Amend the Rice Tariffication Law

The Rice Tariffication Law initially worked as planned. From a high of five percent or more, the inflation rate now averages to between to two to three percent, primarily due to the prices and supply of food, especially rice, being stabilized. The new law also gave consumers enhanced access to relatively affordable retail prices of rice.

The Rice Tariffication Law was formulated and implemented by the Duterte administration as a "hitting two birds with one stone" solution. It initially addressed rising food prices and inflation by stabilizing rice supply, which, at the time when the law was first implemented, was in a shortage due to a mix of natural (i.e., higher demand from Filipino consumers but inadequate supply from both domestic rice farms and imports) and artificial (i.e., manipulation of rice supply by middlemen, traders and smugglers) factors. At the same time, through the imposition of a 35 percent tariff on rice imports, it aims to help Filipino rice farmers become competitive, efficient and modernized through the creation of the Rice Competitiveness Enhancement Fund (RCEF), where proceeds of tariff collection will be placed.

The Rice Tariffication Law initially worked as planned. From a high of five percent or more, the inflation rate now averages to between to two to three percent, primarily due to the prices and supply of food, especially rice, being stabilized. The new law also gave consumers enhanced access to relatively affordable retail prices of rice.

However, there is a different situation on the producer level. Farmers are complaining of excessively low farm-gate prices of palay, which, according to the latest feedback from my sources on the ground, are being bought at an average of P12 to P14 per kilo. Those whose palay were purchased at that level were lucky, as there were those who were forced to sell at even lower prices. This goes in sharp contrast to recent press releases of the Department of Agriculture that the price per kilo of palay is P19, which, apparently, is only for those that are dry and free impurities- a situation that is hard for the average farmer to attain due to the lack of drying facilities in the farming communities across many areas of the Philippines.

It also seems that nothing has changed at the rice value and supply chains despite the implementation of the Rice Tariffication Law. The middlemen and traders still have a monopoly of rice supply and prices, from depressing the farm-gate prices of palay to raking huge profits out of milled rice being sold to wholesalers and retailers. The Rice Tariffication Law even made them bolder with that they do, no thanks to the "free for all" rice importation that allowed them to flood the market with cheaper imported rice while they also have control over domestic rice supply and prices.

Despite the heavy criticism coming from farmers and consumer groups, and the obvious situation on the ground, the economic managers seem to be hell bent on keeping the Rice Tariffication Law. For instance, Acting Socioeconomic Planning Secretary and National Economic Development Authority (NEDA) Director General Karl Kendrick Chua said that the said law "benefits all Filipinos" and "enhances productivity and overall competitiveness of the Philippines' rice sector" and that "the old Quantitative Restriction regime did not succeed in providing affordable rice for all Filipinos." NEDA backed up its position by saying that the studies that it conducted alongside the International Rice Research Institute (IRRI) and the International Food Policy Research Institute (IFPRI) suggested that the law is "expected to accelerate agricultural growth and facilitate the structural transformation of the economy with gross domestic product (GDP) increasing by at least 0.13 percent compared to the baseline in 2025."

The COVID-19 pandemic has revealed new realities about agriculture and food security not only in the Philippines but also in other countries. It has proven the role being played by farmers and agribusinesses in ensuring that communities and an entire country have access to food at a time when travel restrictions are being imposed to prevent the spread of disease. It has also shown the vulnerability of being dependent on food imports, especially after Vietnam, the Philippines' main source of imported rice, decided to stop importation as its way of self-preservation. Most important of all, COVID-19 has shown the role to be played by agriculture, fisheries and rural development in post-pandemic economic recovery.

Rice farmers are already battered heavily by the high cost of production, especially inputs such as fertilizers, pesticides, herbicides and fuel for machinery. A combination of middlemen and traders deliberately depressing farm-gate prices of palay and the effects of COVID-19-related restrictions and safety protocols created a double whammy that further complicated things for them. It is not enough for the Department of Agriculture to ask middlemen and traders to be "patriotic" at a difficult time like what we are all experiencing now by not importing rice during local harvest season. What must be done is a concrete course of action being taken by the department, especially officials based at the Central Office, by going out of their air conditioned rooms to visit the farms and talk to the farmers for them to see things first-hand and verify reports coming to their office instead of relying on pieces of information being relayed to them by their field officers, some of whom are, unfortunately, in cahoots with the same middlemen and traders who have been controlling rice supply and prices for the longest time.

Given the situation facing our local rice farmers, the conditions at the wholesale and retail levels, the continuous domination of the rice value and supply chains by middlemen and traders, and the new economic realities brought about by the COVID-19 pandemic, it is high time for the Duterte administration, especially the economic managers and legislators and President Duterte himself, to consider introducing amendments into the Rice Tariffication Law.  I suggest as an amendment to the law the introduction of a mechanism that will control the amount of rice being imported by the Philippines during specific periods of time, especially during local harvest season. At the same time, farming communities should be formed into community corporations so that it will be easier for the government to assist farmers, set up drying and storage facilities and other necessary harvest and post-harvest infrastructure that they need to become modernized and competitive, and help them transition from being cottage industry workers towards becoming full-fledged modern, technology-driven and high earning agro-entrepreneurs.

 

The COVID-19 pandemic has shown the importance of farmers and agribusinesses to the survival of the nation. Without them, the Philippines and the Filipino nation will be starving to death due to hunger. It is high time to extend our sincerest gratitude and appreciation on what they do by looking into policy reform measures that will address food security, protection of agricultural lands and food sources, and protection of livelihood in rural areas, one of which is the need to introduce amendments into the Rice Tariffication Law.

 

 

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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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