2019News

Government all set to limit intervention in rice market under new law

By Jasper Y. Arcalas, March 5 2019; Business Mirror

https://businessmirror.com.ph/2019/03/05/government-all-set-to-limit-intervention-in-rice-market-under-new-law/

Image Credit to Philippine News Agency

THE government is ready to exit from local rice markets and fulfill its new role under the rice trade liberalization law, which will take effect on Tuesday, Agriculture Secretary Emmanuel F. Piñol said on Monday.

Piñol also said the National Food Authority Council (NFAC) would meet on Tuesday to finalize implementing rules and regulations (IRR) of Republic Act 11203, which will bring sweeping changes to the domestic rice market.

For one, the National Food Authority (NFA) will no longer sell low-priced rice starting in August, when the food agency expects its inventory of imports to be depleted. It will also stop monitoring grains businessmen and apprehending violators.

Piñol said the law would be legally effective on March 5, but its implementation would still depend on whether an IRR would be signed on that day. He did not give a categorical answer when asked if he expected the IRR to be signed on Tuesday.

“We hope that all the [concerns] would be settled tomorrow [March 5]. What is only needed to implement the law is just the approval of the IRR. The IRR is complete and I believe that there will be no major disagreements on it,” he said in a news briefing on the eve of the effectivity of the law.

“Even if the [Department of Agriculture or DA] is not ready, we have to be ready. So we are ready. We are ready with our inputs,” Piñol added.

As the law allows traders to apply for sanitary and phytosanitary import clearance (SPS-IC) starting March 5, Piñol said some of the personnel of the NFA will be transferred to the Bureau of Plant Industry (BPI) to beef up its manpower.

The BPI, an attached agency of the DA, was tasked to process the applications for SPS-IC. Under RA 11203, interested traders need only to secure an SPS-IC from the BPI to import rice.

“This is an additional task for the BPI and it does not have the budget for it. So I am looking at asking for a secondment from the NFA to handle the [processing],” Piñol said.

Limited role

Even without the final IRR, the NFA said it would “no longer exercise regulatory functions over the international and domestic rice trade” starting March 5, as stipulated by RA 11203.

Among the regulatory powers that would be stripped away from the NFA are: licensing and registration of entities engaged in grains businesses; collection of regulatory fees; issuance of warehouse receipts; warehouse inspection; seizure of hoarded stocks; and enforce rules and regulations concerning rice trade.

“The IRR of the law are yet to be finalized. But as spelled out in the law’s self-executing provisions, we have already instructed our offices to cease all regulatory functions over our local grains business starting March 5,” NFA OIC-Administrator Tomas R. Escarez said in a statement on Monday.

Escarez also said the NFA would channel its resources in procuring local palay as mandated by RA 11203. “We will just wait for the release of the final IRR before we fully shift our focus on buffer stocking for calamities and emergencies, as stated under the law, and on the eventual restructuring of our agency to suit its new functions,” he said.

The NFA was created by virtue of Presidential Decree 4 issued in September 1972. The decree abolished two agencies—the Rice and Corn Board (Ricob) and the Rice and Corn Administration (RCA) but absorbed their respective functions.

Ricob regulated the rice and corn retail trade and was tasked to nationalize it within a target date, while RCA handled the distribution of government low-priced rice especially during the lean months.

Concerns

Piñol said the DA wants to see a provision that will allow the NFA to procure more palay from farmers in the IRR. This, he said, will serve as their “shield” in case the buying price of palay drops below their production cost.

“The Neda [National Economic and Development Authority] has taken this into consideration. I support this proposal also,” he said.

“President Duterte has announced that he wants to have a buffer stock of up to 60 days. I also think that the buffer stock should be more than 30 days,” Piñol added.

‘Biggest budget’

While RA 11203 takes effect on March 5, the P10-billion Rice Competitiveness Enhancement Fund (RCEF) has yet to be set up by the national government. The RCEF, which will consist of tariffs collected from imports, is regarded as a safety net for farmers.

But Piñol said the rice sector is set to receive its biggest budget in history. This year, the rice sector will receive P22 billion—the P10-billion RCEF, P5-billion supplementary budget from the national government and the P7 billion allocated by the DA for the sector under its regular budget.

“Hopefully, if tariff revenues would increase and hit P26 billion next year then our fund for rice alone would reach about P30 billion,” he said. “This is actually the greatest irony. Farmers are afraid of the liberalization but they are given this huge benefit.”

Piñol said, however, that the interventions to help farmers cope with the expected influx of rice imports should have been put in place before the law took effect.

Still, he thumbed down proposals to prolong the crafting of the IRR so that the law would not be immediately implemented. Piñol argued that by doing so, the release of the budget for the RCEF would also be delayed. “The longer we wait [for the IRR], the longer it will take for the budget to be released. This will make it difficult for the government to intervene during the wet season planting,” Piñol said.

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