RCEF is a year-old bust

By Marlen V. Ronquillo, Manila Times, 11 Mar 2020

FOR the nth time, let me refresh the nation’s collective memory a bit. A collective memory that is often dulled, oblivious of the past and unaware of the great — and painful lessons — of history. The part of history that is related to a great undertaking that has been marginalized — agriculture.

I will start with what transpired in the dying days of 1994, the time the Philippines officially signaled its accession to the World Trade Organization (WTO) with an overwhelming Senate vote (and officially became a WTO card bearer in January 2005).

The accession period was that of intense optimism. The Ramos administration’s economic mandarins, after successfully branding the anti-WTO advocates as quislings (I was one small farmer-quisling), rolled out what was supposed to be an ambitious program to jump start Philippine agriculture and make it a competitive force in the global agricultural landscape. Indeed, on paper, there was reason for the optimism.

The Department of Agriculture’s post-WTO Action Program was a dream investment program: P27 billion in fresh irrigation investments, P8 billion for a massive farm-to-market roads program, P762 million for post-harvest facilities and P64 million for the construction of grains centers (silos, warehouses, drying facilities, etc.). From the funding aspect alone, it was a mini-Marshall Plan for the agriculture sector.

The jumbo allocation was supposed to fund an ambitious agricultural renaissance, the likes of which had yet to be witnessed in the oft-neglected, oft-marginalized agriculture sector. The ambitious targets were the following:

– A P3.4-billion yearly increase in the earnings from agricultural exports

– The agriculture sector’s gross value added (GVA) would at least be P60 billion a year

– Jobs, jobs, all around — around 500,000 agri jobs would be created yearly.

Seven years after the accession of boundless optimism and grand dreams, a review of the agricultural landscape post-accession was made. The results would make one weep.

– Agricultural jobs were lost in massive numbers.

– Agriculture’s GVA not only failed to meet the grand increase of P60 billion a year, it atrophied across all agri subsectors.

– Agriculture’s exports dropped — in embarrassing numbers.

Even if only half of the promised close-to-P40-billion investments had been made, the dismal results of the post-accession review was reason enough to give a pause to any program that says “deregulation” and “liberalization.”

The lessons of the WTO accession have been unheeded.

The Rice Tariffication Law (RTL), which just turned one year old a few days back, was anchored on the same grand idea — open up a critical component of the agriculture sector and good things would come out after the transition pains. Congress passed a law, giddily signed by Mr. Rodrigo Duterte, that lifted the quantitative restrictions (QRs) on rice and substituted QR with a two-tier tariff, one set for rice imported from the Southeast Asian region and another from countries outside of it.

The RTL created a fund, the Rice Competitiveness Enhancement Fund (RCEF), which on paper was to allocate P10 billion a year from rice tariff collections to fund another action program supposedly aimed at propping up the rice farmers, to a point of regional competitiveness.

One year after the RTL and the accompanying RCEF, what has transpired is this: the RTL was a death sentence on the country’s 3 million small rice farmers. The P10-billion-a-year RCEF, assuming that there is really P10 billion a year, is inutile as an amelioration program for small rice farmers. The P10-billion fund is inadequate. The program scheme is underwhelming and poorly designed. Instead of “transition pains,” the small rice farmers now see a permanent damage to a rice planting culture that is older than the arrival of Christianity in the country.

A peasant group that studied the loss dealt by the RTL to the country’s small rice farmers said it was P34 billion more than what was gained by the consumers from the cheaper rice that came with the lifting of the QR. And to think that the premise of the law was to sacrifice the 3 million rice farmers for the sake of more than 90 million consumers. Now that “consumer gain” has been debunked, the utter bankruptcy of the law has fully unravelled.

And if you go to the heart of the rice farms of Central Luzon, you will observe this hard truth — vast swaths of abandoned paddies. What you see with the naked eye is the most truthful rendition of the RTL’s savagery.

The official data from the unreliable Philippine Statistics Authority said the price of palay (unmilled rice) dropped to P15 per kilogram. False. Palay below the moisture content sold between P10 to P12 per kilo during the last harvest season. Production cost is P12 and that does not count the labor of the farmer-tiller.

The much-hyped RCEF, with its inadequate funding and poorly crafted programs, has a predictable fate. It will soon be buried in the mass grave of failed agriculture amelioration programs, the grandest of which was the post-WTO accession Action Program.

The Agriculture Competitiveness Enhancement Fund, implemented in the early 2000s but was suspended because of corruption and poor supervision, is in that grave. So is one of the best-designed programs, the Agriculture and Fisheries Modernization Act, which failed to receive adequate funding.

It is just one year old, but we can state this with utmost confidence: RCEF — RIP.