On Corporate Rice Farming and Other Notes on the Rice Crisis

House Speaker Prospero Nograles and Palawan representative Abraham Mitra, the chair of the House Committee on Agriculture, is set to file this coming week a bill entitled “An Act promoting corporate farming and providing incentive(s) therefor“. Nograles and Mitra would require the country’s most profitable (read large) corporations to engage in agricultural production supposedly to feed their own employees. But it also aims to encourage corporations to enter rice farming in a big way, through tax incentives, government loans and even use of public land.

The proposed bill’s explanatory note states:

In addition, corporations and other business entities shall be required to engage in corporate farming with rice as their primary crop. Vast tracks of unused public lands can be tapped for such corporate farms. Corporations can also enter into joint venture agreements with farmer beneficiaries of agrarian reform communities. As such, employers will not only be able to feed their own employees and but will ensure provide ample supply to local consumers.

The classic argument for this is that corporations will be able to achieve economies of scale that small rice farmers could never hope to attain. The built-in efficiencies of corporations will allow for the cultivation of an ample rice supply at lower costs and, presumably, speed up the processing and distribution of the end product.

However, I doubt if much thought has been given to the social damage such a policy will bring about. Corporations have their own imperatives, primarily to earn profits for shareholders and to grow. It doesn’t make corporate sense to simply enter into rice farming on a small scale to feed employees or invest in manpower, technology and other inputs for limited returns. Corporations, specially the huge conglomerates like San Miguel, will quickly come to dominate the entire process, from planting to retailing.

Small farmers, unable to compete with the big boys, will be reduced to contract farming or worse, will be forced to sell or lease their land for a pittance. As it happens, the present rice crisis has hardly benefited subsistence rice farmers, despite a nearly threefold increase in the price of the grain from a year ago. According to the International Herald Tribune, the biggest winners are the millers and packers, because they are able to hold onto their rice and sell at higher prices. And now the big corporations are about to intervene in an already inequitable situation, and further squeeze out the traditional small-scale farmers.

Furthermore, the provisions on tax breaks and government loans, not to mention the ceding of state lands, provide yet more opportunities to promote institutionalized corruption.

The proposed bill is just another knee-jerk reaction to the rice crisis, and a symptom of what Randy David calls the government’s policy blind spot. Instead of selling out to big business, we need to take a good, hard look at our national attitudes and policies which impact agriculture, including, as pointed out by Prof. David, the thoughtless downgrading of agriculture in favor of a service economy based primarily on the earnings of exported workers.

We need to re-examine the rapid and reckless conversion of farmland into industrial and residential zones. The government needs to invest more in research and development, irrigation, sustainable farm-based technology and other long-term solutions to address the needs of farmers. According to Prof. David:

The rice crisis, which can only become serious, forces us into a “gestalt switch”–a change of frame that will allow us hopefully to see what our blind spots have hidden from us.

Interestingly, Time magazine has reported in an article “A Rice Crisis is Boiling” :

Rice is life itself in Southeast Asia, and this year there is not enough to go around. Freakishly bad weather last year has turned the region’s usual bare sufficiency into severe shortage. The result: smuggling, hoarding, soaring prices and hungry people.

Thailand, a traditional supplier, has left her rice-buying neighbors in panic by halting exports to fill her own needs. China, usually an exporter, has also cut back sales because of a poor harvest last year.
Indonesia and the Philippines face the worst shortages, but wealthier Hong Kong and Singapore also are hard put to find supplies.

The article sounds current, but was actually written in July 1973, almost 35 years ago. We’ve been in this situation before and we managed to survive. And to some extent, even prosper. There’s no reason why we can’t do it again.

However, the IMF presents a gloomy scenario.

The reasons for the worldwide food crisis and some long-term solutions for a most painful reality– the global food situation is going to get worse before it gets any better.

As I pointed out in a previous post, the political survival of the Arroyo regime hinges on how it handles the present food crisis. Amando Doronila explains that because rice ( or the rising price of the commodity) is a potential political flashpoint, the government’s priority has shifted to preventing civil unrest. If things don’t improve, the social volcano may erupt.

Rice prices are still soaring.

Why the Philippines, home to the International Rice Research Institute (IRRI) and some of the world’s best agriculture schools, has become the world’s top importer of rice.

As Randy David explains, the main crisis is still political. So much has been written about the roots of the present political crisis, and some people say it is now time to move past this crisis, considering the gravity of the rice problem. But according to Prof. David, it is difficult to imagine how we can move on without carrying forward the same dysfunctions that have hobbled the government throughout the Arroyo presidency.

4 thoughts on “On Corporate Rice Farming and Other Notes on the Rice Crisis”

  1. I have deep reservations about giving large corporations a dominant role in rice cultivation. As we all know, rice is deeply intertwined with politics in our society. This would be tantamount to handling these conglomerates a significant amount of political influence. Can they exercise it responsibly and not selfishly ? I doubt it.

  2. You’re right about knee jerk — my family was into corporate farming. Our land in Bukidnon supplied the whole country’s requirements during the crisis in the 1970s. Agricultural Research Farms, Inc. was exempt from Marcos’ land reform law, but not from CARP.

    We had to go on Voluntary Offer to Sell, and had to leave behind a fully irrigated rice farm, complete with a rice mill and equipment that had the farmers as employees-stockholders.

    We watched helplessly as many other agricultural lands were converted into industrial estates. Now they want corporate farming using public land — how well suited for rice would these lands be when we have been pouring cement over arable land?

    Unless the proponents have defined within their districts arable public lands. The unmistakable stench of vested interests is very strong here.

    I agree with you that ‘we need to take a good, hard look at our national attitudes and policies which impact agriculture.’

  3. Baguio Insider: I didn’t know you had a farm in Bukidnon. What happened to it after you were forced to sell ? It would be interesting to know if productivity went up or down under the farmer-beneficiaries. Or coop, was it ?

    Yup, the unmistakable stench of vested interests is strong in this scheme for corporate rice farming.

    Very happy to hear from you, BI.

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