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Farmers see no respite despite rice price hike

The government is committing 44 billion pesos (roughly US$1 billion) to emergency agricultural assistance, including fertilizer, improved irrigation, infrastructure and seeds but some farmers are sceptical that they will get anything.
(Veejay Vilafranca/IRIN)

Imelda Lacandazo, a 41-year-old rice grower, should be glad the government has hiked the farm-gate price of palay (unhusked rice) in the wake of the rice crisis. Lacandazo and her husband till a one-hectare rice plot in Victoria Town in Laguna Province and, if good weather permits, they harvest about 80 cavans of palay (about 4,000kg) in the first crop season.

In a move to stave off a potential political crisis, President Gloria Arroyo last month ordered an increase in palay farm-gate prices by the National Food Authority (NFA) from 12 to 15 pesos/kg (US$0.35).

The increase was meant to enable farmers to compete with commercial traders and keep them from cornering most of this year's first crop. It will also hopefully encourage farmers who had shifted to other crops to consider planting rice, the chief staple, again.

"I should be jumping for joy now, but no. At that price [P15], the impact is minimal on our income," Lacandazo said.

The Lacandazos, however, count themselves luckier than many. "At least we own the land we till and we don't have any debts," Imelda told IRIN. "What about those who sell their produce to commercial traders?"

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In the last harvest, the Lacandazos only earned P47,000 ($1,119). Their one-hectare lot produced 80 cavans, or 4,000kg. But the president's order for NFA to increase the farm-gate price had not yet come into effect. Thus, they sold their produce at a low P11.75/kg ($0.28).

But for the cropping season, the Lacandazos spent P26,200 ($624) in production costs, including preparation of the farmland, seeds, fertiliser and labour. The biggest expense, about a third, came from fertiliser as they used the high-yielding variety.

High-cost fertiliser

For their one hectare, Lacandazo told IRIN, they used six sacks of fertiliser. However, tight world supply has almost doubled the cost: a bag that used to cost P860 ($20) now costs P1,500 ($35).

According to the Philippine Phosphate Fertiliser Corporation (Philphos), international market prices of some basic raw materials - such as sulfur, ammonia and potash - used in fertiliser production have increased rapidly over recent months, indicating that prices will continue to rise.

While the Lacandazos' palay sold for P47,000, their expenses were P26,200, leaving them a net income of only P20,780. As the planting season and harvest season lasts for three months, their daily income from farming was P173 pesos ($4) for the period. They are one of the fortunate ones, however, having good irrigation, so they will plant and harvest a second crop. Even so, their annual profits are meagre, amounting to as little as P118 ($2.80) a day averaged over the entire year.

At least they do not have to resort to usurious loans for their production inputs, as does Alex Arias, also of Laguna.

Arias told IRIN that for every P1,000 ($23.80) creditors are paid with four cavans of palay. In his case, he borrowed P15,000 ($357) to buy fertiliser.

From the 80 cavans he harvested, he paid the creditor 60 cavans. After subtracting other production costs, he only earned P11,750 ($280) for the entire harvest season.

"What I earned from the harvest is just enough to pay for my other debts," he said.

Photo: Veejay Vilafranca/IRIN
Many Filippino rice farmers have to borrow money for fertilizer and other inputs and repay their loans with substantial portions of their rice harvest, leaving them little money on which to live

Assistance package

The Kilusang Magbubukid ng Pilipinas, a farmers' organisation, has been demanding that the government increase the farm-gate price from P15 to P17/kg ($0.38), while Oscar Marcellana, secretary-general of KASAMA-TK, a farmers' organisation in the Southern Tagalog region, said the NFA's new farm-gate price was only implemented in Nueva Ecija province, in Central Luzon. "In Southern Tagalog, the farm-gate price is only pegged at P12 [$0.28]," he said.

The government announced on 15 April that it would commit P44 billion (about $1 billion) to emergency agricultural assistance. The aid would come under a programme called FIELDS – standing for fertiliser, irrigation and infrastructure, extension and education, loans and insurance, dryers and other post-harvest facilities, and seeds. FIELDS would include the construction of farm-to-market roads, ferry ports and airports for agricultural cargo, rice and corn-processing centres and the promotion of organic fertiliser and hybrid seeds.

While welcoming the initiative, many farmers fear the assistance will not end up where it is most needed. Marcellana cited the P728 million ($17 million) fertiliser scam in 2004 where a subsidy for farmers never reached beneficiaries but was reportedly used for election purposes by politicians. "We are twice victims of their corruption," he told IRIN.


This article was produced by IRIN News while it was part of the United Nations Office for the Coordination of Humanitarian Affairs. Please send queries on copyright or liability to the UN. For more information: https://shop.un.org/rights-permissions

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