Philippine food security: far behind

The author is currently the economic policy adviser for the Supreme National Economic Council of the Office of the Prime Minister of Cambodia.

The Human Development Report (HDR) 2002 – released by the United
Nations Development Programme on July 24, 2002 – says that the
Philippines’ performance in meeting the first “Millennium Development
Goal” of halving the proportion of people suffering from hunger to be
“far behind” its national targets.

This is absolutely mortifying.

Looking Back

In the ’60s and ’70s, the Philippines led many other countries in
meeting the food and nutrition needs of its people. The Philippines was
one of the early adopters of the green revolution technology, and also
invested heavily in supporting infrastructure – the “rice and roads”
programs under president Ferdinand Marcos.

Since the early 1980s, the Philippines has fallen behind, despite an
all-too-brief spurt in food security capacity in the late 1980s and
early 1990s.

HDR 2002 reports that the Philippines’ neighboring countries in the
ASEAN – Vietnam, Indonesia, Thailand, Cambodia, Myanmar – are all “on
track” in meeting their food security targets.

Only a decade ago, the people of Vietnam and Cambodia were on the brink of starvation.

Now Vietnam is one of the world’s top three exporters of rice – along with Thailand and the US.

The Philippines is the largest customer of Vietnam’s rice exports.

Sometimes the Philippines unknowingly imports Cambodian rice that has been exported through Vietnam.

Rice is expensive in the Philippines

Filipino consumers suffer rice prices that are double to triple those borne by Thai or Vietnamese households.
Similarly, Filipino rice farmers incur, on the average, costs of production double to triple that of Thai or Vietnamese farmers.

The gap in consumer price and producer cost between the Philippines on
the high side, and Thailand and Vietnam on the low side has been
growing since the mid-1980s.

In recent weeks, the retail price of regular-milled rice in the major
Manila wet markets was about P17 per kilo. In peso terms, for the same
quality of rice, Vietnamese households pay only P6 per kilo, while Thai
households pay P7.60 per kilo.

The cheapest rice in the Philippine market is regular-milled rice sold
at P14 per kilo by the NFA in its relatively few “rolling stores.” Yet
in the most depressed areas, the NFA’s stocks are not fully sold,
indicating that even P14 is expensive to the very poor!

Recent survey data show that on the average, it costs Filipino farmers
P7.45 to produce a kilo of paddy (unhusked rice). In comparison, as of
the mid-1990s, Filipino farmers spent P5.71 to produce a kilo of paddy
while Vietnamese farmers spent only P2.33 per kilo and Thai farmers
P4.30 per kilo.

Shortsighted agricultural policies

It looks like Filipino households and farmers will continue to be disadvantaged in prices and costs into the near future.

This is especially true given current policies and programs in the
Philippine rice sector and the current and anticipated levels of
agricultural productivity, given the inherent cycles of agricultural
production.

The Philippine government continues to cling to a policy that equates rice self-sufficiency with food security.

Thus, the government retains its monopoly of all international trade in
rice, exercised through the National Food Authority (NFA). This,
despite the clear evidence that the NFA has been wasteful and
ineffective, serving only very few farmers and consumers and losing
between P7 and P8 for each kilo of paddy it handles.

The result of these shortsighted agricultural policies is expensive
rice for consumers, distorted incentives for farmers and much waste of
scarce government resources.

Another result is rampant rice smuggling.

Price differentials are the root cause of smuggling. Rice prices in the
Philippines are so much higher than rice prices from exporting
countries like Vietnam and Thailand. It is particularly profitable to
smuggle rice into the country, despite the risks of being caught and
penalized. There is little scope for improving enforcement, given the
weakness of the enforcement mechanisms and institutions and the fact
that authorities have many other concerns to worry about – such as the
Abu Sayyaf.

Finally – the painful result of such policies is serious malnutrition – especially of the young.

Deepening hunger and malnutrition

Cross-country evidence shows that Filipinos eat much less rice when compared with its neighbors at similar income levels.

Filipinos consume 95 kilos of rice per capita per year. This comes to
about 260 grams of milled rice – or about three cups of milled rice per
day – or a cup of milled rice per meal.

In sharp contrast, the Vietnamese consume up to 165 kilos of rice per
capita per year, Cambodians 169 kilos, Indonesians 149 kilos, and the
citizens of Myanmar eat as much as 213 kilos of rice per capita per
year!

Even more telling than simply consumption are recent findings from nutrition surveys.

The nutritional status of children is tracked by the National Nutrition
Surveys (NNS) of the Food and Nutrition Research Institute. These
surveys indicate that the incidence of child malnutrition has been
quite high and even worsened between 1993 and 1998.

In 1993, some 8.4% of all children zero to six years old were
underweight, 5.6% were stunted, and 6.2% were wasted. However, the 1998
NNS found 9.3% of all children aged 0-5 to be underweight, and 7.2% to
be wasted.
A principal cause of malnutrition is low calorie intake. Even as early
as 1993 it was already determined that in general, Filipinos had access
to only 88% of their Recommended Daily Allowance (RDA) in caloric
intake.
The basic source of calories in the Filipino diet is rice, and thus low
calorie intake is associated with low rice consumption. In the last 10
years domestic rice retail prices have increased relatively rapidly,
undoubtedly leading to reduced consumption, especially among the
less-able family members.

Certainly, the high prices of rice have contributed to low levels of
consumption of rice and consequent worsening of nutritional status.

Welfare losses due to distortionary agricultural policies

A distinguishing feature of contemporary Thai and Vietnamese cost of
living is very cheap food – relative to the Philippines. This has
become increasingly evident since the 1980s as Vietnam and Thailand
adopted market-oriented economic policies and invested heavily in their
agriculture and rural sectors.

If Filipino households had access to rice at the same prices as
Vietnamese or Thai households, their welfare would be improved
significantly.

For illustrative purposes, a Filipino household of six (two adults and
four children) consumes 570 kilos of rice per year. At the prevailing
Philippine prices, this translates into a rice expenditure budget for
the Filipino family of about P10,000 per year. However, at Vietnamese
prices, the budget required is only P3,500, implying a savings of
P6,500 per year! Such savings can be allocated to more rice or more
food in general.

Good nutrition and good health, arising from access to food at
undistorted prices, whether or not produced in the Philippines. This is
the true measure of food security.

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