LAST March 19 was the third anniversary of the implementation of Rice Tariffication Law (RTL), which is much maligned by Leftist and populist groups in the country. RTL's effectivity is for six years and, thus, last March 19 was the mid-point of its implementation.
Unlike in the previous years when its anniversary was met with vitriolic criticisms from its professional detractors, the verbal assault seems to be muted this time. Why is this so?
Modern-day Cassandras' prediction of the dire consequences of RTL never materialized. They claimed that because of falling palay (unmilled rice) prices as a result of the liberalization of rice trading brought by the RTL, farmlands devoted to palay cultivation will shrink. A series of Philippine Rice Research Institute (PhilRice) studies on palay production trends in the country showed the reverse. Farms cultivated to palay production expanded which, in fact, accounted for a significant proportion of the increase in palay yield.
RTL detractors also predicted that overall farm productivity will decline because farmers will be discouraged to plant palay because of its low prices. Again, they were mistaken as palay harvest reached a record high of nearly 20 million metric tons last year.
They complained that while palay farm gate prices took a dive after the implementation of the RTL, its wholesale and retail prices did not fall at a similar rate. Thus, they noted with disdain that the promised benefit to the consumers that they would enjoy cheaper rice prices due to the RTL did not materialize.
While this was true in 2019, the wholesale and retail prices of rice from 2020-2021 had steeper year-on-year decline vis-à-vis the farm gate price. In particular, wholesale and retail prices of rice decreased, on average, by 3.7 percent 4.2 percent in 2020, respectively, while farm gate prices only contracted by 1.1 percent. Similarly, retail prices of regular milled and well-milled rice declined, on average, by 1.8 percent and wholesale price of regular milled decreased by 0.2 percent in 2021. In contrast, the farm gate price of rice remained the same from 2020 to 2021.
Other benefits of RTL
Besides proving its detractors wrong, RTL has other positive benefits. Immediately after its implementation, the RTL resulted in the decline of rice retail price of regular-milled rice (RMR) from its peak of P45 per kilo in 2018 to an average of P37 from January to December 2021, benefiting millions of Filipino consumers. It contributed to taming inflation from a high of 6 percent in 2018 to an average of negative 2 percent from 2019 to 2021. Moreover, RTL benefited the poor rice consumers because of the savings they generated from lower priced rice, which constitute the bulk of their expenditures. And it generated extra revenues for the government from the proceeds of the tariffs on imported rice, which totaled to more than P40 billion from March 2019 to December 2021.
But the most telling benefit of RTL is that we did not experience rice "pila" during the height of the Covid-19 pandemic in 2020, 2021 and during this recent Russian-Ukraine crisis with the world experiencing a global grain shortage. If we stick to the old quantitative restriction (QR) or rice import ban regime, there is no doubt that we will experience a severe rice shortage resulting in widespread social unrest. This will undoubtedly be the scenario given the government's poor decision-making on when to import and the volume to be imported (as we experienced in 2018), besides our current tight budgetary situation due to the pandemic.
Recidivism and ideology
But there are unrepentant defenders and apologists of the old QR or import ban regime despite the fact that nearly 50 years of its implementation has not improved the plight of our rice farmers, or their efficiency or competitiveness. They have even successfully convinced presidential candidates to either reject or reverse RTL so we will revert back to the old system of QR where National Food Authority (NFA) has the monopoly over rice importation. But take note the inconsistency or duplicity of their position on the matter.
On the issue of RTL, they put their trust in the government that it will efficiently manage our rice supply and demand situation through the operations of the NFA. But on the issue of the Regional Comprehensive Economic Partnership (RCEP), they question the very integrity of the state whether it can deliver on its promises of providing the necessary adjustment measures to the farmers who might be adversely affected by RCEP!
Which leads one to conclude that it is not so much the policy regime or the farmers' welfare that are at stake here, but their insistence in adhering to an obsolete ideology that has long been abandoned by countries all over the world.
What will be their solutions?
As they say in scientific discourses, "One's criticism is only as good as one's alternative." The question that we need answers from the lovers of the old QR regime is if they are successful in rejecting or reversing the RTL, what will be their alternative?
Let me remind the QR lovers of the numerous flaws of that regime so that it will be crystal clear to the public whether their alternative is superior to the RTL. Among the adverse impacts of the QR regime for decades noted by reputable researchers are as follows:
1. Our rice productivity remains low, averaging an annual growth rate of only around 1.4 percent from 2009 to 2018 (Philippine Statistics Authority), not even enough to meet the consumption requirements of the growing population of the Philippines, which registered an annual growth rate of 1.6 percent given the same period;
2. Poverty among rice farmers remains deep and widespread;
3. Rice consumer prices are higher compared to those paid by ordinary Thai, Vietnamese and Myanmar rice consumers;
4. Massive budgetary deficit of the NFA (National Food Authority) that reached P170 billion during its peak;
5. Corrupt practices in the government-to-government rice transactions, including the handling of its downstream logistics;
6. Corruption in the allocation of the minimum access volume or MAV for rice (wherein a number of cooperatives were identified as fronting for some financiers);
7. Periodic artificial shortage of rice due to poor decision-making on when to import and the volume to be imported on the part of the government; and
8. Gross neglect of the development of other agricultural commodities where the Philippines has a comparative advantage, as two-thirds of the DA (Department of Agriculture) budget went to rice productivity enhancement programs.
Outside of asking for more budget to support the rice sector (as if money is pouring from heaven like manna) or shifting the military budget to agriculture, what are their solutions to the above problems of the QR regime that they are so obsessed with? If no satisfactory responses to the above can be offered by RTL detractors, it only means that they were beneficiaries of the corrupt old system and hence, their determination to reverse the RTL.