Monday, June 8, 2009
RP has lost comparative advantage in rice says economist Arsenio Balisacan, who has now backtracked from his conclusion 26 years ago that the Philippines may become a net exporter of rice. The commodity is no longer the country’s comparative advantage.
“We should now look beyond rice as it only forms roughly 15 percent of agricultural output,” Balisacan told the BusinessMirror at the sidelines of the launch of four books one of which he wrote. The author of Securing Rice, Reducing Poverty wrote nearly three decades ago that rice, the staple food accounting for 25 percent of the food expenditures of the poorest 30 percent of the population, was a comparative advantage of the Philippines.
That is no longer the case today, said Balisacan, who is also director of the Southeast Asian Regional Center for Graduate Studies and Research in Agriculture.
Rice prices have been increasing, up to P40 a kilo on the average, according to government statisticians, and some economists say farmers are reaping from the windfall.
The spike in rice prices was aggravated by the importation of rice, according to Balisacan, as “the Philippines reacted nervously” to the price upsurge in the global commodities.
“When the country went to the world market, it added to the spike.” But Balisacan said the spike began two years ago when the price of oil and fossil fuel reached new highs.
It didn’t help that speculation also hit the commodity market and dragged rice into a regime of price volatility. Likewise, a drought in Australia and the biofuel movement, according to Balisacan, forced rice-producing countries like Indonesia, Thailand and Vietnam to place restrictions on their exports.
The situation should force the Philippines to take a long, hard look on the rice economy, according to Balisacan.
“We have other crops like fruits and vegetables that we haven’t yet exploited. The focus on rice, because of the political issue surrounding it, comes to the neglect of these other crops.”
He added: “Let’s not force it if rice is not our comparative advantage. Importation is not that bad.”
According to agriculture officials, the Philippines is expected to import nearly 2 million tons of rice this year.
In his book, Balisacan wrote that “the twin forces of rapid population growth and low rice- productivity growth meant that rice consumption increasingly outpaced rice production, thereby necessitating rice importation.”
He told the BusinessMirror he expects rice imports will be a sustained strategy if productivity rises and government subsidy continues for three years.
But Balisacan said the point here is who will ultimately benefit from the imports, as he says poverty in the rural areas will not likely change in the next two decades.
By Business Mirror
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