Rice price hikes seen with tariffication bill

FILE PHOTO. Peasant and fisherfolk protested on World Food Day on Oct. 16, Friday, calling for genuine agrarian reform, which, they said, will solve hunger. (Contributed photo/ Bulatlat.com)

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Price increases are to be expected as the country’s staple food will be solely at the hands of the profit-oriented private sector.

By RONALYN V. OLEA
Bulatlat.com

MANILA – Farmers, rice millers and employees of the National Food Authority (NFA) warned consumers of more expensive rice if President Rodrigo Duterte signs the rice tariffication bill.

This bill removes the quantitative restrictions on imported rice and replaces them with a 35-percent tariff for ASEAN member-nations and 50 percent for non-ASEAN members. It is expected to be signed by Duterte soon.

Under the bill, NFA will no longer supply low-priced rice to the local market. This will affect the 10 million consumers of the P27-per kilo NFA rice, according to Maximo Torda, president of the NFA Central Office Employees Association. The NFA rice is 40-percent cheaper than the average price of well-milled rice pegged at P45.40 as of December 2018.

Torda debunked government’s claim that importing rice will bring down prices. For the past 54 years, NFA data show that imported rice was not at all affordable. In fact, from 1961 to 1994 (before the Philippines ratified the General Agreement on Tariff and Trade-World Trade Organization or GATT-WTO), domestic rice was cheaper than imported rice in a total of 14 years.

Independent think-tank IBON Foundation has also raised the same concerns, saying that as a result of importation rice prices have continued to rise. From 2008 to 2010, the country imported an annual average of 2.2 million metric tons of rice but the price continued to increase at an annual average of P1.20 per kilo until 2016.

IBON Foundation stressed the danger of being dependent on unsteady global rice supply. Only six percent of global rice production is sold in the world market. Rice-exporting countries also occasionally issue export bans to ensure their local supply.

Profit for big business

Price increases are to be expected as the country’s staple food will be solely at the hands of the profit-oriented private sector, consumer group Bantay Bigas said in a statement.

State-run Philippine Institute for Development Studies (PIDS) projected that with the removal of quantitative restrictions on rice, imports will be doubled from an average of 2.2 million metric tons in 2017 to 4.4 million metric tons by 2020.

A Business World report  said that 174 companies have so far filed applications to import 1.16 million metric tons of rice. Among those intending to import big volumes of rice include Purerice Milling and Processing Corp., Muslim Christian Alliance MPC, Pinguiaman Farmers MPC, AJ Developers and Multi Operation Technical High Environment Resources, Inc. and Pengins General Merchandise.

Multi-million San Miguel Corporation (SMC) has also announced its plan of importing rice.

No safety nets for Filipino farmers

With the impending influx of imported rice, Filipino farmers cannot compete.

Joseph Canlas, vice chairperson of Kilusang Magbubukid ng Pilipinas (KMP) and chairperson of Alyansa ng Magbubukid sa Gitnang Luson (AMGL), feared, “How can landless farmers compete and survive in this cutthroat situation where the biggest players include the likes of SMC?”

A 2016 study by the Philippine Rice Research Institute (PhilRice) shows the deleterious effects of the removal of quantitative restrictions on imported rice. The Philippines has higher production cost at P12.41 per kilo in 2016 compared with Thailand (P8.85), Vietnam (P6.53) and Indonesia (P8.87).

A May 2018 case study by Amihan revealed that a landless rice farmer in Nueva Ecija spends P82,930 per hectare for production. Net income is only P740 as a large chunk of the gross income goes to land rent and loan interest.

Based on the same study, a rice farmer tilling his or her own land does not also earn that much. Net income per harvest is only about P251 per day.

The Philippines’ gross marketing margin (i.e., different between wholesale price and farmgate price) in milled rice equivalent is also higher at P9.06 per kilo compared to Thailand (P5.27), Vietnam (P4.55) and Indonesia (P5.61), according to PhilRice’s 2016 study.

This is not at all surprising as the Philippine government has neglected the agriculture sector. Agriculture expenditures accounted for only five percent of the national budget over the last two decades, according to IBON Foundation.

On the contrary, Thailand and Vietnam subsidize their farmers beyond the ceiling set by the WTO. IBON Foundation’s research shows that Vietnam provided around US$400 million to US$1 billion for agricultural support, while Thailand spent US$27.7 billion in subsidies to its farmers from 2011 to 2014.

With tariff on rice, PIDS projected that farm gate and retail prices may decrease by P4.56 per kilo and P6.97 per kilo, respectively.

Proponents of the rice tarrification boast of the Rice Competitiveness Enhancement Fund (RCEF) or the rice fund consisting of an annual appropriation of P10 billion under the national budget, which they said would protect the local rice industry and improve their productivity and competitiveness.

Farmers are not at all optimistic.

Edwin Paraluman, chairperson of the Philippine Farmers Advisory Board, told Bulatlat that RCEF would not provide direct benefit to the farmers.

Under the bill, 50 percent will go to Philmec for the purchase of farm equipment; 30 percent to the PhilRice, 10 percent to the Agricultural Training Institute (ATI)/Technical Education and Skills Development Authority (TESDA) and another 10 percent to the Land Bank of the Philippines (LBP) and Development Bank of the Philippines (DBP) for loans.

Paraluman said Philmec’s farm machineries would go to favored farmers’ organizations while availing loans would entail a lot of requirements.

“If the fund will not go directly to farmers, it’s useless,” Paraluman. “There’s no government subsidy in palay production.”

Meanwhile, Cathy Estavillo of Bantay Bigas predicted RCEF would be another Agricultural Competitiveness Enhancement Fund (Acef), a special fund supposedly created to protect the farmers after the country ratified the GATT-WTO. Acef was plagued with corruption, with the Commission on Audit ordering its suspension. A 2014 report by ABS-CBN revealed that Acef was also used for political patronage during the term of former President Gloria Macapagal-Arroyo.

Estavillo said that like Acef, landlords and big rice traders are set to benefit from RCEF.

“Duterte’s signature on the Rice Tariffication Bill would be the start of the beginning of the end of the local rice industry,” Canlas said. “It’s like the killing blow to the already ailing rice industry. Once the massive rice imports start coming in, the local rice industry will be knocked out in no time.” ()

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