The production, consumption, and importation of food (rice or grains) have posed contentious as well as analytically difficult issues even when economics was still in its infancy. In the early 1800s, David Ricardo came up with the idea of comparative advantage to explain why countries trade. On its face, it presented a paradox because comparative advantage suggested that a poor country (one endowed with limited technology) should export a good such as rice even if it didn’t have an absolute advantage in its production (it just needed to have a comparative advantage). Ricardo was also not one to advocate self-sufficiency as he was pretty much a proponent of free international trade. Today’s debate on the merits of rice tariffication presents conundrums and even unanswered questions, though the latter have perhaps more to do with politics than economics.
But even earlier, when economics was not yet a social science, kings and despots already knew that to survive insurrections, they made sure that the price of bread or grain (or any food staple) was affordable to the masses. The Roman poet (Juvenal) considered on or around 100 AD that political stability required whoever was in power to provide bread, as well as circuses! Forget the Romans. The Bible has its share of stories where kings had the burden of protecting their subjects from suffering in times of famine. Closer to home here in the Philippines, when the price of rice spiked in 2018 and became part of an inflation scare, there was a fair amount of wrangling on what to do.
The conventional wisdom today in economics, particularly in the textbooks on international economics, hasn’t changed much in the last two hundred years. Free trade, because it is voluntary and anchored on the concept of comparative advantage, was (and still is) a good thing. And yet, here we are in today’s age of wondrous innovations dubbed as the “fourth” industrial revolution, fulminating at the specter of rice prices remaining high for the consumer but falling to penury-inducing levels for rice farmers. What has gone wrong?
ERNESTO M. ORDONEZ: “Misunderstanding the rice crisis”
https://business.inquirer.net/278337/misunderstanding-the-rice-crisis
Sen. Cynthia Villar on cheapening price of palay: “Too much to ask na maging 21 ang kilo ng palay”
https://pinoytrend.net/2019/09/04/sen-cynthia-villar-on-cheapening-price-of-palay-too-much-to-ask-na-maging-21-ang-kilo-ng-palay/
Laurence Go, Jessica Reyes Cantos, AJ Montesa, Filomeno Sta. Ana III: “Understanding rice tariffication”
https://www.bworldonline.com/understanding-rice-tariffication/
DR. EMIL Q. JAVIER: “We told you so”
https://business.mb.com.ph/2019/09/07/we-told-you-so/
FR. RANHILIO CALLANGAN AQUINO: “The ethics of rice”
https://www.manilatimes.net/2019/09/18/opinion/columnists/topanalysis/the-ethics-of-rice/617920/
BEN KRITZ: “Govt losing the game of rice”
https://www.manilatimes.net/2019/09/22/business/columnists-business/govt-losing-the-game-of-rice/619876/
Free trade is good but the world is imperfect. Free trade works perfectly well— within national boundaries. Outside the boundary, it gets complicated. Indeed, the world is far from being integrated analogous to that of a nation.
What indeed is making Vietnam and Thailand rice very cheap? Conversely, what is making our rice comparatively more costly? Water. As Dr. Emil Javier asserts, with irrigation, our farmers would be more competitive. But at some point we simply stopped building irrigation dam because of social resistance. Now we understand the consequences of giving in to such resistance.
There are likely other factors. We should perhaps invest on agriculture intel to see how the rest of the world is doing. Are there secret varieties? Secret subsidies? etcetera. This is serious competition which we lose only at our own peril.