Rice Production and Consumption Trends in the Philippines from 2000 to Benedict A. Exconde

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 Benedict A. Exconde

Yuchengco Center Copyright 2016 Published by the Yuchengco Center Prepared by Jeffrey P. Bernido Printed in the Philippines. All rights reserved. Photo on cover retrieved from: (top photo) http://newsarena.com.ng/batns-boostrice-farming/; (lower left) http://www.agricultureph.com/2016/08/enrollment-ofagriculture-at-uplb.html; (lower right) https://blogs.reading.ac.uk/cwac/2015/01/16/phd-research-abroad-birds-in-ricefields-of-the-philippines/ No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage and retrieval system, without the permission in writing from the Center. The views expressed by the authors in this publication do not reflect those of the Trustees and Officers of the Yuchengco Center. Please address all inquiries to: Yuchengco Center 2nd Floor, Don Enrique T. Yuchengco Hall De La Salle University 2401 Taft Avenue, Manila 0922 Philippines E-mail: yuchengcocenter@dlsu.edu.ph Fax: (632) 525-3457 URL: http://yc.dlsu.edu.ph ii

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 Table of Contents List of Abbreviations List of Figures List of Images List of Tables Abstract iv v vi vii viii 1. Introduction 1 2. Results 3 2.1 Areas Planted to Rice 3 2.2 Population 5 2.3 Top Rice Producing Provinces in the Philippines 6 2.4 Wasted Milled Rice 9 2.5 Rice Consumption 11 2.6 Milled Rice Production vs Consumption 14 3. Factors Affecting Rice Production and Consumption in the 15 Philippines 4. Conclusion 21 5. Policy Recommendations 23 Bibliography 25 About the Author 37 iii

Yuchengco Center LIST OF ABBREVIATIONS AEC BOC BPO DA DOH DTI FAO FEP IRRI kg MIMAROPA NFA PhilRice PSA sq. km. TESDA UP ASEAN Economic Community Bureau of Customs Business Process Outsourcing Department of Agriculture Department of Health Department of Trade and Industry Food and Agriculture Organization Foundation for Economic Freedom International Rice Research Institute kilograms Mindoro, Marinduque, Romblon, Palawan National Food Authority Philippine Rice Research Institute Philippine Statistics Authority square kilometers Technical Education and Skills Development Authority University of the Philippines iv

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 LIST OF FIGURES Figure No. 1 Areas With Harvested Rice in Relation to Arable Land, Philippines, 2000-2013 2 Wasted Milled Rice, Philippines, 2000-2013 3 Annual Per Capita Consumption of Rice, Philippines (in Kilograms), 2008-2009 and 2012 4 Milled Rice Production and Consumption, Philippines, 2000-2015 LIST OF IMAGES v

Yuchengco Center Image No. 1 No Caption 2 Flooded rice paddies stairstep down a mountain slope in Banaue, north of Manila 3 Farmers taking a break to eat lunch after planting rice 4 A lone worker working on a rice field in San Leonardo, Nueva Ecija 5 A Filipino family eating rice 6 With downpour from Typhoon Nona (International Name: Melor) washing away roads and rice fields, residents in Barangay Rajal Sur in Santa Rosa, Nueva Ecija rely on carabao power to get them to their destinations 7 Rice fields in the Cordillera Mountains 8 A shopkeeper displays different varieties of rice for sale at a market in Manila 9 Government agents confiscating container vans full of smuggled rice at the Port of Manila 10 Boodle fight meal at at Balinsasayaw Restaurant in Tagaytay City vi

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 LIST OF TABLES Table No. 1 Total Land Area, Arable Land and Total Harvested Areas for Rice in the Philippines, 2000-2013 2 Population of the Philippines, 2000-2015 3 Total Rice Production of the Philippines By Province, 2000-2014 4 Wasted Milled Rice vs Total Milled Rice Production in the Philippines, 2000-2013 5 Annual Rice Consumption Per Capita in the Philippines, 2000-2013 6 Annual Per Capita Consumption of Rice in Kilograms, 2008-2009 and 2012 7 Total Milled Rice Production and Consumption in the Philippines, 2000-2015 vii

Yuchengco Center ABSTRACT The research analyzed the rice production and consumption trends, and the factors that influenced them from 2000 to 2015. Data were collected from various sources from which information on rice production and consumption was generated. From the data, variations in rice production and consumption among the regions of the Philippines were presented. It was found that rice production was consistently lower than consumption during the 15-year period from 2000 to 2015 due to a variety of factors such as vulnerability of rice farming to weather and climate changes, and natural disasters; inefficiencies in rice farming, harvest and postharvest techniques; limited rice production areas; rapid and uncontrolled conversion of agricultural lands to non-agricultural uses; a consistently increasing population; middlemen mediated rice value chain; smuggling, hoarding and other illicit activities; and inconsistency of government in implementing policies on agriculture and food security. The study proposed recommendations that will help the government in food security and agricultural planning to achieve rice sufficiency. viii

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 Rice Production and Consumption Trends in the Philippines from 2000 to 2015 Benedict A. Exconde (Photo courtesy of the Asian Journal, retrieved via Google Images) 1. Introduction Rice is the main staple and most valuable crop of Filipinos. Its cultivation provides a source of livelihood for many, especially those who reside in rural areas. The Philippines is the eighth largest rice producer in the world. In 2010, the rice harvested area was estimated at 4.4 million hectares, or 81.5 percent of the total arable land of 5.4 million hectares. Roughly 69 percent of the country's rice farms are irrigated. Rice production is increasing steadily, with output mainly coming from irrigated areas. Despite improvements in yield and expansion of areas dedicated to its production, the Philippines still lags behind compared to other countries. (Ricepedia, 2015) While it is the eighth largest rice producer in the world, the Philippines is also one of the world's largest importers. The country imports ten percent of its annual consumption requirements, mostly from Thailand and Vietnam. In 2010, 2.4 million metric tons of rice were imported to fill supply gaps. Importation is strictly controlled by the Department of Agriculture (DA), through the National Food Authority (NFA), which primarily has exclusive monopoly on rice importation. (ibid.) Despite the importation, farmgate and retail prices of rice in the country are 1

Yuchengco Center among the highest among the developing Asian countries. Wholesale and retail prices are being managed by the National Food Authority (NFA). The NFA also purchases paddy from local farmers at a government support price, and is involved in rice distribution through the sale of rice stocks at a predetermined price to licensed and accredited wholesalers and retailers in strategic areas around the country. (ibid) In a study conducted by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), it was found that rice consumption among Filipinos has been steadily increasing with rising per capita income. It was highest among lower income Filipinos, especially those who reside in rural areas, due to lower income, lower purchasing power and lack of access to more and healthier food choices. The only way to decrease this and diversify the food options of the poor is by improving their purchasing power. (Rappler, 2012) Aside from the "natural" factors, there are also illicit artificial interventions that affect rice production and consumption patterns, as well as the availability and prices of the grain. These include hoarding of paddy and milled rice stocks; smuggling of rice stocks mostly coming from Vietnam; artificial rice supply and price manipulation; and infiltration of cooperatives and other farmers' groups by private individuals to gain access to NFA rice stocks. Private traders and middlemen collude with corrupt government officials and employees to successfully execute such acts, at the expense of farmers and consumers. (Exconde, 2013 and 2014) Through the years, successive governments aimed to attain rice sufficiency. The new administration of President Rodrigo Duterte, through Agriculture Secretary Emmanuel Piñol, vowed to make the Philippines rice self-sufficient within several years, indicating that doing so "is a must, not a choice". The Philippines should attain rice self-sufficiency at the regional level to mitigate the effects of climate change. (Galvez, 2016) Several groups called on the Philippine government to review its existing rice and agricultural policies to ensure availability of rice at reasonable prices for everyone. The Foundation for Economic Freedom (2016), noting the existing monopoly on rice importation by NFA, called on the Duterte administration to liberalize rice importation to realize the new administration s promise of affordable food for the poor; enhance food security instead of diminishing it; prevent the huge losses of the NFA and make rice affordable to the masses; and unburden taxpayers with billions of annual subsidies to NFA, but also reduce the further additions to unpayable national government guaranteed debt. Habito (2016) called for the reexamination of the existing rice policy to determine if it ensures sustainable production and supply at reasonable prices in anticipation of the full implementation 2

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 of the 35 percent rice import tariff of the Asean Economic Community (AEC). 2. Results 2.1. Areas Planted to Rice Table 1. Total Land Area, Areas of Arable Land and Total Harvested Areas for Rice in the Philippines, 2000-2013. Year Land Area (sq. km.) Arable Land (sq. km.) Harvested Area, Rice (sq. km.) % of Rice Harvested Area of Land Area % of Rice Harvested Area of Arable Land 2000 298,170 50,340 40,381 13.5 80.2 2001 298,170 49,840 40,654 13.6 81.6 2002 298,170 49,350 40,463 13.6 82.0 2003 298,170 49,700 40,064 13.5 80.6 2004 298,170 51,200 41,267 13.9 80.6 2005 298,170 50,050 40,704 13.7 81.3 2006 298,170 51,550 41,599 14.0 80.7 2007 298,170 52,900 42,729 14.3 80.8 2008 298,170 54,500 44,600 15.0 81.8 2009 298,170 55,000 45,323 15.2 82.4 2010 298,170 53,000 43,542 14.6 82.2 2011 298,170 54,500 45,366 15.2 83.2 2012 298,170 55,800 46,900 15.7 84.1 2013 298,170 55,900 47,461 15.9 84.9 Source: FAO; World Rice Statistics, IRRI Of the Philippines' total land area of 298,170 square kilometers, 17.6 percent are arable, or suitable for agriculture due to the country's archipelagic topography. Each of the islands is composed of mountain ranges limiting agricultural activities, especially rice production to a small area. (Table 1 and Fig. 1) 3

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Yuchengco Center Flooded rice paddies stairstep down a mountain slope in Banaue, north of Manila. (Photo courtesy of National Geographic, retrieved via Google Images) Most (81.9 percent) of the country's arable land are dedicated to rice production. These are confined mostly in limited plains and valleys that are naturally irrigated by large river systems. They are located in Central Luzon and Cagayan Valley regions in Luzon; plains in Mindanao that are fed by river systems such as the Mindanao River, Agusan River, Davao River, Pulangi River and Agus River; the eastern side of the island of Panay where the provinces of Capiz and Iloilo are located; and the island of Mindoro, which lies southeast of Luzon. Fig. 1. Areas With Harvested Rice in Relation to Arable Land, 2000-2013 Sq. km. 60,000 Areas Harvested to Rice and Arable Land in the Philippines, 2000-2013 50,000 40,000 30,000 20,000 10,000 Arable Land (sq. km.) Harvested Area, Rice (sq. km.) - Seventy percent of poor families in the Philippines live in rural areas where agriculture is the main source of livelihood. The average monthly income of a 4

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 Filipino farmer who works on a 1.5-hectare farm, the average farm size in the country, is PHP 2,350 (USD 50), attributed to a combination of factors such as lack of adequate support to farmers from the agricultural sector of the government; expensive production inputs in farming such as chemicals and equipment rentals; and debts incurred from informal lenders. Filipino farmers are also aging fast, as the average age is 57 years and the younger generation refuses to stay in the farm, preferring to pursue better paying jobs such as Business Process Outsourcing (BPO) in the city or working overseas. Such situation forces some farmers or land owners where farmers are leasehold tenants to sell their lands to real estate property developers for a "respectable" amount of money, which they, more often than not, could not handle due to lack of knowledge in personal and family finance. (Manila Times, 2014) 2.2. Population Table 2. Population of the Philippines, 2000-2015 Year Population 2000 77,932,247 2005 86,141,373 2010 93,038,902 2015 100,699,395 Source: http://www.worldometers.info/ The major factor that influences the production and consumption of rice is the country's population size. (Table 2) Farmers taking a break to eat lunch after planting rice. (Photo courtesy of Pinterest, retrieved via Google Images) The population has been steadily increasing. From 77,932,247 in 2000, it 5

Yuchengco Center was an estimated at 100,699,395 in 2015, a population growth rate of 29.21 percent over a 15-year period, or 1.8 percent annually. It is projected that the population of the Philippines will increase further based on these trends (Table 2). 2.3. Top Rice Producing Provinces in the Philippines Table 3. Total Rice Production of the Philippines By Province, 2000-2014 Province Total Paddy Rice Production, 2000-2014 (Metric Tons) PHILIPPINES 233,759,625 Nueva Ecija 19,367,966 Isabela 15,978,613 Pangasinan 13,598,670 Iloilo 12,048,082 Cagayan 9,862,463 Tarlac 7,543,100 Camarines Sur 7,396,645 Leyte 6,972,789 North Cotabato 6,854,693 Negros Occidental 6,207,556 Sultan Kudarat 5,749,304 Maguindanao 5,396,573 Pampanga 4,985,804 Capiz 4,682,547 Oriental Mindoro 4,657,909 Bulacan 4,584,793 Zamboanga del Sur 4,570,543 Bukidnon 4,447,479 South Cotabato 4,337,181 Occidental Mindoro 4,176,518 Ilocos Norte 4,064,869 Antique 3,604,603 Palawan 3,435,941 Nueva Vizcaya 3,255,766 Bohol 2,748,361 Agusan del Sur 2,735,974 Ilocos Sur 2,689,494 Albay 2,500,887 6

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 Province Total Paddy Rice Production, 2000-2014 (Metric Tons) Lanao del Norte 2,449,249 Lanao del Sur 2,412,308 Kalinga 2,180,550 Quezon 2,159,615 Davao del Norte 2,053,536 La Union 2,037,182 Zamboanga Sibugay 1,999,376 Aklan 1,959,836 Davao del Sur 1,870,013 Bataan 1,847,412 Laguna 1,769,872 Sorsogon 1,637,968 Zambales 1,614,792 Masbate 1,562,026 Samar 1,443,017 Zamboanga del Norte 1,335,271 Compostela Valley 1,318,710 Apayao 1,312,340 Northern Samar 1,304,877 Aurora 1,247,619 Southern Leyte 1,240,636 Surigao del Sur 1,217,023 Agusan del Norte 1,210,583 Surigao del Norte 1,041,210 Misamis Occidental 1,011,143 Quirino 1,003,942 Camarines Norte 987,693 Negros Oriental 964,311 Biliran 959,638 Abra 950,845 Davao Oriental 926,194 Ifugao 837,650 Batangas 815,111 Guimaras 704,680 Cavite 670,585 Sarangani 649,472 Eastern Samar 647,295 7

Yuchengco Center Province Total Paddy Rice Production, 2000-2014 (Metric Tons) Romblon 487,746 Catanduanes 477,324 Rizal 462,615 Marinduque 436,023 Zamboanga City 382,767 Misamis Oriental 360,666 Davao City 360,614 Mountain Province 283,767 Cebu 230,047 Benguet 226,467 Basilan 58,499 Sulu 53,423 Siquijor 39,912 Dinagat Islands 36,899 Camiguin 31,277 Tawi-Tawi 22,674 Batanes 203 Source: Philippine Statistics Authority A lone worker working on a rice field in San Leonardo, Nueva Ecija (Photo courtesy of http://www.doctortaylorphotography.com/, retrieved from Google Images) Of the top 20 rice producing provinces, four (Nueva Ecija, Tarlac, Pampanga and Bulacan) are located in Central Luzon, where vast plains and large river systems such as the Pampanga River are located. The region is conducive to rice cultivation and contains large tracts of rice farms. Central Luzon, particularly Nueva Ecija, is the 8

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 source of most of the country s rice supply. Next is Cagayan Valley, particularly Isabela and Cagayan, It is the next largest rice producing region in the country. Isabela is the second largest rice producing province in the country while Cagayan ranks fifth. Cagayan Valley, despite being located in a portion of Luzon that is bounded by the Sierra Madre, Cordillera and Caraballo mountain ranges, has fertile lands that are fed by the massive Cagayan River, enabling rice production to thrive, with Isabela and Cagayan ranked as rice producing provinces. Adjacent to Central Luzon and Cagayan Valley is Pangasinan, the third largest rice producing province. Situated on a large flood plain that is crossed by the Agno River and other large river systems, the province is the major agricultural trading center in the Ilocos region and the only province in the region with topography suited to rice production. The second largest island in the country, Mindanao, rivals the major riceproducing areas of Luzon in rice production output. North Cotabato, Sultan Kudarat, Maguindanao, Bukidnon and South Cotabato are among the top 20 rice-producing provinces and can provide rice not only within Mindanao but also to other parts of the country. The provinces lie on rich plains fed by rivers and other forms of natural irrigation. They are key agricultural areas, producing not only rice but also banana, corn and pineapple. The other areas of the country that are major rice producing are those in the island of Panay, where Iloilo and Capiz, the fourth and fourteenth largest riceproducing provinces, respectively, are located; and Occidental and Oriental Mindoro. 2.4. Wasted Milled Rice Table 4. Wasted Milled Rice vs. Total Milled Rice in the Philippines 2000-2013. Year Total Milled Rice (Metric Tons) Wasted Milled Rice (Metric Tons) % Wasted Milled Rice of Total Milled Rice 2000 8,263,730 532,880 6.5 2001 8,640,920 564,980 6.5 2002 8,851,520 597,290 6.8 2003 9,004,430 590,840 6.6 2004 9,669,350 639,950 6.6 2005 9,740,200 683,670 7.0 2006 10,222,920 707,030 6.9 2007 10,832,210 709,130 6.6 9

Yuchengco Center Year Total Milled Rice (Metric Tons) Wasted Milled Rice (Metric Tons) % Wasted Milled Rice of Total Milled Rice 2008 11,215,970 763,500 6.8 2009 10,849,700 707,560 6.5 2010 10,520,140 719,930 6.8 2011 11,128,270 669,440 6.0 2012 12,027,620 736,750 6.1 2013 12,299,090 721,320 5.9 Source: FAO; World Rice Statistics, IRRI From 2000 to 2015, the wasted milled rice of the Philippines was an average of 6.5 percent of total milled rice and is increasing through time. In 2008, 763,500 metric tons of milled rice, or 6.8 percent of total milled rice production of 11,215,970 metric tons, were wasted, considered as the highest recorded during the 15-year period. The lowest recorded milled rice wastage was in 2000, with a total of 532,880 metric tons, or 6.5 percent of the milled rice production output of 8,263,730 metric tons for that year. (Table 4) Fig. 2. Wasted Milled Rice in the Philippines, 2000-2013 15,000,000 Wasted Milled Rice in the Philippines, 2000-2013 10,000,000 5,000,000 Total Milled Rice Production Wasted Milled Rice - 2000 2002 2004 2006 2008 2010 2012 The large amount of wasted milled rice can be attributed to several factors such as inefficiencies in rice production, but the more prevalent is the wasteful eating practices of Filipinos. Every Filipino wastes around 3.3 kilograms of rice annually. An average of 308,833 metric tons of rice, or an equivalent of P5.3 billion worth of imported rice, is being wasted by the Philippines yearly. (Apun et al., 2014) 10

2.5. Rice Consumption Rice Production and Consumption Trends in the Philippines from 2000 to 2015 A Filipino family eating rice. (Photo courtesy of the International Rice Research Institute (IRRI), retrieved via Google Images Table 5. Annual Rice Consumption Per Capita in the Philippines, 2000-2013 Year Annual Rice Consumption Per Capita in the Philippines (kilograms per year) 2000 103.7 2001 104.1 2002 108.3 2003 107.2 2004 116.3 2005 120.5 2006 120.8 2007 128.6 2008 131.0 2009 123.1 2010 116.0 2011 118.8 2012 120.9 2013 119.4 Source: FAO; World Rice Statistics, IRRI Regardless of price fluctuations and despite the availability of alternatives in the market, the demand for rice has not changed. In fact, it rises as the population of the Philippines increases, resulting in pressure on local producers to increase volume of production and for the government to meet supply gaps through importation and other possible measures. 11

Yuchengco Center From 2008-2009, the annual per capita consumption of rice was around 119.1 kilograms. This was largest at the Autonomous Region in Muslim Mindanao (144.7 kilograms), SOCCSKSARGEN (136.5 kilograms), Western Visayas (133.7 kilograms) and the Cordillera Administrative Region (131.6 kilograms). At 101 kilograms, the National Capital Region had the smallest annual per capita consumption of rice during the same period. Table 6. Annual Per Capita Consumption of Rice in Kilograms, 2008-2009 and 2012 Regions Annual Per Capita Consumption of Rice, kilograms 2008-2009 2012 PHILIPPINES 119.1 114.3 National Capital Region 101.0 97.4 Cordillera Administrative Region 131.6 130.1 Ilocos Region 125.0 122.8 Cagayan Valley 122.4 121.9 Central Luzon 123.2 119.2 CALABARZON 112.7 114.5 MIMAROPA 136.3 130 Bicol Region 124.3 121 Western Visayas 133.7 138 Central Visayas 95.2 82.4 Eastern Visayas 127.2 128.7 Zamboanga Peninsula 109.1 105.5 Northern Mindanao 115.7 107.9 Davao Region 113.2 105.8 SOCCSKSARGEN 136.5 125.5 Caraga Region 128.1 118.2 Autonomous Region in Muslim Mindanao 144.7 118.8 Source: Philippine Statistics Authority In 2012, there was a decrease in the annual per capita consumption in the country. In that year, 114.3 kilograms were reported. Even the regions with the largest per capita consumption of rice showed a decline, while Western Visayas reported an increase of 4.3 kilograms from the 2008-2009 record. With Eastern Visayas, by 1.4 kilograms. 12

PHILIPPINES National Capital Region Cordillera Administrative Region Ilocos Region Cagayan Valley Central Luzon CALABARZON MIMAROPA Bicol Region Western Visayas Central Visayas Eastern Visayas Zamboanga Peninsula Northern Mindanao Davao Region SOCCSKSARGEN Caraga Region Autonomous Region in Muslim Mindanao Rice Production and Consumption Trends in the Philippines from 2000 to 2015 Fig. 3. Annual Per Capita Consumption of Rice in the Philippines in Kilograms, 2008-2009 and 2012 160.00 Annual Per Capita Consumption of Rice in the Philippines, kilograms 140.00 120.00 100.00 2008-2009 2012 80.00 60.00 40.00 20.00 0.00 Most of the regions with high annual per capita consumption of rice are those with large concentrations of farming communities. Farmers in the Philippines, especially those engaged in rice production, are into subsistence agriculture, producing crops mainly for consumption while the remainder of the harvest is sold to middlemen or directly at marketplaces. Therefore, rice farmers and farming communities located in regions with high annual per capita consumption of rice are primarily rice consumers. 13

Yuchengco Center At the same time, most of the regions with high annual per capita consumption of rice are composed mostly of poor communities that either lack access to alternative sources of food due to their relative distance from main trading areas or sufficient amount of money that will enable them to afford alternative sources of food. Residents of these communities have rice as the commodity that is most available for and more affordable to purchase, and their primary source of nourishment and nutrition. (Table 6) 2.6. Milled Rice Production vs Consumption Table 7. Total Milled Rice Production and Consumption in the Philippines, 2000-2015 Year Total Milled Rice Production (Metric Tons) Total Milled Rice Consumption (Metric Tons) Difference between Total Milled Rice Production and Total Milled Rice Consumption (Metric Tons) 2000 8,135,000 8,750,000 (615,000) 2001 8,450,000 9,040,000 (590,000) 2002 8,450,000 9,550,000 (1,100,000) 2003 9,200,000 10,250,000 (1,050,000) 2004 9,425,000 10,400,000 (975,000) 2005 9,821,000 10,722,000 (901,000) 2006 9,775,000 12,000,000 (2,225,000) 2007 10,479,000 13,499,000 (3,020,000) 2008 10,755,000 13,100,000 (2,345,000) 2009 9,772,000 13,125,000 (3,353,000) 2010 10,539,000 12,900,000 (2,361,000) 2011 10,710,000 12,860,000 (2,150,000) 2012 11,428,000 12,850,000 (1,422,000) 2013 11,858,000 12,850,000 (992,000) 2014 11,915,000 13,200,000 (1,285,000) 2015 11,350,000 13,250,000 (1,900,000) Source: USDA; World Rice Statistics, IRRI In 2000, the Philippines produced 8,135,000 metric tons of milled rice. By 2015, total milled rice production increased to 11,350,000 metric tons. The Philippines highest total milled rice production was 11,915,000 metric tons, which was recorded in 2014. In the same 15-year period, the country's total milled rice consumption increased. In 2000, the country consumed 8,750,000 metric tons of milled rice. By 2015, total milled rice consumption was already at 13,250,000 metric tons, the highest since 2000. (Table 7) 14

Metric Tons Rice Production and Consumption Trends in the Philippines from 2000 to 2015 What was consistent during the 15 years is that the total milled rice consumption was always greater than the total milled rice production. From 2000 to 2015, the difference between total milled rice consumption and total milled rice production was -1,642,750 metric tons. The gap between total production and total consumption varied yearly, but had been in million metric tons during 11 of the 15 years. Fig. 4. Milled Rice Production and Consumption in the Philippines, 2000-2015 Milled Rice Production and Consumption in the Philippines, 2000-2015 15,000,000 10,000,000 Total Milled Rice Production 5,000,000-2000 2002 2004 2006 2008 2010 2012 2014 Total Milled Rice Consumption From 2000 to 2015, the total milled rice production of the Philippines increased to meet the growing demand of consumers. In all of the years covered during the period, consumption was consistently larger than production. The largest gap between total milled rice production and total milled rice consumption was at - 3,353,000 metric tons in 2009. 3. Factors Affecting Rice Production and Consumption in the Philippines Several natural and man-made factors affect the production and consumption of rice in the Philippines. 1. Rice farming is vulnerable to weather and climate changes, and natural disasters Agriculture is highly dependent on weather and climate. Drastic changes in weather and climate can directly affect supply, distribution and prices of produce. This is evident in the Philippines. 15

Yuchengco Center With downpour from Typhoon Nona (International Name: Melor) washing away roads and rice fields, residents in Barangay Rajal Sur in Santa Rosa, Nueva Ecija, rely on carabao power to get them to their destinations. (Photo courtesy of the Philippine Daily Inquirer and National Operational Assessment of Hazards, retrieved via Google Images) According to the Asian Disaster Reduction Center (2015), the Philippines is hit by an average of 20 typhoons, some are destructive, annually. It also lies on the "Pacific Ring of Fire", making earthquakes and volcanic eruptions frequent. Other natural risks that the Philippines encountered high susceptibility including sea level rise, tsunami, storm surge, landslides, floods and drought. Climate change poses an immediate to long-term threat to agriculture and food supply in the Philippines. Crop production can be significantly affected by changes in temperature, amount of carbon dioxide, and intensity and frequency of extreme weather. Warmer temperatures may cause crops to grow quickly but, at the same time, reduce yields, significantly affecting food supply. More extreme temperature and amount of rain can prevent crops from growing. Floods and droughts can harm crops and result in a drop in yields, and, in the case of floods, disruptions in the value chain. Higher temperatures can encourage the growth of weeds, pests and fungi that invade farms and affect crop production. Higher carbon dioxide levels may increase yields but factors such as insufficient water and nutrients may cause a reverse effect. (United States Environmental Protection Agency, 2015) 2. Inefficiencies in rice farming, harvest and postharvest techniques Rice production in the Philippines is dependent mainly on traditional methods that are often labor intensive and outdated. Despite the availability of modern farming, harvest and postharvest techniques, most farmers prefer to stick to tradition due to limited educational attainment and literacy, limited or lack of financial resources, small farm area, lack of sufficient extension work from the local 16

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 agriculture officer, and reluctance to embrace new technology due to fears that doing so will result in losses in their sources of livelihood. Inefficiencies in rice production, harvesting and postharvest practices result in a high wastage, which, in turn, leads to a decrease to the supply of paddy and milled rice. 3. Limited areas planted to rice Rice fields in the Cordillera Mountains. (Photo courtesy of 123RF.com, retrieved via Google Images) Compared to Thailand and Vietnam, the Philippines has limited areas that are dedicated to rice production. The country is composed mostly of mountainous volcanic islands with a handful of plains or valleys with large river systems that are deemed suitable for rice production. Despite such physical limitations, the Philippines is still considered the seventh largest rice producer in the world, with Central Luzon, Cagayan Valley and Mindanao as major production areas. 4. Rapid and uncontrolled conversion of agricultural lands to non-agricultural uses The limited rice production areas and other agricultural lands in the country are being threatened not only by the effects of climate change and erosion but mostly by rapid conversion to non-agricultural uses. Large tracts of rich and fertile agricultural land were converted to subdivisions and other housing development projects as the growing population demands for more residential areas. The focus of the national government in developing the manufacturing and services sectors, the two larger contributors to national income, led to the conversion of erstwhile agricultural lands to industrial estates and commercial complexes Conversion of agricultural lands to non-agricultural uses was worsened by poverty experienced by rice farmers and others who are engaged in agriculture. 17

Yuchengco Center 5. Consistently increasing population Having a large population is causing a strain on both the supply and demand of rice in the country. With more mouths to feed, rice farms and other agricultural lands are pressured to produce more, causing further strains on both the land and the farmers. Unfortunately, local production alone cannot meet the growing demand for rice and other food commodities by the 100 million or so Filipino consumers. Hence, the need to fill the gaps in rice supply through importation from countries such as Vietnam and Thailand, as regulated by the Philippine government, through the National Food Authority (NFA). 6. Long and middlemen-filled rice value chain 18 A shopkeeper displays different varieties of rice for sale at a market in Manila. (Photo courtesy of Romeo Gacad/AFP/Getty Images and Seeds of Freedom, retrieved via Google Images) Private traders and middlemen dominate the country's rice business and marketing. Mostly composed of Filipinos of Chinese decent, they operate in virtually every corner of the archipelago as middlemen or informal lender-traders with direct access to farmers or as wholesaler-retailers operating in public markets or stores in key commercial areas in municipalities and cities or as local merchants within farming communities. In Manila, the political and economic heart of the Philippines, the major rice trading area is in the district of Binondo, in particular the busy market area called Divisoria. (Exconde, 2013) Private traders and middlemen, backed up by sufficient business capital and due to lack of accessibility to government buying stations, can go directly to the farms to buy rice from farmers or farmers' cooperatives. However, they are not the last middlemen who are involved in the rice value, as they will also sell rice stocks that are purchased directly from farmers to counterparts who own rice mills or, if they have their own rice mills, to wholesalers. More individuals or firms get involved along the way before milled rice stocks finally reach the consumers.

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 7. Rice Smuggling, Hoarding and Other Iilicit Activities Government agents confiscating container vans full of smuggled rice at the Port of Manila. (Photo courtesy of The Philippine star, retrieved via Google Images) Cases of artificial interventions to the supply and price of rice are rampant in the Philippines. These include hoarding of local rice stocks, smuggling of rice stocks that mostly come from Vietnam, and use of cooperatives and other farmer groups as fronts for illicit activities. Such acts are masterminded and perpetrated mainly by members of the rice cartel, a powerful group of private traders and businessmen with connections to high-ranking government officials. The rice cartel can artificially manipulate the supply and prices of local paddy and milled rice through hoarding of stocks, which are purchased from farmers, cooperatives and traders at low prices. Keeping rice stocks inside storage facilities will result in artificial shortage, decreasing the available supply of the grain and forcing wholesale and retail prices to increase. Releasing the hoarded rice stocks will increase the supply of the grain in the market, causing prices to artificially decrease. While domestic stocks are deliberately hoarded to manipulate supply and prices, the cartel is also responsible for flooding the market with smuggled rice, most of which come from Vietnam. Smuggling operations occur mainly at key ports at Manila, Cebu, Davao and Subic. These activities are rampant because the cartel works with corrupt government officials, especially those from the Department of Agriculture (DA), National Food Authority (NFA) and the Bureau of Customs (BOC). Cheaper smuggled rice stocks are brought into the market to compete directly with more expensive domestic rice. Such practice puts Filipino rice farmers at a huge disadvantage The rice cartel, in collusion with corrupt government officials and private 19

Yuchengco Center individuals, penetrate cooperatives and farmers groups, most of which are lacking in government support and financial resources, and have officers who lack proper management skills and training. Upon takeover, corrupt traders and middlemen use cooperatives and farmers groups to gain access to reserved NFA paddy and milled rice stocks. Corrupt NFA officials and employees receive bribes from cartel members, and release reserved paddy and milled rice stocks to manipulate the supply and prices of rice in the market. 8. Inconsistent government policy on agriculture and food security The agricultural sector has been long neglected by the Philippine government. In recent years, economic planners and policymakers focused more on strengthening the service sector, which is bannered by the Business Process Outsourcing (BPO) industry, as the largest contributor to the country's economic growth and income. Such re-focusing of policy and programs by the State leaves behind the manufacturing sector, which used to be the largest contributor to economic growth and national income, and, the worst affected of the three sectors of the economy, the agricultural sector. Most economic planners argued that the Philippines does not have a comparative advantage when it comes to domestic agricultural production and that the country will be better off using its resources to strengthen the service sector and import its food requirements, especially rice, from overseas. Policymakers, who are already notorious for their inconsistency, tend to side with the planners and formulate policies based on such recommendations. The inconsistent government sector eventually implements the policies formulated despite their putting agriculture and food security at a major disadvantage. The neglect of the agricultural sector by the government due to inconsistent policies has affected food security and the livelihood of farmers and fishermen. In the case of rice farmers, inadequate state financial and extension support, among other things, caused farm productivity to remain low and wastage to be high, resulting in lesser supply of rice that are and can be available in the market. Lack of protection of arable land, especially those dedicated to the production of rice and other staples, and rapid conversion of agricultural lands to non-agricultural uses are also a product of the inconsistent government policy on agriculture and food security. 20

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 4. Conclusion Boodle fight meal at Balinsasayaw Restaurant in Tagaytay City. (Photo courtesy of Leslie Bernarte and About Filipino Food, retrieved via Google Images) Like most Asians, rice remains the main staple of Filipinos. The Philippines is the eighth largest producer of rice in the world, having produced 19.832 million metric tons of rice in 2015 with production concentrated mainly in Central Luzon, Cagayan Valley and Mindanao. Ironically, the Philippines is also the third largest importer of rice in the world, importing 1.8 million metric tons of rice in 2015. From 2000 to 2015, domestic rice production in the Philippines steadily increased. However, in the same period, rice consumption increased at a rate that was faster than the domestic rice production. Larger rice consumption creates a supply gap, as domestic production cannot meet growing demand. The supply gap is being filled through rice importation, which is being managed by the National Food Authority (NFA). Several factors have been identified as to why domestic rice production failed to meet rising consumer demand. These are: (1) vulnerability of farming to drastic changes in weather and climate, and natural disasters; (2) inefficiencies in traditional rice farming, harvest and postharvest techniques in the country, resulting in lower farm productivity and large amount of wastage; (3) rice production areas in the country are quite limited and are vulnerable to rapid conversion to non-rice production or rapid and uncontrolled conversion for non-agricultural uses; (4) increasing demand for rice is due to a growing population, more mismatches created between domestic rice production and consumption; (5) effects of the rice value chain on the proper distribution of rice stocks due to the involvement of too many middlemen and other individuals; (6) artificial interventions by the rice cartel such as hoarding, infiltration of farmers' groups and cooperatives, and smuggling of imported rice to manipulate supply and prices of local rice; and (7) the inconsistent 21

Yuchengco Center government policy on food security and the agricultural sector, especially on rice farmers. The rice supply gap is further worsened by the growing population of the Philippines. With a 2015 population of 100,699,395 and still increasing, domestic rice farms are further pressured to meet demand, but they fail to do so, resulting in a supply gap. Hence,the government must have a credible, efficient and effective population management program, as a growing population, leads to higher demand for food, a major food security concern. Based on the 2000-2014 data, the country has consistently been more of a consumer than of producer of rice. Depending on domestic production alone will not be enough to meet the growing consumption of and demand for rice. It will take a long time, radical measures and political will before rice self-sufficiency, which has been the one of the goals of past and present governments for several years now, can be achieved by the Philippines. Instead of focusing on rice self-sufficiency, the government should introspect on how rice sufficiency can be achieved. Rice sufficiency simply refers to the ability of the country to secure its rice supply and ensure that there is easy access to it regardless of the location where it is sourced. It can be attained through a carefully thought of and executed mix of measures that involve increasing the capacity of domestic rice farms to increase output, filling the gap in supply through imported rice stocks and storing the rice stocks in strategic areas of the country to ensure that all Filipinos will have access to them, especially during times of dire need. Rice sufficiency is more achievable and, for now a more realistic approach in addressing the gaps between supply and demand of rice in the Philippines is needed. It may take several years before the Philippines can become rice selfsufficient. To attain this, a series of necessary steps, all of which will involve political will, must be undertaken. These include the adoption of modern farming, harvest and postharvest techniques to improve yields and reduce wastage; development and eventual adoption of new high yielding, pest resistant, and drought and flood resistant varieties; protection of rice farms and other agricultural lands from rapid and uncontrolled conversion to non-agricultural uses; construction of new and continuous improvement of existing farm-to-market roads, irrigation systems, dryers, storage houses and other facilities that are vital to farming, linking farmers to market places; and full implementation of laws against hoarding, smuggling and price manipulation to ensure that consumers have access to steady rice supply at reasonable prices. 22

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 The best way for the country to achieve rice sufficiency is to encourage farmers to stay in farming; younger people to venture into it, promote agriculture not as just as job but as a profitable business. The lack of adequate support to farmers, farming communities and farmers' groups; and inconsistent economic and policies and planning by the State toward agriculture and food security not only affected the supply and price of rice but have forced farmers, most of whom are aging and with limited educational attainment, to either switch to planting crops that will significantly earn their income or abandon farming altogether and, in the case of farmer land owners, sell their farms to real estate developers. Insufficient income derived from and the hard physical work involved with agriculture, lack of development of rural areas, and the lure of higher paying jobs in Metro Manila and other cities caused most of the rural youth to lose interest and move away. Unless significant courses of action are undertaken by the Philippine government, the Philippines will remain a net importer of rice and domestic rice production will not be enough to meet growing demand. 5. Policy Recommendations Based on the findings of this study, the following policy recommendations to achieve rice sufficiency are posited for adoption by the government, more specifically the Department of Agriculture (DA) and the National Food Authority (NFA): 1. Develop, adopt and plant rice varieties that are high yielding, pest resistant, and drought and flood resistant. 2. Construct new and continuously improve existing farm-to-market roads, irrigation systems, dryers, storage houses and other facilities that are vital to farming, harvest and postharvest and linking farmers to market places. 3. Protect rice farms and other agricultural lands from rapid and uncontrolled conversion to non-agricultural uses. 4. Fully implement laws against the hoarding and smuggling of rice, and rice wholesale and retail price manipulation. 5. Implement a credible, efficient and effective population management program. 6. Formulate and implement continuous, consistent, effective and efficient policies on food security and agriculture, especially those that will encourage farmers to stay in and younger people to engage in farming and agribusiness. 7. Formulate and implement a strategy involving a mix of procurement of locally produced rice and imported rice, and have those stocks strategically stored in key areas of the country for greater access, n times of dire need such as rice shortage and natural calamities. 8. Carefully examine the suggestion of lifting rice importation restrictions 23

Yuchengco Center being imposed on the private sector by the Department of Agriculture (DA), especially the National Food Authority (NFA), as a possible way to increase availability of rice in the market at reasonable and competitive prices without compromising the welfare and business competitiveness of local rice farmers. 9. Encourage farmers to stay in agriculture by providing them with all forms of necessary support such as enhanced access to credit from financial institutions; provision of material assistance such as seeds, fertilizers, pesticides, herbicides, and planters and other equipment; incentives for high farm and top quality farm yield; and tapping their entrepreneurial skills through sufficient extension work, training and education. 10. Cultivate the potential of farmers as entrepreneurs in financial and business management, and encourage them to unite as one strong group, pool together the small resources of farmers to form community-based farming access, harvest and postharvest facilities by all farmer-members the community. 11. Encourage the youth, especially those from rural areas, to engage in agriculture by promoting it as a profitable business venture; and, at the same time, investing in and intensifying the support to agriculture and agriculturerelated courses that are being offered in colleges and universities, technical schools, and the Technical Education and Skills Development Authority (TESDA); and agriculture and agriculture-related subjects that are to be offered as part of the technical track of the K-12 program. 12. Through a joint cooperation of the Department of Agriculture (DA) and the Department of Health (DOH), encourage citizens to consume alternative sources of carbohydrates such as corn, cassava and sweet potato as a possible way of reducing the demand for rice. 13. Through a joint cooperation by the Department of Agriculture (DA) and the Department of Trade and Industry (DTI), extensively promote agribusiness as a way of expanding and securing the country's food sources, encouraging farmers to stay and the youth to engage in agriculture, and inviting more Filipinos to pursue entrepreneurship either as main source of livelihood or as a way of augmenting their income; and 14. As a radical and unconventional way of reducing rice wastage on the shortterm, enact and implement a national policy that will end the offering of "unlimited rice" meals by restaurants. 24

Rice Production and Consumption Trends in the Philippines from 2000 to 2015 BIBLIOGRAPHY Apun, M.R.F. et al. "The Problem with Rice." Rappler. November 01, 2014. Retrived from http://www.rappler.com/move-ph/issues/hunger/commentaries/73333-problemrice-shortage-philippines. Asian Disaster Reduction Center (ADRC). 2015. Information on Disaster Risk Reduction of the Member Countries: Philippines. Taken from http://www.adrc.asia/nationinformation.php?nationcode=608. Exconde, B. 2013. Ensuring Rice Sufficiency in Southeast Asia: A Comparative Analysis of Production Trends and Government Policies in Six Countries. Manila, Philippines: Yuchengco Center, De La Salle University. Exconde, B. 2014. The Political Economy of the Rice Industry in Southeast Asia: A Comparative Analysis of Value Chain in Ensuring Rice Sufficiency in Six Countries. Manila, Philippines: Yuchengco Center, De La Salle University. Foundation for Economic Freedom, Inc. (2016). Let change come to the present rice policy: Liberalize rice importation! [press release]. Retrieved from http://www.fef.org.ph/freedom/wp-content/uploads/2014/02/fef-press-release-on- Philippine-Rice-Policy.pdf. Galvez, J.K. "Piñol to department of agriculture: Rice self-sufficiency a must, not a choice." The Manila Times. July 1, 2016. Retrieved from http://www.manilatimes.net/pinol-to-department-of-agriculture-rice-self-sufficiencya-must-not-a-choice/271168/. Habito, C. "No Free Lunch: Reinventing the Rice Policy." Philippine Daily Inquirer. July 12, 2016. Retrieved from http://opinion.inquirer.net/95609/reinventing-ricepolicy. International Rice Research Institute (IRRI). 2016. World Rice Statistics. Retrieved from http://ricestat.irri.org:8080/wrsv3/entrypoint.htm. Khan, I. "Top 10 Largest Rice Producing Country in the World." World Knowing. July 8, 2015. Retrieved from http://worldknowing.com/top-10-largest-riceproducing-country-in-the-world/. 25

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Rice Production and Consumption Trends in the Philippines from 2000 to 2015 ABOUT THE AUTHOR Mr. Benedict A. Exconde is an academician, economist, and researcher. An economics graduate of the University of the Philippines, Mr. Exconde has many years of professional experience in the academe, business, the private sector and the government; and expertise in the areas of agriculture and food security, transportation and logistics, defense and foreign affairs, entrepreneurship, and education and the academe. Prior to "An Analysis of Rice Production and Consumption Trends in the Philippines from 2000 to 2015", Mr. Exconde authored three publications for Yuchengco Center, De La Salle University: "Ensuring Rice Sufficiency in Southeast Asia: A Comparative Analysis of Rice Production Trends and Government Policies in Six Countries" (2013), "The Political Economy of the Rice Industry in Southeast Asia: A Comparative Analysis of Value Chain in Ensuring Rice Sufficiency in Six Countries" (2014) and "Troubled Waters of a Paradise: An Analysis of the Territorial Disputes in the South China Sea Involving Six Asian Claimant-States" (2014). 27