep increase in the prices of fuel products, like diesel. From an average price of P34 per liter in June 2010, the price now is at an average P47.10 per liter.

I am not saying the previous regime was better than the variety we now have. Their economic policies remain the same, and the only difference is the person in charge. Both dance to the cadence of the band leader for them to carry on the deception that the Filipino people are free and wholly responsible for what they are now – bedraggled, stupid and hungry.

If some came out with their formula of resolving the impasse of poverty, hunger and unemployment, they are palliative solutions because they are not really meant to help, but to boost their own political image as the chosen people of the languid Church we have.

In Connivance
Take the case of rice. When we joined the World Trade Organization, we promised to abide by its rules and resolution.

Unfortunately, one of those resolutions was for the scraping of all subsidies and the dismantling of all protectionism in agriculture to theoretically allow the free flow of cheap food to countries that could not otherwise feed their own people.

As Western economists would say, “why spend time and money in producing food that is costly and unsustainable, when others could produce them much cheaper for us?”

So, instead of encouraging our people to farm, we told them to leave the country and serve as slaves and even as mules abroad. With their meager earnings we tell them now to buy their own small house and lot, while the rich developers in connivance with the good-for-nothing government buy and develop abandoned farmlands to be converted into subdivisions, leisure parks, golf course, ecotourism parks, etc.

Back to Square One
As the hypocrites would often say, there is more money in that approach. The problem is the money earned is not in the hands of ordinary Filipinos who were not able to leave and escape the pangs of hunger here.

The money is mostly in the hands of the elite. So, it’s back to square one. The original problem of the farmers wanting to secure an incentive to produce the food we could eat has become a serious problem of losing both their lands to farm and their money to buy food.

One must bear it in mind that the NFA, headed by that image conscious former acolyte of Senator Lacson, Lito Banayo, cannot forever borrow from the government. The P129-billion debt which is expected to increase cannot be forever tolerated.

The NFA should be taught that it does not exist to serve the political ends of whoever is in charge, but as leverage to reduce the price of rice and other essential food items such as corn. Whether the subsidy is at P1 to P2 per kilo is beside the point just as it would not help solve the problem of food shortage.

One thing sure, for every sale of that imported commodity the government is losing heavily, while at the same time it serves as a disincentive to the remaining farmers. The reason is obvious: that the subsidy in price just to make them affordable is directly helping the farmers and traders exporting those rice at the price they are willing to sell.

Agricultural Subsidy
The hypocrites justified their decision to dismantle the subsidy by citing the comparative advantage theory of David Ricardo, which is to concentrate on what we could produce and sell at cheaper cost, which is to export our people as livestock! For that we removed the guarantee imposed by the then National Grains Authority to buy all the palay at subsidized price during bumper harvest as incentive to the farmers, and to sell the milled rice at floor price to make them affordable to the consumers.

That decision was thorough with the Department of Agriculture discontinuing the subsidy on fertilizers and hybrid rice seedlings.

Instead they revived the rice cartel to increase their price during periods of short supply through hoarding. They abrogated the authority of the NGA to buy, sell and distribute rice, and likewise ordered the National Irrigation Administration to discontinue the subsidy in the cost of irrigation by privatizing them.

Even the size of the farm lands were restructured such that the income of the average farmers today has fallen below the take home pay of the wage earners in commercial and industrial establishments resulting in many of them abandoning their farm lots.

In that one could see the whale of difference in the subsidy in the price from the subsidy in the production of rice. The WTO wants us to dismantle all forms of agricultural subsidy, but would not mind us subsidizing the high cost of imports, while allowing the West to maintain their subsidy in agriculture.

(rodkap@yahoo.com.ph)