The Department of Agriculture (DA) should redesign its much vaunted hybrid rice program if it wants more farmers to adopt the hybrid rice technology and push the country's rice production to a self-sufficient level.

In a recent Philippine Institute for Development Studies (PIDS) policy forum on rice, PIDS senior research fellow Cristina C. David noted in her presentation that the DA's hybrid rice program is having a hard time taking off because of various factors, among them, unfavorable policies that have led to the low rate of adoption by local rice farmers.

The hybrid rice program which the DA started in 2001, was intended to develop the local hybrid rice seed industry and to promote farmers' adoption of hybrid rice. Since its implementation, the adoption rate remained stagnant at four percent. In China, the adoption rate is 50 percent and in Vietnam it is 10 percent.

David noted that India also has a very low adoption rate of less than one percent despite having similar conditions to the Philippines. That's because the difference in yield between hybrid and inbred (this include certified and traditional rice seed varieties) rice is narrow or not enough to offset the higher production costs as well as the lower price for hybrid rice. She said this makes it unattractive for farmers since they will be earning less while their costs are higher.

David noted what she described as other flaws of the program, particularly government's direct intervention which has done little to really push the hybrid rice program.

"The government performs functions more efficiently conducted by the private sector. Not surprisingly, inventory carryover is high, problem of low quality seeds is serious, cost of distribution is high and credit repayments are extremely low," David said.

She pointed out that government shells out an estimated P6,100 for hybrid seed production and distribution of 20-kilogram hybrid rice seeds, which is significantly higher than the private sector cost of only P3,400.

David also noted that the structure of subsidies and incentives is biased against seed companies directly supplying seeds to farmers and that there is an absence of competition among seed suppliers to the government while target area is determined at the DA level and not by farmers such that the target area is much higher than the actual area planted to hybrids even with subsidies provided.

The program is flawed because exept for risks in seed production, all risk costs are borne by the government in terms of limited sales and quality deterioration, and the farmers on the other hand, have to contend with low yield, pest problems and low quality seeds.

Moreover, David noted that there was little budget provided to strengthen regulations on quality seeds.

With this, new hybrid seeds were distributed even without passing the standard criteria of the National Seed Industry Council (NSIC) and that temporary accreditations were being given in violation of standard practice.

She noted that with the introduction of the plant now, pay later scheme for hybrid rice seeds, the repayment rate of farmers dropped to five-eight percent from the 40-50 percent registered during the dry season of 2003.

"Subsidies are too high and are increasing rather than decreasing. The plant-now-pay later scheme had less than 10 percent repayment rates. In most municipalities, farmers who did not pay were still being given hybrid seeds to meet targets."

David in her presentation, urged government to scale down and redesign the program.

Topping her recommendations is that government should step back and allow the private sector to take over the functions of hybrid seed distribution.

"Proprietary rights to publicly bred hybrids are better bid out to the private sector while revenues should be shared between institutions and scientists."

Also, subsidies could still be provided at levels that are reasonable and with a clear schedule of reduction.

"Instruments used should minimize distortions in farmers choice between hybrids and inbreds and ensure a level playing field among seed suppliers. Subsidies may be in the form of tax breaks, technical assistance in research and development, seed production, and technology promotion through techno-demo farms and training."

She added that subsidies on fertilizers and agricultural chemicals must also be abolished and government should instead focus on strengthening the regulatory functions of the NSIC to protect the quality of seeds.

David also called for the elimination of subsidies on testing of Chinese propriety hybrid rice as "this violates the principle of level playing field if not provided to all seed companies."