Philippines Rice Industry at Risk

Year 2018 was the best year for the local rice industry because the price of the staple food soar to its highest price in Philippine's history. Farmers saw a net income of over 150% on their produce and rice millers have increase its volume due to high demand, but this could be the last and the new rules now can be the end story for the industry.

President Duterte had signed recently the so called "Rice Tariffication Law" which lifted all the restriction in importing rice. Anyone can now buy rice from abroad without limitations which are much more cheaper than locally produce.

The effect immediately felt by local farmers, from buying price of 24 pesos/kg. of newly harvested rice, down now this year at only 14-15 pesos per kilo. This is only the beginning, still the pressure is in downward when the full blown importation come.

For context, the production cost in the Philippines to produce rice is around 10-12 pesos per kilogram and can go up to 14 pesos on dryer months, compare to Vietnam cost at 5 - 6 pesos per kg and Thailand at 8 - 9 pesos per kilogram which the imported rice came from.

The law actually overdue, The Philippines is signatory to free and open trade since 1995 and only demanded extensions to be able the local farmers be competitive in open trade. But because of too much corruption, neglect and lack of meaningful programs, local farmers are left behind unlike other countries which incentivised their farmers and build infrastructures that better serve them.
The law now instead impose 35% tariff on all imported rice and the collected fund will be use to help farmers mitigate losses on their production.

But I'm skeptical on this, and saw scenarios which is now a possibility.

1. Adding the 35% tariff, imported rice still much more cheaper than local rice.
2. Funds collected from these tax rarely goes to the benefits of farmers because of years of corruption on government side, and this fund can be allocated in others area not related to agriculture.
3. Profit from rice farming can be too small to sustain the much higher cost of living of today unless someone holds vast land, let say, 10 hectares.
   4.The goal of rice self-suffiency is over because farmers can be pressure now to sell their land and converted to non-agricultural means, to work abroad or find job in the cities.
4. Newly and small and big rice millers can be close because there is no point of "milling" rice now, when you can buy much cheaper milled rice from abroad which affect people and their families working in these businesses.
5. Big companies and elites can buy unrestricted rice from abroad and flood the market with cheap rice.
6. Many people now in countryside whose income derive from rice industry force to go to the cities to find job adding to congestion and worsen the problems in big cities.

Why the government pursue the law, and not extend it to the benefits of the industry.

Here's my thoughts.

1. Pressure from masses, there some hocus pocus, manipulation on the supply of rice last year of some powerful groups to create issues to serve them to the upcoming midterm election.

2. Indeed the price goes up and with the help of sensational media the blame game pointed to the President. Rallies demanding to lower the price launched by political rival and created issues.

3. The President blinks, because of upcoming election and he wants his political allies to win, by solving the issues and lower the price of rice.

The local rice industry looks dark now, and the long term effect for local rice farmers is pessimistic. Maybe the Philippines give up to be a agricultural powerhouse instead be more of an industrial country.

I can only hope for the better. :)