The Rice Tarrification Law (3)

The Rice Tarrification Law (3)

Sometimes, we are persuaded to ask, given the issues on importation these days, and what then-presidential candidate Ferdinand “Bongbong” Marcos Jr. said during the campaign that he favored the suspension of the rice tarrification law.

And we ask: Did we do our homework on improving the production efficiency of palay farmers?

It appears, from available figures that we did not. Hence, according to observers in the agriculture scene, after the 10-year grace period, we applied for another 10-year exemption (though this required sacrificing other agricultural producers through lower tariffs) from the lifting of our rice QR.

The Philippines acquired the right to impose quantitative restrictions (QR) on rice as a result of the Uruguay Round of multilateral trade negotiations that led to the establishment of the World Trade Organization (WTO) in 1995.

The 20-year grace period ended in 2014, during the time of DA Secretary Proceso Alcala (under the administration of President Benigno Aquino III), and we were no longer allowed by WTO to extend the QR.

We resorted to various legal measures such as the declaration of an emergency situation, imposing non-tariff barriers (NTBs), or sacrificing more products through lower tariffs in exchange for maintaining the rice QRs.

Kind of flashback. Then-candidate Marcos said, if elected president in 2022, he favored the suspension of the rice tariffication law, saying that continuous and massive importation of the staple into the country was no longer sustainable amid the country’s poor financial position.

Marcos said the law, enacted in 2019 with the aim of lowering the price of rice in the country by removing quantitative limits on rice trading, was disastrous to farmers.

“We should minimize our importation. I know it’s easy to say but it’s not very easy to do. It will take a long while. These are all very long-term plans but in the short-term, there’s still much that we have to do,” he said in a forum hosted by the Philippine Chamber of Agriculture and Food Inc.

“I wouldn’t mind if we suspend the Rice Tariffication Law first, because it’s really destroying the… NFA is now buying at P18, P19. People don’t plant anymore at P19,” he added.

The law puts a minimum of 35 percent tariff on rice imports and this has been affecting the income of local farmers, Marcos said, forcing them to abandon their fields which in turn results in reduced production.
“That is a cycle that keeps sucking us down into this importation hole, until, you know, we’re not producing anything anymore, we are importing everything,” he said.

“We’re not in the best financial situation right now because of the pandemic and its effects on the economy. We cannot sustain it,” he added.

Marcos also stressed that while the law had good intentions, it had “unintended consequences,” adding in Filipino “If you read the law, it looks okay. But it had unintended consequences and there is an ongoing pandemic so our local farmers are really hurting. They don’t know how to make money anymore.”

The effects of rice tariffication on household welfare occur through prices. The reform leads to lower domestic rice prices, resulting in reduced income for rice farmers but increased purchasing power for rice consumers.

Then we ask the next question: If we are rice self-sufficient, why is there a need to import?

The answer is we are not self-sufficient in rice. We are importing an average of five to 10 percent of our rice requirements, depending on the weather, because we cannot produce enough. Successive DA secretaries promised to attain rice self-sufficiency, but all failed.

But have we not devoted enough resources to make us rice self-sufficient?

A public expenditure review conducted by the World Bank of the Department’s budget done during the previous administration showed that more than 70 percent went to fund rice productivity-enhancement programs.

Hence, the development of other crops, where the country has comparative advantages, was utterly neglected.

Then, why has not rice productivity shot up to at least equal Thailand or Vietnam?

There are several factors, but two of these stand out: First, we don’t have huge compact flatlands blessed with adequate irrigation. We don’t enjoy economies of scale. We don’t have a Mekong River – the 12th longest river in the world and the 7th longest in Asia – that flows through six countries: China, Myanmar, Thailand, Laos, Cambodia, and Vietnam. The Philippines is archipelagic with a lot of mountainous areas.

Second, our population is rapidly increasing – the latest unofficial statistics suggest we are now 114 million – which means we have more mouths to feed.

The third is corruption, where beneficiaries have not been provided proper assistance (i.e., fertilizer, seeds, etc.

Corruption. And the cycle becomes atrociously vicious.


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