By Jasper Emmanuel Y. Arcalas & Elijah Felice E. Rosales, February 8 2019; Business Mirror

Image Credit to Business Mirror

THE opening up of the Philippine rice market is inevitable, as Malacañang said President Duterte will not veto the rice tariffication bill even as he acknowledged that it will be detrimental to farmers.

Duterte had a dialogue with rice farmers, millers and retailers last Wednesday to discuss their concerns over the measure. They deemed the dialogue as their “last-ditch effort” to convince the President to veto some of the bill’s provisions, particularly the removal of the National Food Authority’s (NFA) power to intervene in the local rice market.

“The President told them that the measure may affect you, but that he is thinking of the welfare of all Filipinos. So I don’t think he will veto the bill,” Presidential Spokesman and Chief Presidential Legal Counsel Salvador S. Panelo said in a news briefing on February 7.

However, stakeholders and officials interviewed by the BusinessMirror said Duterte will consider their concerns before acting on the bill, which would convert the quantitative restriction (QR) on rice into tariffs.

“He has ordered the DA [Department of Agriculture], DOF [Department of Finance], DTI [Department of Trade and Industry] to consolidate all of the issues raised by the stakeholders,” Agriculture Secretary Emmanuel F. Piñol told the BusinessMirror. “He will look at the report first [before acting on the bill].”

Alyansa ng Industriya ng Bigas Founding Chairman Robert Hernandez told the BusinessMirror that they were asked by Duterte to submit a position paper indicating the provisions that they wanted to be removed or amended and their justifications for such.

“What we want is to maintain the regulatory functions of the NFA and its rice trading function,” he said in an interview. “Because like right now, there are a lot of imported rice and the buying price of palay is just between P14 per kilogram and P15 per kg. The farmers will lose money.”

Fund allocation

THE President is open to reducing the allocation for research under the Rice Competitiveness Enhancement Fund (RCEF) and transfer it to direct support for farmers, according to Trade Secretary Ramon M. Lopez. This, is to provide farmers with a better safety net once the rice tariffication bill is signed into law.

The proposed law will create the RCEF, also called the rice fund, which will consist of an initial appropriation of P10 billion and all duties collected from the importation of rice. As a safety net, the rice fund will be used to finance programs—whether through direct support or research—for farmers.

Under the bill, 50 percent of the RCEF is to be used for the purchase of rice farm equipment, such as tillers, tractors, seeders, threshers, rice planters, harvesters, among others, for purposes of improving farm mechanization.

Further, 30 percent of the rice fund will be allocated for the development, propagation and promotion of inbred seeds to rice farmers. The bill also sets aside 10 percent for credit with minimal interest to farmers and cooperatives.

The remaining 10 percent is for research and education on rice crop production, modern rice farming techniques, seed production, farm mechanization, as well as technology transfer through farm schools nationwide.

“What we want to do there is tweak in the IRR [implementing rules and regulations] the usage of the fund. The farmers are concerned that, with the way it is stated [in the bill], the fund will be used more for research,” Lopez said.

“Research is very important, but I can agree it should not be heavy on that. It should be heavy on the direct support for farmers, which are [through] the inputs and the loans. That is where the bulk of the fund should go,” he added.

According to Lopez, the President is amenable to adjusting the allocation of the rice fund in response to the plea of industry stakeholders for stronger safety nets under a rice tariff regime. However, he stood firm on the provisions of the bill concerning the NFA.

The measure will strip the NFA of its power to control the volume of rice imports entering the Philippine market, as well as of its capacity to license importers.

Under the proposed law, interested importers will only need to secure a sanitary and phytosanitary import clearance from the Bureau of Plant Industry as proof the rice they will bring in is safe for consumption. They will also have to pay a tariff of 35 percent if the imports are coming from a member-state of the Association of Southeast Asian Nations, and 50 percent if from outside the region.

Lopez said the Chief Executive made clear in his dialogue with industry stakeholders on Wednesday night he is for a free market, but with proper safety nets.

Government economists estimate prices of rice will go down P4 to P7 per kilo once the bill is in place. However, farmers fear this could spell the death of the domestic rice industry, as the NFA is removed of its power to manage the volume of imports.