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Philippines liberates rice market

Feb 17. 2019
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THE PHILIPPINES' Rice Tariffication Bill has been signed into law by President Duterte amid opposition from farmer groups and consistent prodding from economic managers and business organisations.

The measure, considered a priority bill of the Duterte administration, will effectively open the country’s doors to unimpeded importation of rice and provide an annual subsidy of 10 billion peso (Bt6 billion) for the development of the rice industry.

Economic managers and 13 business organisations had thrown their support for the law, noting that its enactment would help temper the country’s inflation, bring down retail prices of rice in the market and harness the country’s ability to ensure food security.

However, industry groups, including the Federation of Free Farmers, Alyansa ng Magbubukid and Bantay Bigas, had urged Duterte to veto the bill, citing issues of smuggling and corruption in the rice trade as well as the limited role of the National Food Authority (NFA) under the law.

Under the tariff regime, the NFA would be limited to maintaining the country’s emergency stocks in time of calamities and would not be allowed to license importers and regulate the entry of imported rice in the market.

It was not clear if it would still be allowed to sell subsidised rice in the market.

Acting NFA Administrator Tomas Escarez said details of the agency’s function would be tackled in the implementing rules and regulations of the law, which has yet to be released.

The Rice Tariffication Law allows the market to be flooded with rice imports so long as these are slapped a tariff at 35 per cent if coming from Asean members and 50 per cent for non-Asean states.

Around 28 billion peso in revenues are expected to be collected by the government from these imports, which would be used to subsidise rice farmers to ensure their competitiveness.

Senator Cynthia Villar, chair of the Senate committee on food and agriculture and the proponent of the bill, said that the money should be used to mechanise and modernise the sector, which has been lagging behind other rice-producing countries.

Unlike in Vietnam and Thailand where farmers can produce a kilo of rice at 6 peso, Filipino farmers incur a production cost of 12 peso a kilo, making local rice costlier than imported rice.

Whether or not relying on rice imports would benefit both local producers and consumers of the staple remains to be seen.

Right now, the challenge is to make sure that rice farmers can compete at a price 35-per cent higher than imported rice, and give consumers the option to avail themselves of the staple at a more affordable price.


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