Philippine economic growth will be enhanced if Republic Act 8178 or the Agricultural Tariffication Act is fully implemented. The country should now allow agricultural products to enter the local market under a tariff scheme as contemplated by the law enacted way back in 1996.
The law is meant to fulfill the country’s commitment to the World Trade Organization while providing a safety net for the agriculture sector. It avows as a state policy to make the country’s agricultural sector viable, efficient and globally competitive by adopting the use of tariffs instead of non-tariff import restrictions to protect local producers of agricultural products, except rice which will continue to have quantitative import restrictions.
In other countries, farmers are rich. It’s non-debatable that such has been the lot of farmers in countries that have long opened their borders to international agricultural trade like Japan, China, South Korea, and Asean neighbors, Thailand, Malaysia, and even Vietnam. In the Philippines, agriculture is the poor man’s sector. This need not be so here. We have laws, like RA 8178, that seek to make agriculture viable, more efficient and more competitive. Unfortunately, the good intentions of the laws have been lost by the failure to fully implement them.
Much has been said about the need to protect local agricultural products from foreign competition. Perhaps, this is one of the reasons why some government officials are wary of implementing the law. Yet, protectionism has already been shown to make agricultural producers more conservative and less competitive because they are already assured of a ready market at prices they could dictate. Experts have repeatedly pointed out that a “protectionist policy environment” which continues to impose restrictions—real and disguised—in the importation of agricultural products have hurt the agricultural sector more than they have helped.
Our sugar industry never modernized while we had the US quota with preferential price. Sugar barons were content with their outmoded means of production because they knew the United States would buy their produce at a price higher than the world market. When the quota ended, our sugar producers found they could not compete with those from other countries with more efficient and cheaper production technology. While the producers lost because of their lack of innovative ideas, Filipino consumers won because they could buy imported sugar at a lower price.
Dr. Roehlano Briones, in a 2013 discussion paper entitled “Philippine Agriculture to 2020: Threats and Opportunities from Global Trade,” concluded that the strategy of curtailing imports resulted in substantial price increases for most agricultural products presenting “a substantial burden to the poor.” Instead, he pushed for “ more liberal trade policies (lowering of tariffs and non-tariff barriers) as well as directing expenditure support on a more neutral basis, i.e. greater outlays towards products with lower support, which typically are the export-oriented commodities (i.e. products for which the Philippines has comparative advantage).”
Briones, a UP-trained economist and writing for the government think tank Philippine Institute for Development Studies (PIDS), maintains that embracing international trade allows investment to be “re-allocated towards export-oriented commodities to accelerate productivity growth in the medium-term, while tariff and non-tariff barriers are reduced.”
“Here, consumers benefit through food affordability for most agricultural products while allowing for competitiveness in other export-oriented commodities: banana, aquaculture products, and even coconut,” he adds.
Briones believes that farmers provided alternatives are most likely to transition from growing crops that are not profitable to crops that can bring them more income. He cites rice farmers who only earn an average of P16,251 per hectare per cropping, as opposed to farmers who grow onion bulbs that can earn an average of P302,070 per hectare per cropping.
It’s doubly lamentable that despite the low income of Filipino rice farmers, our rice sometimes costs twice more than imported rice, according to the National Economic and Development Authority. It’s doubly lamentable that despite the low income of Filipino rice farmers, our rice sometimes costs twice more than imported rice, according to the National Economic and Development Authority . The local production of rice has not helped lower prices; even the National Food Authority has admitted that transporting palay from the provinces to Metro Manila adds as much as P1 per kilo to the price of rice.
Another possible reason why RA 8178 has not been fully implemented is that some schemers sees it as nothing more than a tool for corruption, As it is, despite RA 8178, virtual monopolies in the importation of agricultural products continue to exist. Whether wittingly or unwittingly, undue regulation, in the form of restrictions outside of what the law provides, has allowed certain quarters to grant “special favors” to a select few.
This is the kind of perversion of the Agricultural Tariffication Act that we must all guard against.