The future of food security

Eugene L. Tecson
The future of food security
Without the price support for farmers, local rice production will become less profitable and will result in the bankruptcy of farmers

“8 million natives, more or less, inhabit the Philippines; and of this vast aggregate the principal, almost the only sustenance, morning, noon, and eve is rice… And yet, in the Philippine Archipelago, scarcity even is of rare occurrence, famine unknown; in the worst of years hardly a sack of grain has to be imported; in average seasons the land has enough for her children; all swarming as they are, and to spare.”W. Gifford Palgrave, Country Life in Philippines in 1876-1878

The passage depicts a time in Philippine history when people were still able to sustain their own food requirements and were not dependent on foreign sources of food. Except for periods of food shortages when government had to tap from the global food supply, the country on the average has a 96% food self-sufficiency rate.

But if prevailing agricultural trade policies were to be followed, by the end of 2017, the Philippines will have a food security regime based on free trade. Indeed, consumers will have access to highly subsidized and cheaper rice imports. This will come as a result of the removal of the Quantitative Restrictions (QRs) on rice and the sole authority of the National Food Authority (NFA) to import rice in compliance with the government’s commitments to the World Trade Organization.

For the World Bank and the Food and Agriculture Organization (FAO), which recently presented the results of the mid-term evaluation of the government’s Food Staples Sufficiency Program (FSSP), simple adherence to agricultural trade liberalization to address food security may not be the way to go.

While they understand that free trade and food self-sufficiency have been a subject of academic and political comments, they find that there is still a need to strike a balance between acceptable levels of sufficiency, subsidies, and trade barriers. It is in this context that they pursued the program’s evaluation.

The Food Staples Sufficiency Program

The FSSP is the government’s centerpiece food security program that aims to achieve self-sufficiency in food staples. Based on the Food Staples Self-Sufficiency Roadmap 2011-2016, the program particularly seeks to produce at least 21.11 and 22.49 million metric tons of palay by the end of 2013 and 2016, respectively. They also want to maintain per capita rice consumption at 120 kilograms per year, and increase production of non-rice staples by 3.5% annually. In terms of rice sufficiency level, the DA aims to increase the level of output from 80.2% in 2010 to 100% by 2013.

FOR THE FUTURE. What will the future of food security look like? File photo from AFP

Food staples refer to rice and other staples, including white corn, root crops, and plantain. Rice is the country’s most important food, which is being consumed by 85% of the entire population, while other staples are consumed in significant quantities in certain parts of the country.

The targets set under the FSSP were to be accomplished by raising farm productivity and competitiveness, enhancing economic incentives and enabling mechanisms such as price support, domestic procurement, credit provision and crop insurance for small farmers, and managing food staples consumption by diversifying food consumption and reducing food wastage.

FSSP Assessment

According to South Centre-Geneva Senior Advisor on Finance and Development and Assessment Team Leader Dr Manuel Montes, who made the study for World Bank and FAO, the implementation of FSSP from 2010 to 2013 was relatively successful.

While the targets set in terms of rice production seemed ambitious, the program still managed to record a rapid increase in output. Overall, the program was able to produce 18.44 million metric tons of rice out of the targeted 21.11 million metric tons as of 2013.

Historically, the country’s rice fields for all palay (i.e., irrigated and rainfed) were able to yield an average of only 3.9 metric tons per hectare. But under FSSP, yield per hectare for all palay rose to as much as 4.23 metric tons per hectare by 2013.

At the same time, Montes noted that farm incomes increase by 31% from P12,800 ($283)* per cropping per hectare to P16,300 ($369) per cropping per hectare. This means that the targeted beneficiaries – small farmers who were members of Irrigators Associations – had greater purchasing power and reduced poverty incidence.

In addition, FSSP was responsible for nearly 200,000-hectare expansion of irrigated agricultural lands.

Lastly, the program, through the Land Bank of the Philippines, was able to provide production capital to almost 6,000 small rice producers with an allocation of P464,500,000 ($10,288,962). This enabled the rice farmers to purchase farm inputs such as seeds, fertilizers, and farm equipment to help them in the planting of rice.

Intervene or liberalize?

From a purely consumer standpoint, and ceteris paribus, or all things being equal, food security in a liberalized trade regime is beneficial. The World Bank/FAO study projects that retail price of rice will be reduced from P30 ($.60) to P17 ($.38) per kilo if QRs and rice import regulation are removed.

But this does not take into account how much rice needs to be imported on a yearly basis and how this would affect small rice farmers.

Montes’ research projected that, along with the reduction in retail price of rice, the country will need to import 5 million metric tons of rice annually to offset the underproduction of rice production once free trade happens. “This is simply unsustainable, since the most that the country has been able to import in a single year is two million metric tons,” he explained.

At the same time, Montes expressed concern that the domestic rice industry may collapse if farmgate prices of rice go down from P16 ($35) per kilo to P7.7 ($.17) per kilo, as what may happen in 2017. He explained, “Without the price support for farmers, local rice production will become less profitable and will result in the bankruptcy of farmers.”

On the other hand, Montes clarified that worsening poverty in 2014 was not due to QRs, FSSP, or the failure of the National Food Authority (NFA) to import rice. On the contrary, he said that it was because of the recommendation of the NFA Council (composed of Department of Finance, NEDA, and BSP) to let the Philippine International Trading Corporation import rice (which was not authorized to do so) that resulted in the delay in the importation of rice, and consequently, the rise in food prices and worsened poverty situation.

Members of Montes’ team are also wary of the adverse impact of rice trade liberalization on landless farmers and farm workers. They explained that unfortunately, FSSP cannot absorb these dispossessions of agricultural laborers. With the advent of free trade and agricultural modernization, the evaluation team recommended that additional safety nets should be provided for agricultural workers who may be displaced.

Reconciling food self-sufficiency and agricultural trade

The assessment made by the World Bank/FAO midterm evaluation of FSSP shows that food self-sufficiency and agricultural trade does not have to be a zero-sum game. After all, food self-sufficiency does not always mean zero importation. What is important is to put in context that what needs to be done to prepare the small farmers and the local rice sector with the impending opening of the sector to global rice trade.

Agriculture Undersecretary for Planning Segfredo Serrano explained that with the removal of QRs and NFA authority to import, there is a need to prepare the small farmers to become more productive and competitive. In particular, he said that the production cost of rice farmers should be reduced to maintain the profitability of rice production. Addressing this concern, he said, is just as important as aiming for food self-sufficiency.

He also suggested that a core of domestic producers should be developed to maintain the supply of rice and prevent huge importations.

Serrano pointed out that selective rice trade liberalization is still the policy that involves government importation of rice only when needed. He also clarified that it is not sufficiency at all costs but optimum sufficiency where interventions that will not promote the exploitation of natural resources will be adopted.

“Given the thinness of global supply of rice, reliance on importation is not good,” said Serrano.

Lastly, Serrano recommended that climate change adaptation measures must be put in place to reduce the risks of rice production and trade from natural disasters.

For his part, Montes said that the Philippine government plays a key role in ensuring food self-sufficiency and the development of the agricultural sector through the sustained implementation of the FSSP.

To reinforce these efforts, government should provide and sustain investments in agriculture, particularly in research and development, agri-based infrastructure and smallholder productivity.

“The NFA should be strengthened, not abandoned,” said Montes.

From a strategic standpoint, Montes suggested that agricultural and industrial development in the country should go hand in hand. For him, agriculture should be developed to free up industry.

In turn, industry cannot be developed without agricultural development. For this to be realized, Montes recommends that public expenditure for agriculture be sustained since it is an important leg of the Philippine economy. –

Eugene L. Tecson is a senior researcher for Centro Saka Inc. (Philippine Center for Rural Development Studies), a farmer-based NGO engaged primarily in policy research, policy advocacy, networking, capability-building and economic linkaging work on agrarian reform and rural development issues. He earned his Bachelor’s degree in Political Science from the University of the Philippines. He has previously written a study on the profile and status of Farm Workers in the Philippines.

*$1 = P44

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