From Rice to Riches – the Philippines

September 2004

In the wake of the Asian financial crisis of 1997-98, rice producers in the Philippines have weathered extremely tough times. As a result, they have explored diverse ways of finding new markets for their produce. An increasingly common way to do this is by using rice by-products to make products such as rice paper, rice coffee and rice wine. Combining relatively simple methods with entrepreneurial flare, these ventures create much needed extra wealth for poor producers.

Rice Facts

More than 90 per cent of the world’s rice is grown and consumed in Asia, where people regularly eat rice at least three times a day. Nearly 500 million tonnes of rice is consumed in Asia every year, costing over half of a household’s income. In 1999, the Philippines produced over 11 million tonnes of rice from a yield of 2.9 tonnes per hectare.

© Steve Kramer
© Steve Kramer

Rice is harvested from the field in the form of paddy, which is the complete rice seed. Each grain of paddy contains one rice kernel, and many other layers. The outer layer of rice is known as the husk, which consists of two interlocking covers each protecting a half of the paddy. The husk consists mostly of silica and cellulose. The next layer is a very thin film of bran. This consists of fibre, vitamin B, protein and fat, and is the most nutritious part of the rice. At the base of each grain is the embryo, which is the part that will grow into a new plant. The innermost part is the rice kernel, consisting mainly of two types of starch (amylose and amylopactin). This mixture of the two types determines the cooking texture of the rice.

There are three main varieties of rice in the world: Indica (long grain), Japonica (round grain) and Javanica (medium grain). The Philippines produces mainly Indica rice, as it grows best in the warm climate belt running through Indochina, Thailand, India, Pakistan, Brail and the southern parts of the USA.

Prosperity Through Rice

Prosperity Through Rice is a joint venture between the International Rice Research Institute (IRRI) and the University of the Philippines Los Baños (UPLB), which explores profitable and sustainable uses for rice by-products. Fe Frialde, personnel officer for the Forest Products Research and Development Institute (FPRDI) in Los Baños, was able to benefit from the initiative by establishing a small-scale cottage industry, making paper from rice straw. With initial capital reserves of P11,000 (Philippine Pesos) and a loan of P22,000 from the Government Insurance System in 1986, Frialde started the Los Baños Handmade Paper Enterprises, producing a range of rice paper products. The products were later spotted by foreign customers at the Centre for International Trade, Expositions and Missions (CITEM).

Frialde’s products include multi-coloured wedding gifts, invitations, gift wrappers, boxes, folders, wall decorations and stationery. Having been trained in indigenous fibre papermaking by the FPRDI, Frialde does not have to be confined to using rice straw.

‘There are no standard methods for handmade papermaking. The techniques and tools used in each step vary, depending on the availability of resources and the maker’s capability to discover cost-saving and easy-to-adopt innovation to create the desired effects on paper. The more unique the paper, the more saleable it will be.’
The process of papermaking involves pulping, preparation of ‘stock’ (liquid starch), and sheet formatting. The materials required for making the paper include rice straw, starch, solid resin, alum (tawas), caustic soda, okra juice, water, sodium hydrochlorite (bleach), and dyes. The tools needed for production include a wooden mortal and pestle, a vat or basin, a mould and deckle (a pair of movable rectangular frames with a detachable screen), cheesecloth, a rolling pin, and a drying board.

One kilogram of rice straw is able to make six sheets of writing paper. According to Frialde, products such as a 150mm hexagonal box, covered with kakawate leaves, sells at US$1.92 on the international market. A picture frame, meanwhile, will fetch US$2.67. Clearly, there is great money-earning potential in papermaking from rice straw.

Producing paper from agricultural residues has now become so popular that it has penetrated foreign markets in Australia, Europe, Japan and the USA. April to June are the main exporting months; September to December are dominated by the local market, because of the Christmas season. This expansive market that Frialde has established means that she now owns premises in Los Baños, and employs a dozen staff. Papermaking from rice straw is more than a surviving art, it is a culture and a livelihood from which Frialde has substantially benefited.

Rice Coffee

In the face of global coffee giants such as Starbucks, entrepreneur Letty Basubas is producing a local drink from the country’s rice granary in Nueva Ecija. Letty was so dedicated to planting and harvesting rice that she decided to improve the traditional rice coffee, which her grandmother had served her every morning when she was young.

‘Because rice coffee is somewhat belittled by some coffee aficionados due to its not-so-good quality, I experimented in making the rice coffee an equal of imported coffee.’
Letty Basubas

According to the Agriculture Secretary, Luis Lorenzo, Letty is probably the only rice coffee producer in the country, since there are no records in the Department of Trade and Industry or the Bureau of Internal Revenue that show other individuals or groups engaged in the same business. Letty first explored the market for her rice coffee at the anniversary celebration of PhilRice (Philippine Rice Research Institute), from which she made a profit of P600 (US$10.71). She regarded it as a sign of things to come and established a niche market for her rice coffee products during trade fairs and exhibits.

Letty’s rice coffee products come in three flavours: peanut, three-in-one (coffee with sugar and milk), and caramelised carabao milk. These products have earned Letty an average monthly income of P25,000 (roughly US$447). However, in a ten-day province-wide exhibit she made P7,000 (US$125), and she also made a profit of P35,000 (US$626) in a three-week exhibition in Manila. Letty believes that the reason behind her success is the quality of her coffee:

‘Unlike the coarse traditional rice coffee, my product has a powdery quality.’

With the assistance of the provincial government of Nueva Ecija, the Department of Trade and Industry, and PhilRice, Letty’s market niche grew and she now caters for the coffee needs of thousands of consumers at 30 outlets in the province.

Rice Wine

At PhilRice, they are keen to encourage new ways of making a living from rice, and have taken traditional practices of rice fermentation and adapted them to the modern market for wine. The Rice and Rice-Based Products Programme run by the Rice Chemistry and Food Science Division of PhilRice develop and pilot the production of rice-based products. The project has three objectives:

  1. To establish the functional properties, and identify processing applications of Philippine rice varieties;
  2. Modify and standardise processing methods of rice wine, beer and thermally processed rice-based products, and to prepare these technologies for dissemination;
  3. To enhance the adoption of developed products and technologies by expanding and sustaining strong linkages among processors, manufacturers, research and development organisations, and consumers.
© Courtesy of IRRI
© Courtesy of IRRI

The project has accomplished a series of ventures that aim towards these objectives. The institute has successfully transferred standardised rice-based production technology through an on-going training and skills programme. The project has also studied the shelf-life of Tapuy (the local name for rice wine) and the effect that rice variety and storage conditions have on the end product. This research revealed that samples stored in a refrigerator were significantly lighter in colour, more acidic, and more acceptable than samples kept at room temperature. The survey of the market for Tapuy was carried out during the Asian Ethnic Food Fest (AEFF). Suggestions included having more blends, different flavours, changing the bottles, and having boxes for safer transport.




Fermentation of Rice Wine

Ingredients required: glutinous rice, water, bubod, activated carbon or bentonite.

  1. Weigh 1 kg of glutinous rice and wash through with water three times.
  2. Drain and add 1.5 litres of water.
  3. Cook in a rice cooker until well done. Let it cool.
  4. Spread the cooked rice on a tray and inoculate with powdered bubod (rice yeast) at 1g per 100g of raw rice.
  5. Cover the tray with a piece of paper or cloth and incubate at room temperature for two days.
  6. Transfer to a fermentation jar with a water seal to allow the rice to ferment for two weeks, or until the bubbling stops.
  7. Press out the alcoholic juice through a cheesecloth and discard the residue.
  8. Pasteurise the freshly harvested wine at 65-70oC for 30 minutes.
  9. Allow it to stand for one to three months in a dark, cool place to prevent discolouration.
  10. Siphon the clear wine. If the wine is not yet clear, add one spoon of activated carbon or bentonite for every litre of wine. Mix well and filter.
  11. Bottle the wine and pasteurise at 65-70oC for 20 minutes. Approximately 1 litre, or 3 bottles at 350ml, can be harvested from 1 kg of rice.

A return on investment for rice wine can reach 88 per cent, meaning that investment can be recouped in seven or eight months. According to PhilRice, with a total monthly production expense of P44,000 (US$785.99) and an average wine production estimated at 1500 350ml bottles (fetching P82,500 / US$1473.74), producers can expect a net income of P38,553.92. (US$688.71).

The Value of Rice

Value-added rice products enhance the profitability derived from rice farming. Upon establishing a nice market, the products can contribute to the improvement of the rice market in general. They also have a significant role to play in lifting the income of struggling rice farmers. By diversifying into the industry of value-added rice products, people are able to supplement their existing income and even sustain their lives fully on the generated income.


ITDG would like to thank the Philippines Rice Research Institutefor providing information and helping in this case study.

The case study draws on articles written by the Philippine Rice Research Institute.

Further Information

Business in Asia: The Philippines


International Rice Research Institute (IRRI)

IRRI Library

PhilRice: Philippine Rice Research Institute

Rice On-Line



ITDG Technical Briefs

Donor and Supporting Organisations

Department for International Development (DFID)



ITDG Technical Briefs