Rice cartels, like drug lords, deserve their doom Last of 3 parts

Last of 3 parts

AS I WROTE previously, supply boosting measures like rice tarrification are things that the rice cartels do not like. It removes control over importation from the NFA. While they can now import directly, they will now be competing with other suppliers. This is not an outcome they want, since they favor tight controls on imports to create scarcity they can use to justify price hikes.

Moreover, the coming harvests late this year promise an additional 200,000 metric tons, adding to the same amount recorded early this year that already upped the harvest by 4.6% in the first quarter of the year compared to the year before.

Along with the almost 380,562 metric tons of rice imported in May and June by the NFA, (http://www.nfa.gov.ph/images/files/announcement/2018/vsr_g2g.pdf) we can expect a boost in supply.

High supply, by itself is bad for the cartels since they cannot claim scarcity they use to hide their hoarding and justify high prices. They also cannot keep the stocks for too long, lest they go bad, and cannot prevent new investments in rice mills and warehouses from sprouting to compete with them.

There is hope in new and proposed programs will allow freer importation and boost local production at the same time.

For one, free irrigation recently approved will remove about 10 percent from farm expenses. It is hoped that this savings will go to expanded production or more money for seeds and inputs.

Secondly, expanded agricultural credit will raise production further. The Landbank reports 655 billion pesos in new agricultural loans this year, a dramatic increase that may push investment in planting, machinery and milling activities that will expand production towards the end of the year and the first quarter of 2019 and beyond.

Proposed rice tarrification also bodes well for our rice supply. In the lean months or when calamities occur, traders can freely Import the staple to help keep prices stable, unlike the present system where any imports require a long process while prices go up, and as mentioned previously, are gamed by cartels.

The challenge, however, is upping it further into the future. Towards this, developments down the road like the approval in financing of the long-awaited Jalaur dam under Korean ODA and Chico dam in Luzon that can expand irrigated areas and boost rice production further while increasing rural livelihoods satisfy long-term food security. Even the recently approved Bangsamoro Organic Law can push many areas in Muslim Mindanao, turning previous battlefields to croplands that can feed the people and provide good sources of local income.

With these positive developments, it seems that the cartels days are numbered. We will not stop monitoring developments, and hope for the best.

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