rice supply in the Philippines

[ANALYSIS] Damage control for dummies

Dean de la Paz

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[ANALYSIS] Damage control for dummies

Nico Villarete/Rappler

'If only we could grow rice as fast as government grows excuses'

Allow us to examine the perfunctory palliatives, placebos, and panaceas that serve as damage control responses belatedly taken after Ferdinand R. Marcos imposed an open-ended price cap on rice. Executive Order (EO 39) was to bring prices down from the unprecedented heights Marcos thinks were caused by local price manipulators, hoarders, and cartels. He also blamed typhoons, but those were added when the audience was comprised of foreigners.

The objective was to cite familiar uncontrollable factors. After all, recent monsoons in Pakistan and India were cited by their own governments to justify building up their buffer stock or limiting exportations.

Accusing domestic hoarders as the sole reason and then adding the planet’s weather, Marcos subsequently blamed the frantic buying frenzy of our ASEAN neighbors. Never mind that our buffer stock shortage was forecasted long before the lean mid-year months with the rise in local prices occurring before the buying sprees of our import sources.

Blaming neighbors is likely the result of our failure to import at prices that allow imports to be resold domestically within the price brackets of EO 39.

To validate, do the math. Vietnam supplies up to 90% of our rice imports. Previously Vietnamese imports were valued at P55/kilo (Freight-on-Board Manila) before import taxes; before the peso’s devaluation; and before Vietnam reduced their rice exports and jacked up export prices. These make Vietnamese imports expensive.

Even if we zero-out the 35% Rice Tariffication Law duties as part of our damage control attempts, to reduce prices to EO 39’s levels, government would still need to exact funds from taxpayers and then substantially subsidize all throughout the value chain.

Note what just happened. A few days ago the National Food Authority (NFA) was ordered to purchase from farmers palay between P23/kilo to P25/kilo – up from a few weeks ago when farmgate prices ranged from P15/kilo, to an average of P17/kilo and a high of P19/kilo.

Before Marcos’ price cap, farmgate prices were from P21/kilo to P22/kilo. These crashed when buyers, millers, and traders realized that to survive they had to buy low and dump EO 39’s cost-squeeze unto farmers. Sensing how dangerous that can be, government then shifted tactics and ordered the NFA to buy high in areas where it can.

Unfortunately, this entails substantial subsidies apart from the ayuda granted micro-retailers when the price cap fiasco began.

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Someone is not crunching the numbers. To purchase from farmers, there is a budget of P7 billion, enough for 280,000 metric tons. But since consumption is 14 million metric tons, that’s insignificant.  Where will the balance come from? It is doubtful that the secret billions squirreled away by other officials might be used to subsidize farmgate prices.

Meanwhile, Marcos’ latest go-to culprit amid claims of sufficiency now includes rice distribution constraints, whatever that means. If only we could grow rice as fast as government grows excuses.

As scathing criticism flooded-in the second Marcos attempted to repeal the laws of supply and demand, the first response was to protect precious posteriors. When the public wanted to know who the idiot was who whispered in the presidential ear, our economic mangers quickly claimed they were not consulted, two saying they were overseas when Marcos ordered the price control cap.

Given subsequent calls for sacking economic managers, the deflect amid trial-and-error ambivalence was a personal parry given the pedigreed economists appointed to positions proximate to the presidential ear.

The subliminal message of reckless autocratic fiat is more worrisome. Worry turns to dread when we factor in creeping tendencies towards the complete resurrection of dictatorial rule and the fears of systematic albeit “confidential” plunder throughout the bureaucracy.

While circle-parrying ripostes seemed like evasive subterfuge and betrayal either a Pontius Pilate or the Roman Marcus Brutus might take, both spawned more confusion. In the wake of a perception fallout, officials continued to speak from both sides of their mouths. While the Department of Agriculture bets on bumper harvests, the Philippine Statistics Authority, one of three agencies that early on foresaw severe shortfalls, still predicts a “drop in palay production.”

Like an Abbott and Costello act, contradictory, convoluted, and confusing repartee is a feat political factotum have mastered. It especially comes in handy when they lie.

While the usual PR optics played out in state-controlled media, among the legitimate related existential questions were asked of officials running in place yet getting nowhere really fast.

Is there or is there no rice shortage? Since buffers fell to within days, were these sufficient given a three-week lag for importations while the bulk of the third quarter harvests comes in mid-October? Why resort to Draconian police powers absent an official declaration of an emergency? Why rewrite the agricultural smuggling law? Why create an Anti-Agricultural Economic Sabotage Council headed by Marcos? Won’t the penal code or special laws suffice? And finally, where are the smugglers and hoarders? Include those forced to hoard because of EO 39.

While at it, why not decree a presidential price cap on petroleum products and secret intelligence funds?

“O, what a tangled web we weave, when first we practice to deceive!” Allow us to list what else was woven worthy of Sir Walter Scott.

One was when “temporary” meant a week, then a month, and now, the end of the harvest. Note that the shorter the period the likelier that EO 39 spawns its own hoarders.

Another was the Monday morning-quarterbacking of a presidential order designed for specifically declared emergencies.

A third was to replace rice with root crops, beans, tubers, and corn. Why not cake?

A fourth was the barnstorming of a “Raid Better More” public relations made-for-TV roadshow featuring floor-to-rafters piles of rice sacks being raided.

A fifth was to maintain delusions by repeating the P20/kilo promise. Such fantasy works hand-in-hand with audacious claims that the Marcos local price cap reduced global rice prices.

Note a unifying default – government’s reliance on damage control. Perhaps government can try something different, something novel and out-of-the-box. Always begin with the truth. Then damage control becomes unnecessary. – Rappler.com

Dean de la Paz is a former investment banker and managing director of a New Jersey-based power company operating in the Philippines. He is the chairman of the board of a renewable energy company and is a retired Business Policy, Finance, and Mathematics professor. He collects Godzilla figures and antique tin robots.

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  1. ET

    Thanks to Dean De La Paz for his amusing article entitled, “Damage control for dummies.” He described how the Marcos Jr. administration controlled the damage brought about by its very own EO 39. He noted about “a unifying default – government’s reliance on damage control.” Then he suggested “… government can try something different, something novel and out-of-the-box. Always begin with the truth. Then damage control becomes unnecessary.” With respect to EO 39, there are two problems hounding the Marcos Jr. Administration. Firstly, on finding a solution: it cannot “try something different, something novel and out-of-the-box.” This is because the DA top officials have long lost their initiative and creativity for fear of that they will be “ma-Sebastian.” (Remember that Sugar Importation fiasco?) Secondly, under the Marcos Jr. Administration, damage control will always be necessary – because it always started with a Lie. (Example: Remember the P20/kilo price of rice campaign promise but later downgraded to a mere aspiration.)

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