I had a chat with a good friend of mine over the recent issue with the rice farmers. I'm still in shock how me and her came up with the same idea though we haven't been in contact for several years now. The reason that the rice farmers have to sell their rice at a lower price is because foreign players have entered the country and are able to sell rice a cheaper price.
This then begged the question. If foreign competitors, who still have to pay tariffs (up to 35% of declared value) to bring their goods into our country are able to sell at a cheaper price and still make a profit, why can't our farmers turn up a bigger profit if they don't need to pay tariffs?
I'm no business major but the basic concepts are simple enough. To turn up a profit, your revenue must exceed your expenses. Also, smaller volume sold tend to be more expensive as the fixed cost (the ones unaffected by volume) will have to be compensated by a smaller volume. So the problem lies in any one of the variables in the equation.
I personally think the problem lies in a low volume, high fixed cost and high variable cost or the operational costs. The high operation cost can be attributed to our equipment being outdated, the absence of farm to market roads, etc. As such, the solution seems clear. We should invest in heavy equipment for farming. The capital expense might be larger but in the longer run, the operational expenses will go down, provided we get the right equipment for our needs.
Who knows what farming requires more than the farmers? I say no one. As such, they're important in solving this crisis. The second part of the equation is seen as the bad guy by the activists but they are not! Who has the dispensable income to invest in modern farming equipment? While some people would say the government, I say it's private enterprises who have this money to invest. And I'll explain why in very vague terms so as not to draw attention to certain private groups.
Months back, we decided to buy a machine that could help us in our composting in our family farm. We had heard of a good machine that the Department of Agriculture (DA) bought in bulk. Since they did buy in bulk, they were able to purchase these at a lower price than regular - or Php250,000. Their regular price was Php300,000. Being as composting is essentially a non-profit activity of a business, we decided to skip on this. We later found a different supplier selling a similar product for one-fourth the cost!
This got me to thinking why the DA would purchase a very expensive machine when cheaper alternatives were available. And that's where it hit me. The government has the biggest purchasing power in the country and so like rich man, it doesn't care if it spends more for a certain thing. All it cares about is that it provides the machinery. Unmentioned in this analysis is the probable kickback everyone involved in the purchase of these machines is able to get.
Compare that kind of spending to that of a private entity whose main goal is to minimize cost and maximize profit. They will no doubt try to get the most for their money and as such be a more efficient way of investing in these types of endeavors.
What's keeping private enterprise from coming in an attempting to modernize the agricultural sector? First, we have very restrictive laws which make it difficult. Add that to the the activists always painting the private sector is such a bad light. It's no wonder rice farming is seen as a tedious business. That's also why the Chinese just stick to rice milling and rice distribution!
Let's stop vilifying the author of the Rice Tariffication Law. Senator Cynthia Villar's only fault is not introducing this into law years ago. Here's something to think about before I close. Why did we see the need for Villar's law? It was in response to heavy criticism from the public that saw the highest inflation rates in 20 or so years! Remember the figure of 6.8%? Economists agree that it was due to the high prices of rice and food that caused this inflation rate. Now, with cheaper rice, we do indeed see a lower inflation rate, though no one talks about that, now do they?
Who knows what farming requires more than the farmers? I say no one. As such, they're important in solving this crisis. The second part of the equation is seen as the bad guy by the activists but they are not! Who has the dispensable income to invest in modern farming equipment? While some people would say the government, I say it's private enterprises who have this money to invest. And I'll explain why in very vague terms so as not to draw attention to certain private groups.
Months back, we decided to buy a machine that could help us in our composting in our family farm. We had heard of a good machine that the Department of Agriculture (DA) bought in bulk. Since they did buy in bulk, they were able to purchase these at a lower price than regular - or Php250,000. Their regular price was Php300,000. Being as composting is essentially a non-profit activity of a business, we decided to skip on this. We later found a different supplier selling a similar product for one-fourth the cost!
This got me to thinking why the DA would purchase a very expensive machine when cheaper alternatives were available. And that's where it hit me. The government has the biggest purchasing power in the country and so like rich man, it doesn't care if it spends more for a certain thing. All it cares about is that it provides the machinery. Unmentioned in this analysis is the probable kickback everyone involved in the purchase of these machines is able to get.
Compare that kind of spending to that of a private entity whose main goal is to minimize cost and maximize profit. They will no doubt try to get the most for their money and as such be a more efficient way of investing in these types of endeavors.
What's keeping private enterprise from coming in an attempting to modernize the agricultural sector? First, we have very restrictive laws which make it difficult. Add that to the the activists always painting the private sector is such a bad light. It's no wonder rice farming is seen as a tedious business. That's also why the Chinese just stick to rice milling and rice distribution!
Let's stop vilifying the author of the Rice Tariffication Law. Senator Cynthia Villar's only fault is not introducing this into law years ago. Here's something to think about before I close. Why did we see the need for Villar's law? It was in response to heavy criticism from the public that saw the highest inflation rates in 20 or so years! Remember the figure of 6.8%? Economists agree that it was due to the high prices of rice and food that caused this inflation rate. Now, with cheaper rice, we do indeed see a lower inflation rate, though no one talks about that, now do they?
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