A story that came out in Philippine Star on Jan. 2, 2025 lamented the fact that nearly 1,000 small rice and corn mills closed shop from 2013 to 2023, with the Philippine Statistics Authority (PSA) reporting that in 2023, there were only 15,436 barangays with such mills, compared to 16,476 barangays in 2013.
What this development proves is that there is little incentive for such small mills to operate in more than a third of all barangays nationwide as hectarage for rice and corn cultivation is being lost, with property developers like the Villars snatching irrigated lands in Iloilo and transforming them into commercial centers and Congress enacting laws that pamper foreigners with 99-year land leases, tax perks, and even tariff cuts. The indigenous people of Bugsuk Island who farmed the 10,821-hectare island were granted Certificate of Landownership Awards (CLOAs) by the Department of Agrarian Reform (DAR) only for the same to be junked after DAR reclassified the land and declared it unsuitable for farming. A bigger farmer named Ramon Ang will operate an airstrip and an “ecotourism” venture on the island. In Coron and Busuanga, Palawan, the 40,000-hectare ranch “owned” by Marcos cronies is off limits to natives who used to till the huge tract of land.
The death of small rice and corn mills came when the Philippine government started liberalizing the agriculture sector, particularly when senators who didn’t know any better clung to the stupid idea that domestic crop production must align with the vagaries of the General Agreement on Tariffs and Trade-World Trade Organization (GATT-WTO) to which they acceded. They promised safety nets as the country was compelled to liberalize the rice market, import more meat and other agricultural products, and dismantle all tariff walls. The grand delusion of the GATT-WTO was that it could act as an impartial referee to resolve disputes. The result? The US ignored the need to name the WTO referees and all issues raised against US trade practices were left hanging. Filipino policymakers missed the point entirely. You only liberalize trade when you can afford it. You can’t keep up with the wealthy Joneses.
As the Philippines, contrary to its people’s needs, continue to believe in the unseen hand that disciplines the market, what farmers see are the deterioration of the rice market, and the shutdowns of small rice and corn mills indicate that there is no longer any incentive for them to operate and serve what was already a smaller share of the market. The Rice Tariffication Law (RTL) worsened the situation. As Danilo Fausto of the Philippine Chamber of Agriculture and Food, Inc. (PCAFI) said, the deregulation of the rice industry allowed the entry of huge volumes of imported but cheaper subsidized rice. affordable foreign grain supplies, resulting in stiffer competition in the domestic milling industry, according to the Philippine Chamber of Agriculture and Food Inc. (PCAFI).
However, what should intrigue Fausto and the hardy members of PCAFI is that loval rice production had been in the doldrums since the Gloria Macapagal Arroyo took over and systematically weakened the farming sector. Aside from toying with the role of landlady to Chinese farming ventures, she presided over the steady erosion of rice production. In one of her worst actions, she even declared that the Philippines was importing 2.4 million metric tons (MMT) of rice, causing riots in Bangladesh ajd in African countries dependent on rice imports. As a result, rice prices skyrocketed. No one knows what stroke of genius hit Arroyo. In the international rice market, import volumes and prices are not announced, especially in Vietnam, which has a two-tiered system of prices—one for the socialist bloc and another for the open market.
What should give the creeps to the Philippine government is the ineptitude of Malacanang, the DA, the National Economic and Development Authority (NEDA) and the lumpen technocracy that officialdom allowed the rice output to sink. The country’s rice import dependency ratio (IDR) rose to 23% in 2022 from just 8.1% in 2012, according to the PSA, Fausto said. A 300% deterioration in 10 years points to the incompetence of the government, which already operates PhilRice in Nueva Ecija and is a partner at the International Rice Research Institute (IRRI) in Los Banos, Laguna. The DA has the Bureau of Plant Industry (BPI) and the Bureau of Agricultural Research (BAR) aside from PhilMech, which is tasked to produce equipment to make farming more efficient.
The data suggest that from the rice deficit of 7.2% before 2001, which could be offset by reduced pre and post-harvest losses as well as a rational scheduling of harvesting and milling of palay, the government never spurred higher production. Fausto warned that more small rice and corn mills may shut down as the government further cut tariffs on rice and corn. Last year, President Marcos slashed rice tariffs to a historic low of 15% while tariffs on corn imports were retained at 5% for in-quota and 15% for out-quota until 2028.
Small mills serve interior barangays and thousands of farmers who grow rice and keep palay in storage, and only mill it when they need to consume the staple. Many studies conducted by PhilRice and even the Philippine Institute for Development Studies (PIDS) have confirmed that in many cases, farmers keep 40% of their palay output in storage in anticipation of “kawitang-palakol” or when the supply is down or during calamities. Only during bumper harvests would you see farmers bringing their produce to the big rice mills.
