Henry Lim Bon Liong, Chairman and CEO, SL Agritech: Interview

Interview: Henry Lim Bon Liong

What will be the impact of lifting limits on rice imports and the introduction of the Rice Tariffication Act on the agriculture sector?

HENRY LIM BON LIONG: The competitiveness of the Philippines’ rice production has fluctuated over time. In the 1960s the country’s output was higher than that of both Thailand and Vietnam, which are the largest exporters among the ASEAN countries today. Inadequate infrastructure development, more specifically the lack of dam construction due to political reasons and an increase in population, have generated a disparity in rice production, creating a need for imports for the first time. It was not until the 2000s that production soared again as a result of new dams being built and the introduction of hybrid rice seeds, which boosted yields from 2.9 tonnes to 4.2 tonnes per ha.

In late 2017 and early 2018 imports of cheap rice were prohibited by the National Food Authority and prices remained high. This was aggravated by new taxes introduced by the first package of the Tax Reform for Acceleration and Inclusion initiative, known locally as TRAIN, and the price per rice paddy eventually peaked above P30 ($0.56). Although local demand for rice paddy currently exceeds domestic supply, the country has the potential to achieve self-sufficiency by reaching a production output of 5.5 tonnes per ha if just 1m ha of the 4m available ha of rice land is planted with hybrid seeds. However, opening up the market further to imports entails the risk of the country becoming even more dependent on shipments as many local farmers might cease operations if they are no longer competitive. With the lifting of the rice import cap, farmers may be discouraged from continuing to grow rice given that imports are more competitive than local production. If no mechanisms are implemented to encourage local production, it may cease altogether within a few years. Today, P12 ($0.22) per paddy is the bottom line for subsistence farmers in the Philippines.

Where is there scope for farmers and the public sector to better collaborate in order to boost production and ensure self-sufficiency?

LIM: Local farmers must embrace modern farming technology. With the dwindling supply of arable land due to commercialisation, the most logical way to increase rice production is to adapt modern farming technology, especially by increasing the use of hybrid rice seeds. It has been proven that hybrid seed technology enables farmers to double – if not triple – their usual harvest. With regard to the role of the public sector, more government resources should be spent on research and development efforts that will aid farmers to increase their production output. They should also promote mechanisation by providing equipment to farming organisations, including farmer cooperatives. More irrigation systems should also be developed, as palay (unhusked rice) and other food crops rely on water for growth and sustenance.

Which foreign markets do you identify as the most promising destinations for the export of agricultural products from the Philippines?

LIM: Presently, a portion of the premium rice products harvested in the country is exported to Asia, North America and the Middle East, and the demand from those international markets is growing so rapidly that it is actually outpacing supply. In terms of hybrid rice seed varieties, these are exported primarily to the Philippines’ Asian neighbours. Destinations with great business potential for the expansion of Philippine companies include Myanmar, Indonesia, India and Bangladesh due to their large areas of arable land and sizeable populations.

In addition to rice, the Philippines is also one of the top exporters worldwide of tropical fruits such as bananas, pineapples and pomelos. Most of the large plantations are located in the south of the Philippines where the climate is conducive to a high-quality yield.