Special Report: How a small Bohol town sells rice at P29/kilo

(Second of three parts)

MANILA, Philippines — The local government of Jagna, led by Mayor Joseph Rañola, has removed unnecessary items in its yearly budget since 2019 to save cash.

Rañola, once a fiscal specialist who worked with several legislators in developing the national budget, turned around Jagna’s finances when he was voted mayor in 2019. He took out what he believed to be fat in Jagna’s spending.

For instance, Rañola managed to reduce by half the cost of street lights installed on Jagna roads. He also ordered project heads to find the cheapest yet durable sources of construction materials, down to the bolts and nails, for infrastructure works.

Rañola also capped food spending and minimized the travels of employees. He slashed medicine procurement costs by half.

Further, the mayor invested in a gas station for municipal vehicles, shielding the local government from the weekly fluctuations in fuel prices. Fuel is also given for free to farmers and fishermen supplying the buy-back program.

Rañola’s cost-cutting measures bore fruits to the tune of millions of pesos. The local government saved P19.3 million in 2019, P6.17 million in 2020, P13.31 million in 2021, P13.53 million in 2022, P17.33 million in 2023 and P10.76 million in 2024.

And these savings fund the buyback program, allowing the local government to purchase directly from producers without undercutting them. Whatever is saved this year is spent in the following year for agricultural support and social services.

At the height of the pandemic in 2020, the local government spent P1.55 million to buy fish and ube for its buyback program. As savings piled up yearly, the project also started expanding coverage, adding pork in 2022 and mango, rice and other crops in 2024. This year, Jagna is spending P5 million for its buyback program.

National convergence

The savings that the town generated became the cornerstone of the buyback program. The other huge component came in the form of national support.

Rañola, who assumed office as the municipal agriculture officer during the early years of his mayoralty, negotiated with various national government agencies, including the Department of Agriculture to secure support for Jagna’s farmers and fishermen. And it yielded positive results.

A rice mill was put up. A rice dryer was built. A cold storage was established, an ice maker, too. There’s also a composting facility.

Between 2019 and 2024, the municipality secured over P136 million in grants from the national government in support of its agriculture sector. The amount is more than a third of Jagna’s average budget of P200 million during the six-year period.

The establishment of the key post-harvest facilities transformed the local government from a mere marketer of agricultural commodities to a significant player in each part of the rice value chain.

The local government unit allows farmers and fishermen to use all the facilities for free, thanks to savings that it creates annually. The local government does not impose a contract that binds farmers to sell a share of their produce to it.

A cheaper staple

With all the facilities in place, Jagna buys palay from its farmers at P17 per kilo, dries it and mills it into rice that will be sold through the buyback program. In short, the local government produces its own rice for its constituents.

And then, there is the P9 subsidy for every kilo of rice sold by the local government to bring down its price to P29 from its break-even cost of P38. The subsidy is also fueled by the annual savings that Jagna generates from its cost-cutting measures.

“The local government gives assistance to bereaved families, to the hospitalized ones, to the unemployed. So, why don’t we support the farmers?” Rañola said.

“That P9 subsidy goes a long way. If you give it in cash, it is nothing, but if it is in the form of cheaper rice, it is something,” Rañola added.

In contrast, the national government like the National Irrigation Administration sells rice at P29 through contract farming, especially with the ones that receive huge subsidies from the government. The Department of Agriculture also previously sold rice at P29 per kilo, which was at least three-month old stock from the National Food Authority.

For farmers like Vicente Carpio, what happened to Jagna’s rice industry was life-changing. In fact, for him, it was freedom.

“The traders have been dictating our prices but now we have an assured market with fair prices because of the buyback,” said Carpio, 55, who has been planting rice for more than two decades.

The free post-harvest facilities and planting inputs reduce Carpio’s cost per hectare to P20,000. At a buying price of P17, he earns a gross of P61,200 on a 3,600-kilo harvest. He nets about P41,000.

The free facilities also allowed Carpio to sell rice directly in his village, doubling his possible income from just selling palay.

Meanwhile, Bernardo Caingles, saves at least P5,000 per fishing trip because of the free ice and diesel provided by the municipality to fishermen like him. The lower cost allows them to sell their catch to the local government at as low as P100 per kilo.