At the onset of the year, the Los Ba?os-based International Rice Research Institute issued an ominous warning that world prices of rice would ?likely rise sharply.? The institute acknowledged that prices of the staple cereal have gone down dramatically from their peak in 2008 but the global financial crunch has made it difficult for farmers to secure credit for seeds, fertilizer and other essential farm inputs.

Amid this gloomy forecast, it is a source of comfort that rice is not only in abundant supply in the country but prices of rice varieties that the ordinary families usually buy are affordable. As confirmed by the IRRI and reported by the Agriculture Department?s Bureau of Agriculture Statistics, domestic rates have actually fallen further at the close of the main harvest season. Rice is being sold in Metro Manila markets at an average price of P30 per kilo and the price dropped to as low as P23 per kilo in certain outlets in November.

Fortunately, concrete and timely measures were put in place by the national leadership and agriculture officials to address the problem. Because of these, it may not be whimsical to hope the nation will be spared of the looming jump in global rice prices.

As early as April last year, the government organized a National Food Summit to beef up production and stabilize the prices of rice, corn, and other farm products. Pursuant to the recommendations of the summit, Agriculture Secretary Arthur Yap swiftly launched  a five-year rice sufficiency program?with the help of experts, including seven former heads of the Agriculture Department and two ex-administrators of the National Food Authority?and jumpstarted the department?s intervention programs to boost yields and stabilize supply.

Being implemented by the department is a program to expand the areas planted to palay by 7.5 percent to 2.58 million hectares during the wet season. This has boosted hopes to meet its revised 2008 harvest volume of 16.7 million metric tons, or 9.2 million cavans more than the 2007 output.

Next, Yap zeroed in on the problem of steep cost of fertilizer which has led to a 30- percent decline in usage among palay farmers.  After the period of high crude oil prices ended, he carried out President Arroyo?s order to see to it that the downward spiral of fuel prices in the world market is reflected in the farm sector by a corresponding decrease in the market rates of petrochemical fertilizers. He directed the Fertilizer and Pesticides Authority to keep a tight watch on the possible price-manipulation activities of certain traders and appealed to fertilizer producers and supplies to reduce their retail prices.

As a result of this initiative, prices of chemical-based fertilizers went down in December by more than half of the prevailing rates in September.  For instance, the price of triple 14 fell 40.7 percent, or from P1,940 to P1,150 per bag. While 21-0-0 brand dropped 53 percent from P1,065 to only P499 per bag. The sharp decrease in fertilizer cost came at a providential time when farmers were starting to plant for the coming summer or dry cropping season.

But if there was a government action that heartened the farmers most, it was most likely the President?s order to the National Food Authority to double its domestic procurement of palay. This means that from the original volume of 500,000 metric tons, the NFA is now buying one million MT from local farmers. Yap reported that the government?s procurement of locally produced rice climbed from 33,000 MT in 2007 to 650,000 MT last year, the highest since l979.  This is an unprecedented boon to farmers because they can now more easily sell their rice harvest and convert the fruits of their labor into cash. Gone were the days when they always faced the dilemma of disposing their rice stock and wrest for months with storage problems.

The increased domestic procurement complements an earlier government move to raise the buying price of palay from below P10 to P17 per kilo. This approach is very beneficial to the economy especially because government spending for rice importation can be significantly reduced. As Secretary Yap always says, every ton of local palay bought by the government helps lower the level of imports.

As the linchpin of the aggressive procurement and distribution strategy, the NFA last year beefed up its inventories with imports and then flooded the market with cheap rice stocks costing P18.25 per kilo. These were sold to the ?poorest of the poor? families in partnership with local government units, Church-based groups like the Catholic Bishops Conference of the Philippines-National Secretariat for Social Action and the Social Welfare Department.

The DA-DFA also sold rice at P25 and P35 for middle-income consumers, kept tabs on rice millers and grains traders, and ran after hoarders and profiteers. This enabled them to pull down prices to P32 at the start of the lean season from a range of P40 to P50 during the height of the global grains crisis last summer.  Proof of the successful supply and price stabilization effort last year was that rice was even more expensive at that time in Thailand and Vietnam where the per-kilo rates reached an equivalent of P56 and P67, respectively.

Likewise, big rice millers were persuaded to agree to unload rice stocks from their warehouses and pare down their prices in exchange for a lower volume of rice that the NFA has been selling in the market in competition with traders.

At the same time, Malaca?ang issued a directive encouraging large firms to go into corporate farming by producing or importing the rice requirements of their employees, and another one relaxing the rural credit squeeze by setting up an Agricultural Guarantee Fund Pool with contributions from government financial institutions.  To date, the Guarantee Fund deposited with the Land Bank stands at more than P4 billion and is being used to infuse more credit to agricultural stakeholders through rural, cooperative and thrift banks and irrigators? associations.

To sustain the gains in the food production and security program, Secretary Yap says his department is backing the enactment by Congress of at least eight farm-friendly measures. One of these bills will amend the Agri-Agra Law (Presidential Decree 717) to free billions of pesos available from commercial banking institutions to develop the agriculture sector and raise incomes for its small direct stakeholders. It seeks to remove the provision of the law allowing banks to invest in government securities as alternative compliance with the law, and specifies those who may have access to credit to ensure that small farmers and fisherfolk are given priority by these credit sources.

The department is also lobbying for the approval of the long-pending legislation that will spell out a national land use policy to regulate the conversion of farmlands for non-food uses.

Other proposals that the DA is supporting are the extension of the comprehensive agrarian reform program, creation of the Office of Trade Representative to unify the government?s fragmented approach to trade and promoting a Green Philippines and the financial and corporate restructuring of the NFA to bankroll a multibillion-peso national grains highway that would further boost farm production and raise rural income.

f_maragay@yahoo.com