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Philippines’ finance chief Dominguez defends rice import liberalisation law

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Farmer Joey Bernardino walks through a rice field at Barangay Krus na Ligas in Quezon City, Philippines in 2021. Bernardino and his family, together with other urban farmers of Krunali (Krus na Ligas) Farm and in collaboration with the Grow QC Movement, planted paddy in this 2ha plot to benefit their community. PHILIPPINE DAILY INQUIRER

Philippines’ finance chief Dominguez defends rice import liberalisation law

Philippine President Rodrigo Duterte’s chief economic manager warns against moves to repeal the rice tariffication law (RTL), pointing to its benefits to Filipino consumers such as the big reduction in rice prices as more imports were allowed into the country.

According to Finance Secretary Carlos Dominguez III, rice is currently sold at an average of P39 ($0.75) a kilogramme – cheaper by about P7 than prices in 2018 when short supply triggered prices of the staple to skyrocket to about P46.

The high inflation mainly caused by expensive rice in 2018 led to the enactment of Republic Act No 11203 or the RTL in 2019. It removed the import quota or so-called quantitative restriction slapped on rice, which for decades protected local producers and raised the debts of the state-run National Food Authority (NFA).

Before the new law removed the NFA’s commercial function, the agency had accumulated about P165 billion in debt as it intervened in the market by selling cheaper “NFA rice” varieties that it bought at higher prices.

“The NFA monopolized rice importations before the [RTL], with a few private traders granted import permits that enabled them to control the price and supply of rice through hoarding and other manipulative practices. With the [RTL], the role of the NFA has been limited to ensuring emergency rice stocks exclusively procured from local palay growers,” Dominguez said in a statement.

The NFA was also granted about P11 billion in tax subsidies yearly from 2005 to 2018, but rice prices did not go down as much.

In 2018, before the RTL took effect, Dominguez said the retail price of regular-milled rice spiked to P46.04 per kg, but after the law took effect, the average price of this rice variety went down to P39.13 as of April 2022, or cheaper by P6.91 per kg.

“Freed from local entrenched interests that took advantage of the protectionist policy on rice for decades, this staple food is now more affordable, especially for low-income Filipinos who spend about 16 per cent of their total household budget on rice,” Dominguez said.

“The [RTL] was finally achieved after more than 30 years of failed attempts under previous administrations. The law opened up the Philippine rice market and, in turn, reduced the price of our country’s staple food for more than 100 million Filipinos,” said Dominguez, who was a former agriculture secretary during the administration of the late President Corazon Aquino.

Dominguez pointed out that these past few years, rice was no longer a major contributor to inflation.

With the private sector now given a free hand in importation, the government was also able to raise P40.4 billion in import duties—P12.1 billion in 2019, P9.3 billion in 2020, and P18.9 billion in 2021—from rice from March 2019 to December of last year.

As of April this year, the government through the Bureau of Customs collected P46.6 billion from rice import tariffs.

In its 2021 annual report published early this month, the Department of Finance (DOF) said rice import duties had “assured the government of continuous and sufficient financing support for the $197 million yearly rice competitiveness enhancement fund (RCEF)” for farmers badly hit by the entry of cheaper imports.

In particular, the RCEF was being “used exclusively to finance programs that will sharpen the competitiveness of palay growers by way of providing them with easy access to fertilizer, farm machinery and equipment, high-yield seeds and cheap credit; and offering them skills training programs on farm mechanization and modern farming techniques,” it said.

Due to the RCEF, it noted that more than a million farmers have enjoyed access to 13,499 units of farm equipment and “thousands more units are on their way to more farmers.”

“Tens of thousands of rice farmers, and farmer cooperatives and associations have also attended workshops, technical briefings, and training sessions in 90 newly established and 43 enhanced farm schools all over the country,” the DOF report added.

A separate report last week of the inter-agency, Cabinet-level Economic Development Cluster chaired by Dominguez said that “the rice tariffication law is also expected to accelerate agricultural growth and facilitate the structural transformation of the economy with gross domestic product increasing by at least 0.13 per cent in 2025,” citing estimates of the National Economic and Development Authority.

However, presumptive President Ferdinand Marcos Jr. had said during the campaign that an administration under him would reduce the price of rice to P20 to P30 a kg and review the RTL for supposedly making life harder for Filipino farmers.

The Federation of Free Farmers (FFF) also refuted the claims made by the DOF, arguing that the price of rice just slightly decreased from the time the government had control over rice imports.

Citing data from the Philippine Statistics Authority, FFF said prices of regular milled rice now averaged P37.60 a kg, lower than P39.02 in 2016 and P39.52 in 2017.

“Although RTL allowed the entry of cheaper imported rice, the savings were mostly captured by importers and traders and were not passed on to consumers. Also, most of the imports were for premium rice grades for sale to well-off consumers, not the more affordable grades that NFA used to import for the poor,” said FFF national manager Raul Montemayor.

“That is why poor consumers today are actually paying almost the same as in 2016 and 2017. To top it off, the P27/kg rice that [NFA] used to distribute has disappeared from the market,” he added in a statement.

The group claimed that economic managers were primarily responsible for the crisis in 2018, saying “they conspired in the NFA Council to prevent the NFA from replenishing its inventories until its stocks had shrunk to zero.”

The FFF is appealing to the incoming administration to undertake a “serious and factual review of the RTL and to amend the law as deemed necessary.”

PHILIPPINE DAILY INQUIRER/ASIA NEWS NETWORK

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