In the midst of declining farmgate prices of palay, local think tank Action for Economic Reforms (AER) reaffirms the urgency of the targeted implementation of the Rice Competitiveness Enhancement Program (RCEP).
In AER’s latest publication, titled “The Rice Industry Under the COVID Weather,” AER discussed some of the measures that would help manage the transition to competitive rice farmers and industry.
AER noted that while the government is implementing cash transfers and interest-free credit in the short-term, RCEP and other rice programs by the Department of Agriculture (DA) are equally urgent measures that must be sustained.
“Over the medium- and long-term, designing targeted implementation of the RCEP complemented with other DA rice programs should lower cost of production and increase farm productivity,” said AER.
Challenges wrought by organizational constraints, coupled with the pandemic restrictions, have resulted in delays in delivering the much-needed interventions.
“Mechanization is the laggard of the four RCEP components. This component started to show some movement just recently. PhilMech aims to complete the delivery funded by the remaining ?2 billion budget for 2019 by the end of September 2020. Around ?3 billion in the 2019 budget and ?5 billion in the 2020 budget allocation remains to be utilized,” it added.
AER also cautioned that pooling farm machineries alone is not enough. Extension services, farm consolidation, and strategic clustering are integral in achieving economies of scale. Without these complementary programs, AER believes that the government would be throwing good money after bad, with the mechanization fund taking the biggest chunk of the RCEP allocation.
AER, nonetheless, lauded PhilRice for its implementation of the RCEP-Seeds program despite the bottlenecks it encountered during the pandemic, saying that this component is the least problematic among the other components of RCEP. PhilRice earlier reported that it has launched its Binhi e-padala program to ease the delivery and distribution of seeds. This, according to AER, should be complemented by more aggressive support to local seed producers to shorten transport costs and delivery time.
Ten percent (10%) of the RCEF goes to the program’s credit facility, dubbed as Expanded Rice Credit Assistance (ERCA). The assigned state-owned banks, specifically LandBank and the Development Bank of the Philippines (DBP), as co-implementers, have an equal share of the annual ERCA allocation. While both banks take pride in their accomplishments from the previous year, AER pushes the banks to widen their coverage and provide a level playing field for all farmers applying for these cash loans.
“Although the requirements for availing the ERCA-RCEF were streamlined, long-indebted individual farmers and Farmer Cooperatives/Associations (FCAs) still cannot benefit from this credit facility due to bad credit standing. Accessibility remains to be a major hindrance in leveling the playing field for all stakeholders, especially among marginalized small farmers and fisherfolks in unbanked communities, despite several attempts by government to improve agricultural credit access,” AER argued.
Agriculture Secretary Dar reported that despite COVID-19, the Rice Extension Services component of the RCEP remains operational through school-on-the-air programs, online and radio-based information caravans, and ‘new normal’ technical briefings.
The government collected PhP 12.1 billion in import duties for the first year of RTL. The law stipulates that if import tariff collections exceed the PhP 10 billion threshold for RCEP in any given year of its implementation, Congress shall earmark these additional revenues for other interventions such as Rice Farmer Financial Assistance, Titling of Agricultural Rice Lands, Expanded Crop Insurance on Rice, and Crop Diversification Program.
“The decline in palay farmgate prices, as a consequence of the RTL, was not an unforeseen birth pain. Targeted safety nets, like direct cash transfers to farmers, should be readily available to compensate for income loss,” AER said.