15

MODULE 1

THE PHILIPPINE RICE SITUATION

Overview

This module presents a situationer on trends in production

and hectarages for rice, demand for the commodity, imports and
exports, requirement for national rice self-sufficiency and rice
pricing policy.

Rice is the most important and dominant commodity in the

country. According to the international rural sociologist, Gelia T.
Castillo, rice is life, politics, and economics to the Filipino. It is
survival itself.

Objectives and TTopics

opics

I. Recognize the importance of rice in the agriculture sector and in the

economy.

A. From 1990 to 2001, paddy contributed an average of 18% to GVA of

agriculture and 3% to GNP.
B. Rice is the staple food of 90% of our population.
C. It accounts for 41% of total calorie intake and 31% of total protein
intake.
D. Rice carries the largest weight of a single commodity in the Con-
sumer Price Index (CPI). Thus, rice prices are the best barometer
for inflation in the whole economy.
E. There are about 2.5 million farmers in the country whose major source
of income is rice farming.
F. The goal of every government administrator is self-sufficiency in
rice.

II. Describe the areas planted to rice in the country.

A. Rice is cultivated in 2.3 million hectares (M ha), 25% of total arable

land.
B. In 2001, the total area planted to rice is estimated at 4.1 M ha
(irrigated-2.73 M mt; lowland rainfed-1.24 M mt; 0.1 M mt).
C. Sixty-seven percent of this total rice area harvested is irrigated;
30% is lowland rainfed and 3% is upland.
16

D. Problem soils total to around 1.2 M ha which is about one-third of

the total hectarage: 600,000 ha have adverse water and nutrient
conditions; 100,000 ha are saline prone; 10,000 ha are alkaline; 15,000
ha have peat soil, and 500,000 ha are acid sulfate soils.
E. Rice areas are projected to further shrink due to their conversion to
other uses such as subdivisions and residential areas, parks, and
for other commercial/industrial purposes.

III. Explain the trend in rice area harvested, production, and yield during the
period 1970-2001.

A. Rice Area Harvested

1. From 1970 to 2001, the total area harvested grew by 1% annu-

ally owing to increase in irrigated areas and increase in cropping
intensity (see figures 1.1).
2. Irrigated areas grew at an average of 2.9% annually; rainfed
areas declined from the 1.7 M ha in 1975 to 1.24 M ha in 2001;
and upland rice area declined by more than 75%.
3. In the last decade, the total area harvested increased from 3.3
M ha in 1990 to more than 4 M ha in 2001 despite some loss of
agricultural land because of land conversion, urbanization and
industrialization (see figures 1.2).
4. This growth in area harvested is accounted for by the increase
in irrigated areas which grew by an average of 3.2% per year in
the last decade.

B. Palay Production

1. A growth rate of almost 4.6% in production was achieved in the

1965-1975 period, largely explained by high yield growth. During
the 1985-1995 period, however, rice production grew only at an
average rate of 1.6% per year.
2. From 1995 to 2001, total production increased from 10.5 M mt
to almost 13 M mt with a slump in 1998 due to the El Niño that
hit the country (see figures 1.3).
3. Irrigated areas contributed about 76% of this total production.
4. This increase in production, however, cannot keep pace with
consumption growth, thus resulting in rice importation averag-
ing more than half M mt yearly.
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4.00
Area
3.50
Prodn
3.00 Yield
Cons
Index (1961=)

2.50
Popn
2.00

1.50

1.00

0.50

0.00
1961 1966 1971 1976 1981 1986 1991 1996 2001
Year

Figure 1.1 Trends in area, production, yield, consumption and population,

Philippines, 1970-2001 (BAS-PhilRice, 2002)

4.5
4.0 0 4.0 4 4.0 7
3.9 5
3.7 6 3.8 4
4.0
3.4 7 A ll ec os y s tem s
3.3 2
3.5 3.1 1 3.1 7
Are a Ha rve ste d (in M ha )

3.0 2.6 6 2.7 0 2.7 3

2.4 8 2.5 0
2.3 3
2.5 2.1 8 Irrigated
2.0 1
2.0 1.6 01
1.4 3 1.4 2 1.4 7
1.2 9 1.3 5 1.3 4 1.3 3 1.3 4
1.5 1.2 1
0.9 9
1.0 R ainfed

0.5

-
1970 1980 1990 1995 1996 1997 1998 1999 2000 2001
Ye a r

Figure 1.2 Estimated rice area harvested by ecosystem, Philippines,

1970-2001 (BAS-PhilRice, 2002)
18

14 12.95
12.39
11.77
12 11.28 11.27
10.54 A ll ec os y s tem s
9.79
9.32 9.41
10 8.92
8.48 8.55
8.23
Production (in M m t)

7.65 7.60 Irrigated

8
6.60 6.68

6 5.32
4.51

4 2.95 2.88 2.94 3.05 2.87 2.98 3.16

2.59 2.79
2.01 1.87
Rainfed
2

-
1970 1980 1990 1995 1996 1997 1998 1999 2000 2001
Ye a r

Figure 1.3 Estimated paddy production by ecosystem, Philippines,

1970-2001 (BAS-PhilRice, 2002)

4.00
3.59
3.39 3.48 Irrigated
3.29 3.26 3.31 3.35
3.50
3.06 3.19
3.07
2.80 2.93 2.95
3.00 2.81 2.80 2.86 A ll ec os y s tem s
2.70
2.50 2.36
2.23
Yield (m t/ha )

2.06 2.20 2.13 2.08 2.15

2.07 2.08 Rainfed
1.90
2.00 1.71 1.80
1.56
1.50

1.00

0.50

-
1970 1980 1990 1995 1996 1997 1998 1999 2000 2001
Ye ar

Figure 1.4 Estimated average yield by ecosystem, Philippines,

1970-2001 (BAS-PhilRice, 2002)
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C. Yield per Hectare

1. Average paddy yield almost doubled from about 1.7 mt/ha in the
1970 to 3.19 mt/ha in 2001(see figures 1.4).
2. During the period, yield in irrigated areas grew by an average of
1.8% per year, 1.4% in rainfed areas, and 1.9% in upland areas.
3. The growth rate in yield is declining, particularly in the irrigated
areas. Average growth rate in yield decreased by half from an
average of 2.4% per year during the 1970 to 1990 period to
1.2% during the last decade.
4. For irrigated areas, the average growth rate per year in the last
decade is 0.9% only compared with the 2.8% annual growth
rate in year during the 1970 to 1980 period.

IV. Show the trend in rice production (milled rice equivalent) relative to
domestic consumption.

A. In the last three decades, the country has seen more deficits than
surpluses in rice.
B. With a population close to 80 M in 2001 and per capita rice con-
sumption of 102 kg, total rice requirement for food use only is more
than 8 M mt per year.
C. Adding 1.1 M mt to account for seeds, feed and wastes, the total
domestic rice requirement is about 9.1 M mt.
D. At a realizable total palay production of 12.95 M mt and at the cur-
rent 65% milling recovery, this translates to 8.42 M mt milled rice or
a deficit of 680,000 mt. The country, thus resort to rice importation
to meet the total requirement (see figure 1.5).
E. The deficits are even more pronounced owing to the seasonal na-
ture of rice production in the Philippines. Production during the dry
season is not enough to cover the large deficits during the lean third
quarter months, e.g. 0.77 M mt surplus dry season production was
not enough to cover the 1.97 M mt deficit (see figure 1.6).

V. Compare rice prices and costs in the Philippines with other Asian coun-
tries.

A. Filipino consumers pay rice prices that are double to triple those
borne by Thai or Vietnamese households (see figure 1.7).
B. As of August 2001, the wholesale price of regular-milled rice in Metro
Manila wet markets averaged 16.53 per kg. For the same quality of
rice, Vietnamese households pay whosesale for only P6.36 per kg
while Thai consumers pay P7.54 per kg.
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10 000 To tal Us e

80 00
Tota l Use a nd P roduction

Ric e Produ c tio n

60 00
(in '000 m t)

40 00

20 00
Surplus /De f ic it
0
19 70 19 75 19 80 19 85 19 90 19 95 19 96 19 97 19 98 19 99 20 00 20 01
-2000

-4000
Ye a r

Figure 1.5 Estimated rice consumption and production, Philippines,

1970-2001 (BAS-PhilRice, 2002)

2500

P roduc tion
2000
Total Us e
M onthly P roduction ('000 m t)

1500 +0.77 Mmt +1.69 Mmt

+1.69 M m t
1000 +0.77 M m t

-0.73 Mmt
-0.73 Mmt -1.97 Mmt -0.44 M m t
500 -0.44 Mmt
-1.97 M m t

0
Jan F eb M ar A pr M ay Jun Jul A ug S ep O c t Nov Dec
Ye a r (2001)

Figure 1.6 Monthly Production Inflow and Total Use of Rice, 2001
 21

C. Similarly, Filipino rice farmers incur more expenses in growing rice

compared with Thai and Vietnamese farmers.
D. Based on IRRI survey data in 1999, it costs Filipino farmers P4.82
to produce a kilo of paddy while Thai farmers spend only P2.94,
Vietnamese, P3.45, and Chinese, P2.92.
E. The Philippines employs more hired labor in paddy production than
other countries

450 427
M o st E xp en sive
400

350
300
Average
282
300 266
243
229
250 220
US$/To n

205
192
200

150 116
100

100

50

-
China Indones ia V ietnam B anglades h Philippines India USA Pak is tan Thailand Braz il My anmar

Source: USDA FAS 2001, www.oryza.com, www.telmedpak.com, www.agrinet.org.gov, www.usda.gov, www.fao.org

Figure 1.7 Cross-country comparison of rice prices, 2001

VI. Discuss the status of farm-level production technology.

A. Nearly 100% of the farmers use high-yielding varieties, but only

around 30% use high quality seeds. The average farmers’ seeding
rate is 2 bags with transplanting still the dominant method of crop
establishment.
B. Farmers generally apply inorganic fertilizer 2-3 times in a cropping
season. Average NPK application per hectare is 65-15-10 for all
ecosystem.
D. Most farmers apply herbicide and molluscicide. The practice of IPM
is increasing among farmers but most farmers still spray a certain
level of insecticide.
E. Land preparation and threshing activities are largely mechanized.
F. Most farmers sell their paddy fresh compared with Thai and Viet-
namese farmers.

VII. Describe the status of rice marketing and international trade.

A. The government intervenes in the rice sector by maintaining a floor

price for farm prices and a ceiling price for retail prices.
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B. The National Food Authority (NFA) has the sole control of rice im-
portation.
C. The average procurement of NFA is about 3-5% of the total palay
production.
D. To improve market efficiency, the problems on poor condition of
farm-to-market roads, and lack of grades and standards need to be
addressed.
E. Net effective protection has been declining due to the higher protec-
tion on tradable inputs and overvaluation of exhange rates.

VIII. Infer how rice production can catch up with the ever increasing population.

A. Our population grows at an annual rate of 2.5%, one of the world’s

highest. The growth rate in productivity has to exceed the population
growth rate in order to meet the total requirement.
B. By year 2004, the population is estimated to be about 83.9 M. This
means that we have to increase production by at least 4.38 mt/ha in
the irrigated areas through yield increase alone to achieve self-
sufficiency.
C. The Philippines can catch up if adoption of improved technologies
and strong institutional support are sustained.
D. In the next four decades, we have to double our rice yields to be
able to feed the population without importation.

Suggested Methodology

- Lecture-Discussion
- Case analysis
- Experiential learning: participatory discussion groups using guide
questions

Materials/Visuals

- Slides, slide projector

- Transparencies, OHP
- Powerpoint presentaion
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References

Duldulao, VA. 2000. Let’s produce more rice. Department of Agriculture,

Philippine Rice Research Institute. Muñoz, Nueva Ecija, Philippines.

PhilRice. 1993. Philippine rice situation in a capsule. Rice Production

Technoguide. Illustrated English Edition, 2nd printing. PhilRice,
Muñoz, Nueva Ecija, Philippines.

PhilRice-BAS. 1998. Philippine rice statistics, 1970-1996. PhilRice,

Muñoz, Nueva Ecija, Philippines.

Palaytandaan. 2001. Philippine Rice Research Institute. Muñoz, Nueva

Ecija, Philippines.

Tolentino, Bruce et.al. 101 Facts about rice in the Philippines.

Evaluation

Write true if the statement is correct. If false, change the under-

lined word or words to make it correct.

_______ 1. Rice is the staple food of more than 60% of Filipi-

nos.

_______ 2. The goal of our government is to produce rice for

export.

_______ 3. Due to decreasing hectarage, rice production is also

decreasing.

_______ 4. Our problem soils for rice total to 1.2 M ha which

is about 1/4 of the country’s rice hectarage.

_______ 5. Across ecosystems, upland areas grew fastest.

_______ 6. The increase in production has kept pace with con-

sumption.

_______ 7. The increase in total food use was largely attrib-

uted to the increasing population.
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_______ 8. The Philippines has employed more hired labor in

paddy production than any other country.

_______ 9. Improved varieties contributed 90% of the palay

output.

______ 10. The cost of rice production is lower in the Philip-

pines compared to other Asian countries.

Questions to Answer

1. Why is rice the most important commodity in the Philipines?

2. Explain why, despite decrease in areas devoted to rice

prodution, is still increasing?

3. Why do we import rice?

4. Compared with other ASEAN countries, rice is more expen-

sive in the Philippines. Explain why.