President Rodrigo Duterte has recently approved the Rice Tarrication Law, allowing massive rice importation into the country.
Research group IBON said that the second year of slowing growth under the Duterte administration should be enough to jolt it out of its complacency and denial. The downturn in the last two years and the poor prospects in the year to come should be a wake-up call to start to undertake the difficult but necessary reforms for genuinely inclusive growth and national development.
The Philippine Statistics Authority (PSA) reported a 6.2 percent annual growth in the country’s gross domestic product (GDP) for 2018, lower than government’s revised growth target of 6.5-6.9 percent for the year.
Government cited slowing agriculture and high inflation as among the main factors pulling back growth, while the main drivers were growth in construction, and trade and repair of motor vehicles, motorcycles, personal and household goods.
“Growth is slowing most of all because of the economy’s unsound fundamentals in backward agriculture and shallow industry,” said Sonny Africa, IBON executive director.
The agriculture sector registered just 0.8 percent growth in 2018 from 4 percent in 2017.
This is the sector’s worst performance since its contraction in 2016.
Yet, Africa said, the administration seems to have little interest in reversing this trend.
For example, the Php49.3 billion agriculture department budget for 2019 proposed by Congress is Php1.4 billion less than the Php50.7 billion in 2018 (in equivalent cash-based terms).
Africa also noted that manufacturing growth slowed to 4.9 percent in 2018 from 8.4 percent the year before, which is the slowest since the 4.7 percent growth in 2011.
He said that this is due to weaker demand in domestic consumption and weaker exports amid the global economic slowdown. Manufacturing also remains shallow in being low value-added, foreign-dominated, and dependent on foreign capital and technology.
Africa pointed out that recent rapid growth has instead relied on external short-term factors that are fading. Yet remittances are slowing, exports are falling, and interest rates are rising. The real estate and consumer spending booms are also petering out.
Growth in overseas remittances slowed from 5.0 percent in 2016 to 4.3 percent in 2017 to just 3.1 percent in the first 10 months of 2018, said Africa.
Exports growth increased from 11.6 percent in 2016 to 19.5 percent in 2017, but then fell to 11.5 percent in 2018.
Meanwhile, the benchmark overnight reverse repurchase (RRP) rate rose steeply from 3.0 percent in 2017 to 4.8 percent by end-2018, reversing the decade-long general decline in interest rates.
Africa also said that household consumption spending markedly slowed from 7.1 percent growth in 2016 and 5.9 percent in 2017 to just 5.6 percent in 2018.
The real estate boom is also tapering with 2016 growth of 8.9 percent in real estate, renting and business activities declining to 7.4 perent in 2017 and falling further to just 4.8 percent in 2018.
“Rising government spending and its infrastructure offensive haven’t been enough to offset the reliance on waning external factors,” said Africa. “The administration’s efforts to stimulate growth to its 7-8 percent target with even more spending, are not going to be enough amid high disguised unemployment, low incomes, and the global slowdown this year.”
Global GDP growth is estimated to slow from 3.1 percent in 2018 to 3.0 percent this year.
“The Duterte administration needs to stop downplaying slowing growth and hyping that this as still among the fastest in the region and the world because the growth is becoming more jobless than ever,” Africa said.”
The number of employed only increased by 162,000 from 41 million in 2016 to 41.2 million in 2018, according to data from the Philippine Statistics Authority (PSA).
Average annual job creation was then only 81,000 in the period 2017-2018, which is the lowest level of job creation among post-Marcos administrations.
Africa said that government continues to ignore telltale signs of an economic downturn and deceive Filipinos with its rosy picture of the economy.
He said that the sooner the administration admits the failure of its neoliberal policies, the sooner measures that will spur domestic industries and benefit the Filipino people can be implemented. #
Rice tariffication and uncontrolled rice imports will displace rice farmers and worsen food insecurity without solving the problem of expensive rice, research group IBON said.
The government is using high inflation to justify rice sector liberalization according to long-standing demands of the World Trade Organization (WTO) and big foreign agricultural exporters.
Domestic agriculture should be strengthened with ample government support instead of being prematurely opened up to cheap foreign government-subsidized imports from abroad, said IBON.
Senate Bill 1998 or the Rice Tariffication Bill, which was approved by the Philippine Senate on third and final reading recently, is currently undergoing bicameral deliberation.
Government said that this will protect the rice industry from volatile prices, and consumers from rising inflation.
The measure is also supposed to earn Php10 billion annually which will be used to fund development of the local rice industry.
IBON however stressed that uncontrolled rice imports will drive rice farmers into worse poverty.
If the Philippines imports two million metric tons of palay, for instance, some 500,000 of around 2.4 million rice farmers will be adversely affected.
Even the government’s own Philippine Institute for Development Studies (PIDS) projects a 29 percent decline in rice farmers’ incomes from a Php4-decrease in palay farm gate prices when rice tariffication is implemented.
As it is, farmers’ average monthly income of Php6,000 at the Php21 farmgate price is already far short even of the government’s understated Php9,064 average poverty threshold for a family of five.
It is also not even one-fourth (23 percent) of IBON’s estimated monthly family living wage (FLW) of Php26,026 for a family of five as of October 2018.
Filipino rice farmers are unproductive and domestically-produced rice is unnecessarily expensive because of long-standing government neglect of the agriculture sector.
No more than five percent of the national budget has been given to agriculture over the last two decades.
The Duterte administration does not correct this and, for instance, the Php49.8 billion 2019 Department of Agriculture (DA) budget it submitted to Congress in July is just 1.3 percent of the national budget and even Php862 million less that its cash-based equivalent of Php50.7 billion this year.
The hyped Php10 billion (US$190 million at current exchange rates) rice development fund of the Rice Tariffication Bill is too little and too late, said IBON.
This compares unfavorably to rice industry support given by other rice producers including some countries the Philippines imports rice from — Vietnam (US$400 million), United States (US$619 million annually), Thailand (US$2.2-4.4 billion), India (US$12 billion), Japan (US$16 billion), and China (US$12-37 billion).
IBON also pointed out that there is no guarantee that retail rice prices will be lower in the long run with unhampered importation.
Relying on rice imports makes the country vulnerable to higher world market prices as well as to rice production and export decisions of other countries.
In 2008, for instance, IBON recalled bow Vietnam, India and Pakistan restricted their rice exports amid rising global rice prices.
Thailand also raised the idea of creating a global rice cartel similar to that for oil exporting countries.
Government’s neoliberal prioritization of food imports and production of crops for export should be reversed, IBON said.
The Philippine government should instead strengthen the local rice industry. This begins with free land distribution to all willing tillers, followed by giving substantial support for rice producers, and taking control of the market to ensure reasonable prices for rice and other agricultural produce. #
“Dati, itong pechay-baguio, ang kuha namin ay nasa P90 lang. Ngayon, nasa P150 na. ‘Yung repolyo, dati P80. Ngayon, P180 na. Sobrang laki ang itinaas, kaya sobra rin ang nararamdaman namin na dagok.”–Mang Ricky, tindero ng gulay, Sitio San Roque, Quezon City