MANILA, Philippines – The recent presidential directive lowering tariffs on rice imports from non-ASEAN countries was a cruel joke against rice farmers made right in the middle of Farmers’ Month and the feast of San Isidoro, the patron saint of Filipino farmers.
Executive Order No. 135 was issued on May 15, 2021 reducing tariffs from 50 percent off-quota and 40 percent of the minimum access volume (MAV) on rice imports to 35 percent for one year. The adjustment, which was recommended by the Board of the National Economic and Development Authority (Neda), was supposedly aimed at “diversifying the country’s market sources, increasing the supply of rice, keeping prices affordable and reducing inflationary pressures.” .
The reasons given for the tariff adjustment were unfounded and misleading.
There is no need to diversify foreign sources of rice for Philippine consumers because under the Rice Tariff Law, importers are already free to bring rice from any country as long as they pass Philippine quarantine regulations.
Aside from Vietnam and other ASEAN countries, the Philippines has been consistently importing from nine other countries, including India and Pakistan and, more recently, China.
Similarly, there is no urgent need to increase our supply of rice. According to the Philippine Statistics Authority (PSA), our rice inventory as of March 1 was 2.08 billion tonnes, or just 4.5 percent less than in 2020.
This population would have already increased after the recent dry season harvest. The Department of Agriculture, in turn, repeatedly stated that we have an ample supply of rice and has announced plans to increase production by one million tons in 2021.
There has been no significant decrease in rice imports at 610,428 tonnes between January and March 2021, or just 3 percent less than the volume brought in during the same period in 2020.
Meanwhile, international prices have begun to soften with the Customs Office (BOC) setting the free on board, or FOB, price of Vietnamese rice with 5 percent broken grains at $ 480 per ton as of April 26, 2021. , down from its peak of $ 515 per tone.
Domestic rice prices have remained stable and inflationary pressures have been due to increases in the prices of pork and fish and not rice. The average price of regular milled rice (RMR) actually fell from P37.89 in 2019 to P36.93 per kilo in 2020. Similarly, retail prices for well-milled rice fell from P42.73 to P41.67 per kilo. . .
The BOC data further indicated that there were no significant differences in import costs between rice from Vietnam and non-ASEan countries despite the current differential in tariff rates. In 2020, rice from Vietnam with 5 percent broken grains cost an average of P29.75 per kilo compared to P30.29 for a similar grade from India.
It is estimated that Indian rice importers would save an additional P3 per kilo if tariffs were reduced to 35 percent. However, these additional margins could simply be pocketed by importers and traders and not passed on to consumers, as was the case during the first two years of the Rice Tariff Law.
In turn, palay prices for farmers could fall to P1.50 per kilo. The government could also lose around P100 million in customs duties, or more if import volumes from non-ASEAN countries increase due to tariff reduction. As a result, funding from the Rice Competitiveness Improvement Fund (RCEF) and similar support programs for farmers would be reduced.
There are also questions about the advisability of issuing Executive Order No. 135 during the weekend just before Congress resumes on May 17.
This is another slap in the face from the legislature. The power of the President to adjust rates is an authority delegated by Congress to allow the Executive to primarily address pressing issues when Congress is not in session.
In the case of rice, there is no emergency that needs to be addressed. In fact, the Executive has deliberately played with the rules to anticipate and subvert the action of Congress.
(Note: Raúl Montemayor is the national manager of the Federation of Free Farmers)
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