The country’s biggest farmers union says the government’s plan to floor tariffs on imported rice to zero percent is ill-timed, given the wet season harvest has started and the country’s granary will be topped-up soon.
“If we reduce the tariffs now, it will send the wrong signal to our farmers and discourage them from increasing their production. Then, we will have our supply problems again next year,” said Federation of Free Farmers (FFF) chairman Raul Montemayor.
There is no need for major rice imports at the moment, since the harvest is about to peak, he added, branding a hastily called Tariff Commission hearing on the proposed tariff cut “a farce.”
“The exercise is rigged and designed to make it appear that stakeholders are being consulted on the proposal,” Montemayor said.
The FFF said the stocks that will be accumulated during the current harvest will tide the nation over until March to May 2024, in time for the dry season harvest.
However, Montemayor emphasized the need to prepare for the lean months next year from July to September.
The FFF said as much as 85 percent of the rice that is being imported is for premium grades for sale to well-off consumers.
“This is because the import price difference between premium and regular rice is very small whereas the profit margins for the former are much larger. Any reduction in tariffs will benefit the buyers of premium grades of rice, not ordinary consumers who prefer to buy cheaper rice,” Montemayor said.
He said this is the reason why the retail prices of rice have hardly moved despite the entry of cheap imports, even before the current crisis.
The group alleged that since the passage of Rice Tariffication Law (RTL) in 2019, the Bureau of Customs has been turning a blind eye on the massive undervaluation of rice imports, which results in a de facto reduction in tariffs.
“This has not resulted in cheaper rice. Importers and traders are the ones raking in profits from imports. It is not surprising that the FFCCII (Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc.), whose members most probably include some of these large importers, support a further reduction in tariffs,” Montemayor said.
The FFCCCII said it supports the proposal to bring down tariff rates on imported rice to 10 percent and if viable, all the way to 0 percent from 35 percent, amid the current supply gap and high prices of rice.
The group believes the tariff reduction will not only bring down rice prices and temper the increasing food inflation, but also address the demand-supply gap in this sector.
But the FFF said its analysis of the data from the Philippine Statistics Authority (PSA) showed that consumers saved a measly P52 per year during the first three years of the Rice Tariffication Law, which opened up the domestic market to unlimited volumes of cheap imports.
The Tariff Commission scheduled a formal inquiry on Sept. 15 regarding the petition of the Foundation for Economic Freedom (FEF) to slash tariffs from 35 percent to 10 percent.
The call for a hearing came after public announcements endorsing tariff cuts by National Economic and Development Authority (NEDA) director-general Arsenio Balisacan and Finance Secretary Benjamin Diokno.
The Tariff Commission will submit its findings and recommendations to NEDA, which has to wait for Congress to recess on Sept. 30, before an executive order authorizing a tariff decrease can be signed by President Ferdinand Marcos, Jr.
“The TC hearings have lost their value as a credible consultation mechanism. No matter what we say in these hearings, the position of DOF and NEDA, which supervises the TC, will prevail,” Montemayor said.
The group criticized the economic managers’ apparent game plan to again disregard and bypass Congress.
“The authority to adjust tariffs is constitutionally vested in Congress. This power can be delegated to the President only during extraordinary situations. The economic managers are abusing this privilege by waiting for Congress to recess on Sept. 30, so that they can ask the President to cut rice tariffs through an executive order,” Montemayor said.
Meanwhile, the British Chamber of Commerce Philippines (BCCP) said it supports the government’s move to reduce rice tariff to 10 percent from 35 percent.
“The British Chamber remains committed to advocating for the lowering of tariffs which greatly helps in dealing with inflation and food insecurity. Also, it is necessary to help with the increasing global market demand and supply,” said British Chamber executive director and trustee Chris Nelson.
Diokno this week batted for lower tariffs on imported rice, after saying he was “shocked” to learn that price ceilings had been imposed on regular and well-milled rice.
Local Government Secretary Bejamin Abalos Jr. urged the Metro Manila Councilors League (MMCL) to pass an ordinance to help rice retailers with the losses they might incur because of the price caps.
During the MMCL’s 35th anniversary, Abalos suggested they pass ordinances that could give rice retailers by suspending market stall fees.
Some 126 rice retailers in the cities of Mandaluyong and Makati on Wednesday received close to P2 million in cash assistance from the government.
A total of 71 private retailers got P15,000 each from the Department of Social Welfare and Development (DSWD) during the payout at the lobby of the Blue Building Annex of the Mandaluyong City Hall.
Victor Victoria, executive secretary of Mayor Benjamin Abalos Sr., said the city government immediately responded when they received the order about the payout schedule.
The cities of Marikina, Pasig, Valenzuela and Pateros also provided cash aid to 736 rice retailers in their areas on Wednesday amounting to P11.04 million.
Experts said a 15-year high in rice prices, prompted by India’s restrictions on exports, should be a wake-up call on how climate change can disrupt food supplies.
Rice prices jumped 9.8 percent in August, bucking decreases in other staples, the Food and Agriculture Organization said last week.
That followed the July decision by India, which accounts for 40 percent of global rice exports, to ban the overseas sale of non-basmati rice.
The government cited soaring domestic prices for the staple, caused by geopolitics, the El Nino weather pattern and “extreme climatic conditions.”
This year is expected to be the hottest in human history, and the effects of the seasonal El Nino weather pattern could make conditions even harsher.
Despite severe flooding in parts of northern India, this August was the country’s hottest and driest on record.
The monsoon season that brings up to 80 percent of the country’s annual rain has been far below normal levels.
India’s July restrictions followed a decision last September to ban exports of another variety of rice that is a staple in parts of Africa.
Up to 8 percent of global rice exports for 2023/24 could now be taken out of the market, according to analysis by BMI, Fitch Group’s research arm.
For now, the crisis offers an opportunity for India’s rivals, including number two and three exporters, Thailand and Vietnam.
Both have increased exports this year, with Nguyen Nhu Cuong, an official with Vietnam’s agriculture and rural development ministry, touting a “bumper crop” and plans to increase planting.
But the dry conditions that tend to accompany El Nino mean smooth sailing ahead is unlikely, warned Elyssa Kaur Ludher, from the ISEAS-Yusof Ishak Institute’s Climate Change in Southeast Asia program. With AFP