I BELIEVE the passage of the Rice Tariffication bill by the bicameral conference committee of the Senate and the House of Representatives will mean more affordable food on the dining table of Filipino consumers.
The measure will remove the monopoly by state-run National Food Authority on food supply. And with the lifting of quantitative restriction on imported rice, inexpensive rice from other countries is expected to easily reach the domestic market.
The measure amends the outdated Republic Act (RA) No. 8178, or the Agricultural Tariffication Act of 1996. Specifically, it will replace quantitative restrictions (QR) on rice imports with tariffs and remove NFA’s control over the rice market, thereby allowing private traders to bring in affordable rice from other countries as long as they pay the 35-percent tariff for imports from other Southeast Asian countries.
What caused rice prices to soar this year in the first place is the tight supply in the market amid weak production, which came after several typhoons hit Luzon and a miscalculation on the part of NFA to import the right volume of the staple. Hoarders exacerbated the situation by holding on to their stock to create an artificial shortage so that prices would escalate.
As rice is the biggest item in the consumer price index basket, inflation rate reached a nine-year high of 6.7 percent in September and October, data from the Philippine Statistics Authority show. Allowing more rice supply in the domestic market will definitely address food supply concerns, stabilize commodity prices and help bring down inflation rate.
Preliminary estimates by the National Economic and Development Authority show that headline inflation rate would ease 1 percentage point if rice prices in the local market were reduced to the level of imported rice.
No less than President Rodrigo Duterte was alarmed by the high inflation data and ordered the importation of more rice to stabilize the domestic supply. Thankfully, food prices are now steady, following the arrival of rice shipments from Vietnam.
Once signed into law, the Rice Tariffication bill will allow more traders to buy rice from other countries as long as they pay the proper import duties and taxes. As more people join the trade, rice supply will stabilize and prices will become more competitive. Hoarding will be discouraged, and the cartels that control the stock and dictate the prices will be neutralized.
However, it is important that the government provide Filipino farmers with safety nets against the influx of imports. One is in the form of tariff rate, representing 35 percent of the price of rice imported from other Southeast Asian countries. Another is in the form of subsidy or support that will give Filipino farmers a fighting chance against farmers of neighboring countries, who also get subsidies from their respective governments.
Making Filipino farmers more competitive should be a priority of the Department of Agriculture.
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This should be complemented by the Rice Competitiveness Enhancement Fund, or RCEF, that will allow farmers to acquire farm machineries and the latest technologies in rice production. The bill provides for an annual appropriation of P10 billion for the fund over the next six years. If the tariff collection exceeds P10 billion in any given year, the excess revenue will also be allocated to RCEF specifically to provide direct financial assistance to rice farmers.
The financial assistance program should be designed to directly compensate rice farmers who will lose income as a result of the open rice importation.
The Philippines is considered a research center for rice production, and I believe that Filipino farmers will become more competitive and productive, if they are given the latest technologies.
Whatever know-how that is available at the International Rice Research Institute should be dispersed to the farmers. The use of modern technologies, such as the propagation of inbred and hybrid varieties, will enable local farmers to produce more. I believe that harvesting 10 tons of palay per season, two or three times a year, will enable a farming family to meet its needs.
This will be a win-win solution for the Filipino consumers and Filipino farmers. Our consumers will be assured of a steady supply of affordable rice, while farmers will be protected from any sudden surge of imports and subsequently compensated for any loss of income.
The rice industry is a vital component of the Philippine economy, but we have to realize that with our growing population and limited land, we should take advantage of the global marketplace to feed our people while taking care of our farmers.
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This piece first came out in Business Mirror on Nov. 27, 2018 under the column “The Entrepreneur.” For comments/feedback e-mail to: mbv.secretariat@gmail.com or visitwww.mannyvillar.com.ph./PN
