A Critical Look into the Government’s Hybrid Rice Commercialization Programme (HRCP)

(A Briefing Paper taken from the research on “The Impact of Hybrid Rice on the National and Community Seed Systems” conducted by SEARICE and Rice Watch Action Network)

1. Introduction

Since 2001, the government has made the Hybrid Rice Commercialization Program (HRCP) a centerpiece in its strategy to attain rice self-sufficiency in the country. The HRCP was influenced by the success of hybrid rice technology adoption in China over the past 20 years. The Chinese plant breeder Dr,.Yuan Liong Pin who made the earliest successful hybrid crosses, is now widely regarded as the Father of hybrid rice. Today, China is said to plant more than 10 million hectares to hybrid rice.

With the HRCP, the Philippines aims to replicate China’s success by investing heavily into HR technology, including research and development, seeds production, procurement and distribution, establishment of production support facilities, and provision of subsidies and other incentives to participating farmers, among others. From an initial target of 50,000 hectares in 2002 for hybrid rice adoption, this year’s target has been set at 214,000 hectares. The program aims to cover at least 10% of the country’s prime irrigated rice area with a goal of increasing average rice production by 15% or higher per hectare.

Originally, the HRCP was set only for 2001 to 2005. However, the program has been extended to 2007. The HRCP is actually a component of the government's Ginintuang Masaganang Ani (GMA) Rice Program although it receives the largest chunk of the budget compared to inbred rice and other components. HRCP is essentially a program to provide subsidies in order to assist farmers plant rice hybrids. The main subsidy is the provision of P1,200 per 20 kg of rice seeds needed per hectare of rice land. Often, because of farmers’ resistance and lack of enthusiasm, the subsidy for seeds often go as high as P2,400.

Budget Allocation

The budget for the program started at P378 million in 2002. It leaped to more than a billion in the election year of 2004 (possibly 1.2B). The budget came down to P780 million in 2005 (still, this represents about 60% of government budget for the rice crop in terms of research and support programs). For year 2006, the proposed budget is 1.6 billion and for 2007, an election year, it is P2.5 billion.

Institutional Arrangements

The Philippine Rice Research Institute (PhilRice) was designated as the lead implementing agency for the HRCP from 2001 to 2004. PhilRice is an agency under the DA but in 2002 it was transferred to the Office of the President by virtue of Presidential Executive Order No. 76. In 2003, PhilRice reverted to DA when Pres. Arroyo issued Executive Order No. 219. The program was reportedly directly handled by Frisco Malabanan, then of PhilRice and currently GMA Rice Program Coordinator at the DA. The main activity of the program is the procurement and distribution of hybrid rice seeds. In 2004, the HRCP’s lead implementation was transferred from PhilRice to the DA. However, Mr. Malabanan was also moved from PhilRICE to the DA and continues to handle the program.

Technical Background

Rice is a self-pollinating crop, which means each seed is self-fertilized and can therefore be replanted and grown while maintaining the characteristics of the variety in the succeeding generations. With inbred rice, farmers can continually save and re-use harvested seeds, making it possible for farmers to share and exchange seeds. Even inbred varieties from the formal sector can also be saved, re-used, shared and exchanged by farmers, thus they also become part of the local seed supply system.

Hybrid rice transforms this system by introducing cytoplasmic male sterility (CMS), which is the basis for producing so-called F1 seeds. Use of CMS, originally developed from wild rice strains, is intended to produce heterosis, or hybrid vigor, in the first generation of seeds, known as the F1. Heterosis is supposed to provide yield advantage for hybrid rice over inbreds, but it also means that seed production is dependent on the continual use of CMS lines. Unlike inbreds where the seeds are fertile, CMS lines always need to be hybridized or pollinated with so-called “restorer” lines, or self-fertile varieties, in order to produce viable F1 seeds. The F1 seeds themselves, are fertile, uniform in appearance and genetically stable, being the first progenies from hybridization. However, if the harvested seeds from an F1 population (called F2) are replanted, the resulting plants will be highly segregating in character as they express the different combinations of traits from the parents. This therefore discourages any seed saving. Only the F1 seeds are economically viable.

Hence, in hybrid rice technology, seed production becomes a highly specialized and restriced activity, dependent upon continual access to and use of CMS and restorer lines. In contrast, an inbred-based seed system is able to “re-generate and sustain” itself with farmers' normal practice of saving and re-using seeds. This is not possible with hybrid seeds since seed production is limited by the nature of the technology itself and farmer’ practice of saving seeds is not a viable option. Hence, institutions or companies that control the hybrid parentals ultimately have control and monopoly over the seed supply. This puts in possible jeopardy the country’s rice seed industry as this places our seed supply vulnerable to various supply problems and susceptible potential monopolistic practices of seed companies, especially foreign multinationals who will have major control over the production of our staple. Rice being a political commodity in this country, these scenarios create possibilities of political turmoil especially in the countryside.

2. Technological Issues

China plants rice hybrids reportedly in around 10 million hectares concentrated in sub-tropical and sub-temperate zones of the country. However, hybrid rice technology has been developed in China for three decades already. In contrast, the Philippines started research on hybrid rice started much later than in Chinas and the country’s first hybrid rice varieties were released by PhilRice just ten years ago. Many Filipino and international scientists seriously doubt the maturity and usefulness of the rice hybrid technology in the Philippine context. What is even more important is that the hybrid rice technology for site-specific tropical conditions such as the Philippines is in its infancy. It is reported that 500,000 hectares of rice lands are planted to hybrids Vietnam and India. These two countries however have sub-tropical and sub-temperate zones where the relatively cold conditions allow the cultivation of rice hybrids. In fact, most rice hybrids are planted mainly in North Vietnam and during the winter months (sub-tropical zones). The only purely tropical country that plants rice hybrids is Bangladesh (and most possibly in their sub-tropical zones near the Himalayas). And because of many difficulties, Bangladesh can barely go beyond 50,000 hectares. In short, rice hybrid seeds for tropical conditions such as the Philippines should be at the research stage to address site-specific requirements and not a full-blown program.

The other technological issue with hybrid rice is on the matter of heterosis or hybrid vigor, which is touted to be the basis for hybrid rice’s yield advantage over inbred rice. As of now, there is still scientific debate with regard to heterosis in rice, especially that this crop is self-pollinated. Some scientists are of the opinion that heterosis is not possible in rice, but what actually takes place with hybridized seeds is a phenomenon called “inbreeding depression,” which happens with inbred varieties. If so, there is no scientific or practical reason to introduce the inherently tedious and expensive technology of hybridization in rice since comparable yield benefits can be attained using inbred rice varieties. Rather than invest massively in hybrid rice technology, the Philippines can possibly gain the same if not better rice productivity results, at less costs, by focusing on improving and developing more adapted inbred rice varieties for local conditions.

One scientist of IRRI who believes in hybrid rice heterosis insists, however, that hybrid rice can only achieve a maximum of 10% yield advantage over the best inbreds. His figure of 10% is much lower than the 20% - 30% yield advantage being brandished about by hybrid rice proponents in the Philippines. Taken together with the views of scientists who reject the heterosis theory, this statement shows that there remain unresolved technical and scientific issues on hybrid rice technology. Given that, it does not justify investing heavily in a technology that has not proven itself under Philippine conditions. An option would be to concentrate on research and development in hybrid rice for Philippine conditions before embarking on a massive and expensive program, assuming that R&D results will justify such undertaking.

Nevertheless, the IRRI and PhilRice in a joint paper listed several rice production constraints in the Philippines and identified the problem of “inappropriate seeds and seedling management” as constituting only 9% of the total problem, compared to insect pests and diseases (35%), inappropriate water management (26%), inappropriate fertilizer and soil management (21%), and weeds (9%). Hybrid rice is supposed to address the problem of “inappropriate seeds,” but this consists only of a much smaller proportion of the problems constraining the Philippines’ rice production. However, the HRCP has been receiving a disproportionately massive amount of budget allocation compared to the other programs. Thus, PhilRice contradicted or undermined its own assessment of the country’s rice productivity problems by prioritizing a supposed solution that addresses only smaller part of the total problem.

The massive implementation of the HRCP by the Arroyo administration even when the technology has not proven itself in Philippine conditions was clearly a political decision more than anything. The GMA program, specifically hybrid rice, became a major political platform of the President during the election campaign of 2004. The elections also coincided with the sudden jump in the budget of the HRCP and the reported number of participating farmers and seeds distributed.

3. Possible Massive Anomalies in the Implementation of the HRCP Program

There are major discrepancies in the reports about hybrid rice hectarage as shown in 4 provinces studied by SEARICE covering the years 2002 to 2004. The DA and the Provincial Agriculture Offices (PAO) in these sampled provinces (Nueva Vizcaya, Isabela, Iloilo and Davao del Sur), show an average discrepancy of around 15%. In the election year of 2004, the discrepancies rose to 32 to 41 percent. The DA tended to report higher number of hectares planted and subsidized seeds distributed.

The discrepancy between the report of PAO against that of PhilRICE is even higher, from 20 to 54 percent. In the election year, one province, Davao del Sur, the difference is more than 90 percent! PhilRICE reported far higher number of hybrid rice hectarage and subsidized seeds distribution compared to DA itself.

The discrepancy in numbers is hard to comprehend considering the massive budget allocation for the program and the sheer number of personnel from the national to local agencies that were involved in the HRCP. Either the program failed to institute an effective monitoring system (for a project that cost the government billions of pesos) or the discrepancies merely reflect underlying anomalies in the use of funds whereby higher figures were reported at the national level to justify corresponding fund releases. Nevertheless, information gathered at the local level does not support the figures reported by DA and Philrice in terms of number of hectares planted and subsidized seeds distributed. And since the discrepancies took place across provinces and over a number of years, the padding could only have been done in a deliberate and systematic manner at the national level.

The sudden jump from 132,000 hectares subsidized with hybrid seeds in 2003 to more than 380,000 hectares in the election year of 2004 is simply impossible. Much of the increase in hectarage was reported during the period before or around the May elections. In February of that year, the Department of Budget and Management (DBM) signed the release of P1.1 billion pesos “to cover the GMA Rice and Corn and Livestock Program,” which of course includes the HRCP. Said amount was disbursed to mayors, governors and congressmen. And then in March, then DAR officer-in-charge Jose Mari Ponce signed a Memorandum of Agreement with then Agriculture Sec. Cito Lorenzo to use P544 million pesos from the Marcos wealth supposedly for “seed assistance: to agrarian reform beneficiaries, again under the GMA HRCP. The amount was released on April 28, less than two weeks before the May 11, elections.

Indeed, in addition to the actual budget allocated to the HRCP, funds from other sources flowed into the program including a loan from the government of China in the amount of $200 million released in 2003 as part of the agricultural cooperation agreement. Part of that loan consisted of supply of hybrid rice seeds. Also, for 2004, the government utilized an additional $11.5 million, which was reportedly the balance from the first $100 million loan received from China in 2002. Thus, for 2004 alone, funds for the HRCP came from at least four different sources although it still needs to be clarified from DA itself how all these funds were eventually utilized. Moreover, local governments, Congress Representatives and Senators also provided their own subsidies and support funds for the local implementation of the HRCP. A COA audit report on PhilRice’s implementation of the HRCP for 2004 showed that there was a total of P43,552,728 allocated for seeds distribution that was not covered by receipts. That amount however is relatively small compared to the questionable amount involved in the discrepancies among the reports among the DA, PhilRice and PAOs. Further investigation needs to be undertaken to really find out how all the funds in the HRCP was used.

The HRCP has opened the country’s rice seed industry to private seed companies, a heretofore unknown phenomenon. These companies are developing their own hybrid rice varieties and are engaged in seed production, marketing and distribution under the HRCP. They therefore benefit from the program by having their rice varieties included in the government’s seed procurement and distribution, thus assuring them of a ready market for their seeds. Under the HRCP, the government identifies the farmer-beneficiaries who will be planting hybrid rice seeds and this master list is provided to the seed companies. The companies will produce and provide the seeds to be purchased by the government at a market price of at least P2,400 per 20 kg. bag. The government will then distribute the seeds on subsidized rates of P1,200 per bag or lower to the farmer-beneficiaries. Without the HRCP, the companies will therefore not have an assured market for their seeds, and will thus find it more difficult and economically risky to sell their seeds directly to farmers. The HRCP has absorbed the risks for them. Most of the companies, such as Monsanto, Bayer Crop Science and Syngenta, are foreign multinationals.

However, the company with the largest participation in the HRCP is SL Agritech, owned by a Filipino-Chinese conglomeration. Dr. David, in her study, raised concerns about the source of SL Agritech’s capitalization of P40 million, which she suspects came from a loan from a government bank. It is also said that SL Agritech applied for a P300 million government guaranteed loan although this application was reportedly referred for review by the National Economic Development Authority (NEDA) as ordered by then NEDA chief Romulo Neri. If allegations regarding SL Agritech’s loan portfolio from government are true then this is certainly a case where government credit is being used to capitalize a company that benefits directly from a government program. In the HRCP, SL Agritech also appears to be favored over other seed companies since it has been allocated a bigger portion of the seeds procurement program. Recently, it has been observed that in a number of provinces, Philrice’s hybrid rice varieties are being replaced by SL Agritech varieties in the distribution program.

Part of the Ginintuang Ani funds that went to hybrid seeds subsidy in the election year of 2004 included P544 million that was supposed to be implemented for agrarian reform. The amount came from recovered ill-gotten wealth of Pres. Ferdinand Marcos. Hence, HRCP realigned funds that were supposedly for such a vital program as agrarian reform. That amount could have been used to redistribute lands to tenants and landless farmers and to provide much needed support services to AR beneficiaries. The Marcos wealth funds were reportedly intended to purchase seeds to cover 453,333 hectares. However, the official report of the DA for 2004 showed that hybrid rice seeds were distributed only in 208,342 hectares.

At the provincial and municipal levels, the perks, rewards and other “rents” are pushing the distribution of subsidized hybrid seeds even in farms that are not suitable for hybrid seeds. Low-paid government technicians, enticed by the prospect of additional income from the HRCP, are aggressively promoting hybrid rice to farmers. In many areas, each technician is entitled to P100 – P200 cash incentive for every bag of hybrid rice distributed. This has resulted in hybrid rice being distributed to areas not suitable to hybrids, or given to farmers who don’t actually plant them, or to possible manufacturing of reports and lists of farmer-beneficiaries to justify the incentives provided. In the past, the government’s certified inbred seeds program was already criticized for its procurement and distribution system prone to graft and corruption. The HRCP has only worsened this problem and has deeply corrupted nearly the entire agricultural services machinery of the government. This bodes badly for future government programs in agriculture and for the country’s agricultural development as a whole.

5. The Continuing Failure of the HRCP Program

In the study done by Dr. David, the average dropout rate, that is the number of farmers no longer participating in the program after using hybrid seeds for one season, ranges from 68 to 78 percent per province! In other words, majority of participating farmers are dropping out of the program after one season only. This immediately raises the question of the viability of the program and its appropriateness to Philippine rice farmers. Despite this glaring fact, the government continued to massively and aggressively promote the HRCP, even raising the target number of hectares to be planted to hybrid rice until 2007. Based on the dropout trend, there is no basis to continue the program on a massive scale as what is being done now.

In terms of field performance as well, hybrid rice varieties have not shown significant and consistent yield advantage over inbred rice varieties across the country. The study of SEARICE showed that only in Nueva Ecija has hybrid rice performed significantly well over inbred rice, with an average yield difference of over 20%. According to scientists, the main reason for this seems to be Nueva Ecija’s agro-climatic conditions, such as good soil fertility and relatively stable climatic pattern, that are conducive to hybrid rice. In Davao del Sur, hybrid rice had a much lower yield advantage of around 11% over inbred rice. But in Isabela and Ilo-ilo province, hybrids had the same or much poorer performance than inbreds. This means that hybrid rice cannot consistently adapt well to different agro-climatic conditions across the country, and therefore does not justify promoting it massively nationwide.

However, in terms of economic returns to farmers, hybrid rice proved to be generally less profitable compared to inbred rice. Except for Nueva Ecija where hybrid rice had a slight return-on-investment advantage over inbreds (due to the former’s relatively higher productivity), in the other three areas, inbred rice production was more profitable for farmers than hybrid rice. The main reason for this is that hybrid rice inevitably cost more to produce than inbred rice. Hybrid rice farmers significantly spent more for inputs, such as fertilizers and pesticides, and labor compared to inbred rice farmers. It appears that hybrid rice yield is partly caused by greater use of fertilizers, which was exactly what farmers did when they increased their applications of fertilizers when using hybrid rice. There is also general agreement, among farmers and government technicians surveyed in the study, that hybrid rice varieties are susceptible to pests and diseases, thus requiring higher doses of pesticides.

Overall, these findings show that there is no justification for massive promotion of hybrid rice in the country given its unproven performance at the field level compared to inbreds and the poor assessment of the technology by farmers themselves as indicated by the program’s dropout rate. To allocate billions of pesos in people’s money for a technology that has fallen short of its promises to Filipino farmers can only be considered anomalous.

Conclusions

It is possible the rice hybrids under Philippine condition could be a major technology for increasing productivity and addressing rice self-sufficiency. However, the technology needs to mature and develop first appropriate to Philippine conditions if it has to acquire a nice in the country’s rice industry. The technology may not necessarily be adapted at a nationwide scale but in targeted areas where its performance can be proven. Moreover, hybrid rice promotion ought not to be done massively at the expense of research and development of inbred rice, which have shown to have comparative advantages over hybrids in a number of agro-climatic conditions across the country. By pushing an immature and unproven technology with massive subsidies, the HRCP program is destroying the possible contribution of rice hybrids in the future and undermining the further improvement of inbred rice.

The Office of the President definitely had a role to play in the implementation of the HRCP and have to be answerable to questions being raised about the program. It is questionable why PhilRice, which used to focus mainly on varietal research and development, was made to handle the HRCP procurement and distribution for four years and was placed directly under the Office of the President in the same period. The sudden increase in budgetary allocation and reported hectarage and seeds distribution happened in 2004 during an election year. The results of that election has been put under doubts after reports of vote rigging and massive use of government resources to help re-elect Pres. Arroyo have come out in the open and used in the failed impeachment proceedings. Recalling the campaign during last year’s elections, it is clear that Pres. Arroyo used the GMA Rice program bannered by hybrid rice as one of her campaign platforms to improve rural incomes and create jobs. After the elections, the Office of the President then reverted PhilRice to the supervision of DA and the HRCP was also transferred to DA.

Proposed Actions

• The government, especially the DA and PhilRice, must release all pertinent documents related to the implementation of the HRCP including the following:

a) Master-list of farmers in all provinces who received the subsidized hybrid seeds and other related support services (fertilizers, pesticides, etc.) since the start of program to present
b) Detailed and extensive financial reports on the use of HRCP funds since the start to present

• The government should release information regarding all transactions made by private seed companies under the HRCP’s seed procurement and distribution

• The government should release information regarding all transactions of SL Agritech with government financial institutions, particularly on applications for loans and government guarantees

• The Congressional hearing on the budget of the Department of Agriculture for 2006 must insist on clear and solid justification for continuing the HRCP program in light of numerous unanswered questions and failures of the program

• Four provinces have been sampled and studied by SEARICE that showed trends of program failure and possible fraud. The report of Dr. David showed the same trends. An official investigation is necessary to unearth the real story behind the implementation of the HRCP

• The government needs to review its program priorities with regard to the rice research, development and extension. Hybrid rice is a technology that has yet to prove itself under Philippine conditions, and this therefore does not justify making it the top program priority to the detriment of inbred seeds and other more appropriate technological and socio-economic solutions to the problem of declining rice productivity in the country



REFERENCES:

DA GMA Rice Program

David, Cristina . PIDS. Hybrid Rice Program , Paper presented during the Tuesday Seminar at
SEARCA, June 2005

PhilRICE Terminal Report on HRCP, 2005

Rimban, Luz . “Did Marcos Wealth and Filipino Taxpayers Bankroll the Campaign of GMA”. September 28-29, 2005. http://www.pcij.org