Doing Masagana right
Can the President resurrect his late father’s signature farm program and achieve unequivocal success this time around? Experts had described as both a success and a failure the 1970s Masagana 99 program that aimed for rice self-sufficiency by raising rice farms’ palay yields to 99 cavans (50-kilo sacks) per hectare (from a reported average of 40 cavans then). It succeeded in raising national rice production in the first few years after it started in 1973. We were reportedly self-sufficient in 1975-1976, and even exported a modest amount in 1977-1978. But the success was fleeting, even artificial and illusory. It was achieved by throwing in large sums of money, most of which never came back and wrecked the rural banking system in the process. Worst of all, small rice farmers came out of it buried in debt and poorer than before, by the time the program was abandoned in 1984.
Self-sufficiency in our food staple rice is a desirable goal, especially in the face of uncertainties associated with geopolitical tensions and climate change. But self-sufficiency without wide accessibility and affordability means food insecurity for many. Any new Masagana program must recognize that it’s not enough that we can produce all the rice we need; it also must be at a cost all can afford, so the poor need not go hungry. Unless sufficiency comes with accessibility and affordability, it does not lead to food security.
Thus, as the government seeks to pursue a new “Masagana 150” program, it must studiously avoid the pitfalls of the past. First, “productivity” is not to be equated to “production.” Raising productivity should not be wrongly taken to simply mean raising domestic production levels of the commodity, at whatever cost or price. Second, the government cannot “force” self-sufficiency by taking full control of and tightly regulating imports. Our long history of insulating the domestic market from the discipline of competition from imports (via persistent waivers and exemptions from various trade agreements) led to a widening gap between domestic prices and border prices over time. This meant that our domestic producers progressively became more and more inefficient than our foreign counterparts, and in the case of rice, domestic prices rose to two to three times that of our neighbors. Malaysia appears to have managed this better, by calibrating trade protection in a way that kept that price gap narrow and consistent over time, mostly using tariffs rather than import controls as tool.
Third, even as the Local Government Code of 1991 had mandated devolution, agriculture was still centrally managed in a top-down manner that overlooked peculiar needs in different areas. The province-led agriculture and fisheries extension system now being rolled out and scaled up is a promising new direction that would make the Department of Agriculture and local government units jointly responsible and accountable for their farmers’ productivity. Their closer partnership could make them more effective in improving welfare and food security for farmers and consumers alike.
Fourth, the bulk of the agriculture budget was allocated to rice. Much of it was to fund the government’s rice importations, whereas the private sector could have spent its own money for this under a regime of open competition and calibrated tariffs, not direct government importation. Meanwhile, the National Food Authority’s mandate to “buy high (from farmers) and sell low (to consumers)” was a sure formula for perennially bleeding government finances, at times to fiscal crisis levels.
Finally, Masagana 99’s main pitfall was its flawed farm credit system that left farmers deep in debt, and poorer than ever. Repayment rate dwindled from 90 percent in 1974 to only 35 percent by 1980. Our government would do well to study how Thailand’s Bank for Agriculture and Agricultural Cooperatives and South Korea’s Nonghyup Bank of the National Agricultural Cooperative Federation have been so successful in financing their small farmers—and the common C-word between the two suggests what the key success factor is.
Can Masagana work this time? It can, provided only the name would be the same, as it would have to be a very different animal.
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