Again and again and again. The crisis is as certain as it has begun. And it is well on its way to becoming another massive, expensive, and panic-ridden recurring nightmare. It is as certain as was the imprimatur on the notorious Maharlika Investment Fund (MIF) and the futility of overwhelming reason arrayed against it. Never mind the eventual ravaging of the economy. And never mind that the MIF seeding robs the Land Bank of the Philippines and the Development Bank of the Philippines substantial capital needed by the agricultural sector.

The crisis worsens this August. For an impotent if not derelict Department of Agriculture (DA), it is a testament to the truism of insanity’s definition. Indeed Einstein’s parable of quantum insanity curses us where our highest officials constantly repeat the same palliatives applied to food shortages, each time expecting different outcomes. Quos Deus vult perdere prius dementat.

Given the 2022 electoral mandate that allowed these politicians the power to toy with our lives, perhaps the Filipino is just as demented. We permitted the resurrection of the evil we once encountered half a century ago.

Ferdinand Marcos Jr. debuted at the DA with a series of reckless and ridiculous importations, from sugar and rice, to onions, garlic, and even salt. The 2022 rice crisis he oversaw but failed to solve is now history. That it threatens again is a farce.

A few weeks ago we applauded the balanced fertilizer strategy (BFS) that would have effectively reduced input costs, thus spurring local rice productivity. We spoke too soon.

Policies favoring blind importations rather than local production distracts from the long-term benefits of protecting soil fertility and productivity.

Discern its immediate effects and count the losses. Unbridled importations had led to a virtual defunding and the recall of the budget for a draught-resistant biofertilizer program – one of the few positive aspects Marcos brought to the DA. We should have realized early on that lip-service is integral to governance-by-spin. Never mind that critical funds had already been expensed for as much as 889,000 hectares, the purchased bags now wasting away in storage. These would have increased palay production by 1.2 million metric tons and earned P24 billion in incremental profit.

As a quick and easy palliative to domestic shortages that aggravate headline inflation, debunking lies at the recent State of the Nation Address that he had proven he can bring down food prices, the default importations Marcos relies on worsen systemic curses inflicted on the  sector he personally oversees.

It does not take a rocket scientist to see the weaknesses that result in comparatively more rationale margins earned by rice exporting economies that mechanize, provide better access to funding, and operate farmer-centric equitable supply chains. Marcos’s default importations that favor cartels create wealth for exporting foreign economies. By favoring foreign farmers at the expense of ours, he virtually catalyzes the crash of domestic food security.  

The crash would have been mitigated had the importations been to increase rice buffer stocks. In 2022, in the wake of a precedent rice crisis, those buffers were set at a minimum of 90 days. Currently the DA has declared that it has slightly a third of that, roughly a month and a week if they are to be believed.

Unfortunately, not everyone at the DA or its attached agencies like the National Food Authority (NFA) agrees. Employing five prospective scenarios using risk and sensitivity analysis models, each with importations, we are likely to have depleted less-than-zero rice stocks under three scenarios while two result in either 48.1 days or 6.8 days. Where rice buffers are concerned, the NFA has the data. But not everyone listens. It is ironic as Marcos, armed with presidential powers, presides over an internally dysfunctional agency.

Focus on the DA’s internal discord under Marcos. Note the constant Whack-a-Mole controversies within its bungling bureaucracy. Among the DA’s internal dynamics, factionalism has worsened as warring interests plot and exert control on weak or non-existent leadership. Grabbing the presidential ear is now part of the one-upmanship game they play. Unfortunately, too many tongues wag while too few medulla oblongata cells work, thus validating Einstein’s parable.

While presidential whispers say there was a bumper crop and current buffers are adequate, ground-level reality differs. Note discrepancies.

Net rice exporter India accounts for over 40% of global rice exports. China and the Philippines are among the largest net importers. The recent Indian rice export ban has created global shortages and astronomical import prices that compel private importers to rethink their strategies. June and July data validate this while August will see our buffers scraping the bottom.

In Mindanao, the largest rice mill located in South Cotabato was forced to source from as far away as Mindoro. Imagine incremental transport costs that bloat mill-gate prices. Unable to source from Bukidnon, Northern Mindanao traders now rely on importations. Debunking government pronouncements, our largest rice-miller groups from Isabela and Mindoro say their year-on-year stocks have fallen. That is effectively a decline from the Duterte administration to Marcos’s.

Our weaknesses result from resurgent corruption, cartelization, crony capitalism, leadership incompetence and a failure to unify constantly combatting bureaucrats – all of which have returned with a vengeance under the Marcos administration.

That said, let us turn to the numbers. The estimates of the current buffer stock according to the Food Balance Sheet show a massive depletion by this month. This invariably forces us to import, not to simply augment the buffer but to put food on the table.

Our neighbors are not as sluggish or internally fractured. Last March, Indonesia augmented its buffer stock by ordering two million metric tons of which 500,000 was for immediate delivery. When the latter amount could not be filled by Thailand and Vietnam, both relatively high priced major rice exporting economies, Indonesia quickly negotiated one million metric tons from India.

India however denies it agreed to export. It cited a non-export policy given its current concerns on its late monsoon effects. Add its 7% productivity funding subsidies and an incremental 20% export tax where it actively commits  to assist its own rice farmers. Worsening matters, Vietnam, which accounts for over 90% of our rice imports, has recently increased its prices by 20%.

Those factors are behind the global rice shortage, and the astronomical prices certain to impact negatively on our importations as our rice buffers hit bottom within weeks, thus leading to yet another rice crisis. – Rappler.com

Dean de la Paz is a former investment banker and managing director of a New Jersey-based power company operating in the Philippines. He is the chairman of the board of a renewable energy company and is a retired Business Policy, Finance, and Mathematics professor. He collects Godzilla figures and antique tin robots.