IS PHL ready to scrap rice import quotas in 2017? (Business Mirror (Philippines))

LESS than two years from now, the Philippine government would again have to determine whether it would seek the extension of the quantitative restriction (QR) on rice. Since 1994, when the country decided to maintain rice-import caps, Manila had the QR extended twice-in 2004 and in 2012.

The Philippine government said the QR is vital to safeguard the livelihood of rice farmers. Rice is the predominant staple in the Philippines, and the Department of Agriculture (DA) warned that removing rice-import quotas would threaten the livelihood of 2.4 million farmers, who are small landholders.

The QR on rice had allowed the government to limit the entry of cheaper-rice imports, especially from neighboring Asian countries, such as Thailand and Vietnam. In maintaining it, the Philippines had to make concessions, such as raising the minimum access volume (MAV) of rice to 805,200 metric tons (MT) annually, from the previous 350,000 MT. Rice that falls within MAV is slapped a tariff of 35 percent, lower than the 40-percent tariff imposed on out-MAV imports.

An expert earlier said that the rationale behind the retention of quotas is to give farmers time to prepare for stiff competition that may be posed by cheaper rice from other countries. Studies, however, suggest that the Philippine rice sector may have to work double time to be able to go head-to-head with other countries.

One such study was commissioned by the DA. It was titled Benchmarking Philippine Rice Economy Relative to Major Rice-Producing Countries in Asia, and was undertaken in close collaboration with the International Rice Research Institute. The study covered six Asian rice-producing countries-the Philippines, China, India, Indonesia, Thailand and Vietnam.

The study found that, in terms of average yield in unmilled rice, the Philippines ranked fourth, with 6.34 metric tons (MT) per hectare. Vietnam recorded the highest yield at 6.81 MT; followed by Indonesia, with 6.67 MT; China, with 6.55 MT; and India, with 4.71 MT per hectare. Thailand, a major rice exporter, yielded an average of 5.69 MT per hectare.

The data used in the study were culled in the first six months of 2013. But in a national yield survey, the Philippines’s actual yield in 2012 reached only 3.84 per MT.

As for the use of rice seeds, China, Thailand and Vietnam did not use hybrid rice seeds. In the Philippines hybrid-rice seeds accounted for 27 percent of total rice output. Certified and registered seeds were extensively used in India, Thailand and the Philippines.

In terms of cost, rice seed was most expensive in Thailand, at P6,500 per hectare, while Indonesia registered the lowest, at P500 per hectare. The cost of seeds in India, Vietnam and China ranged from P2,500 to P3,500 per hectare.

Indonesia was most efficient in seed use at below 50 kilograms per hectare, followed by the Philippines, at 70 kg per hectare. Vietnam used up to 210 kg per hectare, while Thailand used 195 kg per hectare.

The study also found that Chinese farmers made use of more fertilizers-a combination of nitrogen, phosphate and potassium-in growing rice at 345 kg per hectare. Indonesia ranked second, with 274 kg per hectare, followed by Vietnam, with 212 kg per hectare.

Filipino farmers used 185 kg of fertilizers per hectare. India and Indonesia subsidized fertilizers used by their farmers.

Among the six countries, India and the Philippines used the least amount of pesticides. Spending for pesticides in the Philippines reached only P2,000 per hectare, compared to P6,500 per hectare in Indonesia and Vietnam.

In terms of labor-saving technology, young rice plants in China, Thailand and Vietnam were all seeded directly. In Indonesia all young rice plants were transplanted. In the Philippines 80 percent were transplanted, while 20 percent were directly seeded.

Labor cost was highest in India, at P27,872 per hectare, followed by the Philippines, at P22,477 per hectare. Labor cost was lowest in Thailand, at P7,091 per hectare, followed by Vietnam, at P8,820; China, P9,139; and India, P14,219.

In Indonesia per hectare of rice land required 94 man-days of work, which included land preparation, planting and harvest. India required 78 days; the Philippines, 69 days; and Vietnam, 23 days. Thailand was the most efficient as it required only 10 days.

In terms of power usage, China and Thailand consumed a little less than P10,000 per hectare, making the two countries the most mechanized. Filipino farmers spent P9,000 per hectare, followed by India, at P7,600; and Vietnam, P5,700. Indonesia was regarded as the least mechanized, as farmers consumed only P2,700 worth of energy per hectare.

The cost of rice production per hectare was highest in Indonesia, at P83,800, followed by China’s P80,800. Production cost in the Philippines reached P63,600 per hectare; Thailand, P51,900; and Vietnam, P45,500. India recorded the lowest cost, at P37,900.

The cost of producing a kilo of paddy rice was highest in Indonesia, at P12.52, followed by China, at P12.34; and the Philippines, at P10.03. Indonesia and the Philippines are net importers of rice.

Thailand, a rice exporter, spent P9.12 to produce a kilo of rice, while Vietnam recorded the lowest cost, at P6.69.

The study also found that Filipino rice farmers paid the highest amount of irrigation fee, at P2,536 per hectare, while farmers from four countries paid only a fifth of this cost. Chinese farmers got irrigation water for free.

In terms of selling price, Chinese farmers ranked first, as they sold paddy rice at an average of P21.60 per kilo, followed by Thai farmers, who sold rice at P17.63. In the Philippines farmers priced their crop at P1480 per kilo. Bangkok and Beijing have active government procurement programs, which encourage farmers to produce more.

In terms of earnings, Chinese farmers recorded the highest gross revenue at P141,452 and the highest net income at P60,645 per hectare. India recorded the lowest gross revenue, at P48,264, and the lowet net income, at P10,295. Farmers in the Philippines recorded a gross revenue of P93,902 and net income of P30,294 per hectare.

The authors of the benchmarking study concluded that in terms of yield in irrigated and intensely cultivated areas, the Philippines is not far behind from its neighbors. They said, however, that the Philippines needs to implement the necessary reforms to make the country more competitive in rice production.