On Rice Tariffication

Through rice tariffication, the government will be able to finally address the need to modernize Philippine rice agriculture, and bring long overdue economic growth and development to rural communities.

Effective March 2019, the Philippines will start implementing a more liberal rice policy. Under the rice tariffication law, the previous monopoly on importation being exercised by the government, through the National Food Authority (NFA), will end, as the private sector will be allowed to import rice stocks from countries such as Vietnam and Thailand at a certain the tariff. Revenue to be generated from rice tariffication will then be used by the government to help develop and modernize the local rice farms, which have long suffered from lack of access to credit, and technology and innovation, and production and post-production inefficiency due outdated and costly farming, harvest and processing techniques.

The government, in particular the economic managers, came up with rice tariffication in response to food price-driven inflation, which reached a high of 6.7 percent in September 2018, and artificial manipulation of rice supply by the rice cartel and their cohorts in the government through the hoarding of stocks and flooding the market with smuggled produce. By allowing the private sector, including large companies such as San Miguel Corporation, to import rice stocks from the likes of Vietnam and Thailand, the goal of achieving rice sufficiency, which is the ability of a country to make affordable and high quality rice stocks available to consumers regardless of the source of the rice stocks, will be met. Doing so will give consumers the guarantee that rice stocks will be available in the market and the retail prices of the grain will be determined by naturally occurring market forces (i.e., supply and demand).

At the same time, through rice tariffication, the government will be able to finally address the need to modernize Philippine rice agriculture, and bring long overdue economic growth and development to rural communities. As an agricultural economist and researcher working on the area of food security for several years, I have seen firsthand how difficult life is for most Filipino rice farmers and their families, and how much they need support in order to transform them from being dependent on mere subsistence towards becoming successful agro-entrepreneurs like their Vietnamese and Thai counterparts. Proceeds from rice tariffication, along with the government's own commitment to provide budget for agricultural modernization, rural development and food security, will be very helpful in achieving the goal of transforming the lives and livelihood of Filipino rice farmers.

Recently, however, there seems to be an escalation of reports coming from the media that paint rice tariffication negatively. Some of the reports say that rice tariffication should be considered as an abandonment of the rice farmers by the Duterte administration, leaving them at the mercy of their Vietnamese and Thai competitors, and importers and other so-called "capitalist forces." There are even some articles which said that consumers would be on the losing end of rice tariffication because, according to the reporters and their resource persons, rice importation would make them lose access to cheaper NFA rice, forcing them to buy "more expensive" rice, which, frankly speaking, seem to go against basic economics, especially supply and demand (i.e., prices would naturally go down if there is a higher supply of a commodity such as rice).

I consider the "fears" over the effects of rice tariffication as manufactured noise. Consumers will benefit from lower retail prices of rice due to relative stability in rice, which addresses concerns about rice sufficiency and inflation. Proceeds from rice tariffication can be used to help develop and modernize Filipino rice farms provided that the money will be used and managed properly, hopefully with help coming from professional fund managers.

Only the rice cartel and their cohorts from within the government and among so-called "progressive groups" have real fears because a more liberal rice policy will kill their "kumikitang kabuhayan," which is their artificial manipulation of rice supply.

About the Author
Benedict is an agricultural economist, academician and writer. He has gained experience and expertise in various fields of economics, business, political science and public relations after through professional ventures in the academe, and in the public and private sectors. He has authored or co-authored key publications on topics ranging from agriculture and food security to global affairs and politics.
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