Government Failure: Imported Surplus Rice

Looking at the headlines we observe that the Philippines seem to jump from one crisis to another.

I’d say such crisis is a lucid manifestation of the failure of government interventionism or government meddling.

Of course, many would make other insinuations (corruption) mostly emphasizing on the devious intent of the previous administration.

But I would argue that these are the effects and not the cause of the present problems.

The latest hullabaloo is that government imported too many rice says the headline. This from the Inquirer.net,

The group was reacting to a report on Tuesday by Banayo that the country was “swimming in rice” because the Arroyo administration had imported seven times more than the country’s needs.

Banayo said that the NFA under Arroyo had authorized the importation of some 20,000 metric tons of rice estimated at P100 million in late April or May despite the oversupply in the local market. He said that the shipment had started to arrive at Poro Point in La Union.

Mr. Aquino on Monday said that rice was rotting in warehouses while the NFA had accumulated debts totaling P177 billion.

This seems to be a wonderful example of time inconsistency or the sustainability of a policy given the changes of the circumstances over time.

Back in the October 2009, post Typhoon Ondoy and Typhoon Pepeng, headlines yelled fire! These typhoons wrought devastation on our rice production!

'Ondoy', 'Pepeng' hit areas producing 56% of RP's rice, bannered the ABS-CBN headline. And this article accompanied the table, as shown above, which depicted on the estimated scale of damages.

And because of this, the Arroyo government reacted to the calamity by...you guessed it...importing the problematic rice of today.

Below was media’s sentiment immediately during the post Typhoon days, according to GMA news,

Estoperez, however, said that while the damage caused by Ondoy and Pepeng would definitely have a negative effect on local rice farmers, a rice crisis in the coming year is a remote possibility.

“We have enough rice supply for the remainder of the year, and the DA is taking steps to mitigate the effects of the damage so we could have enough rice for next year," he said.

He said the prices of NFA rice will remain stable, including the subsidized P18.25/kilogram for qualified poor families, and the P25/kg rice.

He also said that the DA, on orders of President Gloria Macapagal Arroyo, is planning to import rice earlier than scheduled this year to prevent a possible rice supply crunch in 2010.

The article even cited an NGO study who said that the government ‘downplayed’ the impact of the typhoon on the rice fields which lent a sense of urgency to the missive.

The Arroyo Administration even tried to dramatize the impact of the calamity by declaring price controls, which I argued, could have used been as justification to declare martial law and a postponement of elections.

Yet, then, NOBODY averred that imported rice would pose as a problem because the POPULAR issue of the day was the looming risk of a RICE CRISIS.

Now, since NO rice crisis have emerged, the Arroyo government gets slammed for what is seen as an improvident or even perverted action.

To put in perspective, in 2009 importing rice was deemed as politically correct, today it is politically wrong. The change in circumstances results to a corresponding change in the political climate. So a time inconsistent policy.

I’d further add that such policy faux pas represents as government’s knowledge problem.

In other words, government simply DOES NOT know the future and the specific needs of the society enough to justify repeated interventionism.

Obviously, the miscalculation resulted to massive wastages and economic distortion which presently adversely impacts the local farmers. Hence, the crisis.

One could add icing on the cake by saying that the previous administration used the incident as political cover to profit.

Whether this is true or not, it is the nature of politics to attain credit by attributing sensationalism and discrediting foes.

In short, instead of analyzing the genuine cause of the failure, just blame the personality involved as this would be the fashionable thing. Nevertheless, the offspring of interventionism is corruption.

Yet all these three factors combine to reveal why government interventionism is not only wrong, but immoral and a waste of capital.

Of course if you listen to politicians, their solution is more of the same.