THE Federation of Free Farmers (FFF) urged Congress to amend Republic Act (RA) 11203 or the "Rice Tariffication Law (RTL)," saying farmer incomes have dropped significantly since the law was passed in 2019 due to "excessive" rice imports alongside the rising cost of production.
Former agriculture secretary and FFF National Chairman Leonardo Montemayor said that RTL's claimed benefits are overstated and deceptive.
"During RTL's first three years, rice retail prices fell by an average of P6 per kilo, but only if compared to the exceptionally high prices during the rice crisis in late 2018," he said.
Montemayor added that when analyzed against prices in 2017, the average drop was only about half a peso for both regular milled rice (RMR) and well-milled rice.
"RTL hurts poor consumers in particular. They spent P12 per kilo more for the same RMR they had previously bought from NFA at P27 per kilo. About 87 percent of imported rice were premium grades sold to well-off consumers," he said.
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Palay (unhusked rice) prices decreased by an average of P1.37 per kilo vis-a-vis 2017 levels, causing cumulative losses of P66 billion and an income decrease of P4,657 per hectare per season.
"Most of the gains from cheaper rice imports were captured by market intermediaries. Undervaluation of rice imports was rampant, resulting in an estimated P12 billion in tariff under collections to date," Montemayor said.
While palay output reached a historic high in 2021 of 19.96 million tons, he said this was only 3.5 percent more than the production in 2017.
"Yields in 2021 were just 3.7 percent better than in 2017. The current average of 4.15 tons per hectare is still way below the minimum 5 tons (100 cavans) per hectare needed to be competitive against imports," he said.
Montemayor maintained that there is no reliable and up-to-date information on whether the estimated P40 billion spent on rice farmers under the RTL's Rice Competitiveness Enhancement Fund really reduced farmers' production costs and improved their competitiveness.
Finance Secretary Benjamin Diokno said he will recommend to President Ferdinand "Bongbong" Marcos Jr. to continue the implementation of the RTL, in light of the Chief Executive's earlier pronouncements to amend or suspend the law.
Diokno said that RA 11203 lifted the quantitative restriction on rice imports and imposed a minimum of 35 percent tariff on imported rice, effectively opening the Philippine rice market.
"[The RTL] really is a good law. It has a major contribution to our desire to control inflation, so I think it's not smart to go back to the old system," Diokno said.
Diokno added that the price of rice has remained low and predictable even during the height of the pandemic, due in large part to the RTL.
On average, Filipino consumers enjoy a price reduction of P7 per kilo of rice compared to its peak in 2018. Households also now have a variety of choices under a liberalized rice trading regime, he added.
Diokno explained that prior to the liberalization of the sector, rice was a major source of inflation. Following the enactment of the RTL in 2019, the contribution of rice to inflation dwindled to negative levels.
"In January 2019, when inflation was at 4.4 percent, the contribution of rice to inflation was 0.6 percentage point (ppt). By contrast, in January 2020, when the inflation rate was at 3.0 percent and with the RTL already in effect, the contribution of rice to inflation dropped to -0.8 ppt," he said.
Diokno said that the effects of the RTL continue to be felt as in June 2022, when overall inflation hit 6.1 percent, the contribution of rice to inflation was only 0.18 ppt.
"Tariffs collected from rice imports are reinvested back into the local rice industry through the annual P10-billion Rice Competitiveness Enhancement Fund. The fund earmarks resources for the modernization of the agriculture sector and provides farmers with greater direct access to credit, high-quality seeds, agricultural machinery, and skills training on modern farming technologies," he added.