Rice tariffication will not ‘kill’ local rice industry -- Piñol

February 18, 2019
Emmanuel Piñol

Agriculture Secretary Emmanuel Piñol yesterday allayed the fears of several sectors that the approval by President Rodrigo Duterte of the Rice Tarrification Act will “kill” the local rice industry saying even if the importers would want to bring in huge volumes of imported rice there is not much rice supply available in the world market.

Piñol made the clarification in view of the concerns about the negative impact of the Rice Tariffication Act on the local rice industry.

“Because of this disinformation, it came to the point that the buying price of palay has dropped from a high of P22 per kilo last year to P14 and P15 in some parts of the country now,” Piñol said.

Piñol explained that the opening up of the local market to imported rice will not result in oversupply since at present, the volume of rice traded in the world market every year is only about 40 million metric tons of which about 38 million is already committed to specific non-rice producing countries.

“The world population is growing exponentially while the land area is constant and this is true with rice exporting countries like Thailand, Vietnam, Cambodia, Pakistan and Myanmar. A few years from today, Thailand and Vietnam will not be able to export the same volume of rice as they do now because they also have a growing population,” Piñol added.

According to Piñol, the Philippines cannot let go of its own rice production program because the moment it becomes dependent on imported rice, even on a short term, it will end up at the mercy of the rice exporters who could sell their produce at an even higher price than our domestic cost of production.

He added that the proposal by some economists that the Philippines would do better just importing rice rather than investing in its local rice production program is a short-sighted perspective.

“If this view prevails, the Philippines will face a real rice crisis a few years from now with sky-high prices which the poor cannot afford,” Piñol said.

He also denied that the drop in the buying price to palay by traders was a result of the Rice Tarrification saying it is not yet in effect since the President has just signed it. 

Piñol stressed that there is a period within which the public will be notified and the Implementing Rules and Regulations still have to be finalized.

“The fall in the buying price by traders is a result of speculation fueled by the anticipated “flooding” of the market with cheap imported rice which is expected with the opening up of the market,” he added.

Piñol further clarified that the law will not affect Filipino rice farmers even as there would be a drop in the buying price of palay initially but they are expected  to adjust by increasing productivity with funds coming from tariffication.

“The Rice Tariffication Law features a provision which says that the tariffs and duties collected from the rice importation (35 percent for ASEAN members and 50 percent for other sources) shall be turned over to a program called Rice Competitiveness Enhancement Fund (RCEF) estimated at no less than P10 billion every year,” Piñol  pointed out.

He said for 2019, the P10 billion from RCEF is allocated as follows: P5 billion for farm mechanization; P3  billion for high-yielding seeds; P1 billion for credit and P1 billion for technical skills training.

Piñol said the RCEF could actually increase the productivity of Filipino rice farmers if properly used because farm mechanization alone will increase production efficiency and reduce post-harvest losses estimated at 16 percent of total production.