A year into tariffication, farmers feel worse off

URDANETA, Pangasinan, Philippines –Sixty-five year old Pepito Parahas has been farming for 40 years and last year has been by far the most difficult with palay (unhusked rice) prices hitting record lows.
The farmgate price for palay  plunged to P10 per kilo - the lowest level Parahas has ever seen in four decades of tilling the soil - from its peak of P23 in September 2018.

The passage of the Rice Tariffication Law in February 2019, which the Duterte administration and its political allies said would help farmers improve their profitability and lower the price of the staple, has made things worse for the country’s two million farmers.

Rice has become an important political commodity because it is the country’s main staple.

The law, which removed limits on imports, allowed cheap imported rice to flood the market, sending farmgate prices to multiple lows.

And while the government has been trumpeting the benefits of the law, farmers – one of the poorest sectors in the country - continue to fight for their livelihood as they compete with the oversupply of imported rice.

“We barely earned last year because of low palay prices. It was the most difficult, we still had to pay our debts so we only got about P2,000 for the whole main harvest,” Parahas said in an interview with The STAR.

“We were only able to save two cavans from everything that we harvested last year,” he said.

Agriculture Secretary William Dar, however, described the current problems of rice farmers as “birth pains”.

“Hopefully by the end of the second year of the implementation, the birth pains will be over. By that time, farmers will benefit more from this,” Dar said.

Dar said the revenue loss from the law was only P3.3 billion and not P68 billion as claimed by the Federation of Free Farmers. He said the government collected a total of P12.3 billion worth of tariffs in 2019.

“Overall, in spite of the transition and birth pains, the outcome has been good. The loss as a result of this law is only P8.2 billion while consumer gain is at P4.9 billion. So net loss of the rice farmers all over the country is only P3.3 billion,” he said.

Even Senator Cynthia Villar maintained that the controversial measure would benefit Filipino rice farmers in the long run. 

“Probably, about two to three years. That’s why, in the meantime, we are giving unconditional cash assistance and loans and I think that would be enough for the three years,” said Villar, the main author of the bill.

Under the law, the tariff collections shall be used to support local rice farmers.

To help farmers cope with the effects of the law, the Philippines is looking at keeping rice imports at a minimum this year, just enough to meet the shortage in local production.

Dar said the country targets to bring in 1.5 million to 1.6 million metric tons of rice this year. 

“Managing importation and enhancing local productivity translate to better productivity and income,” he said.

Villar, for her part, said importation has been declining and based on her projections, imports would only average at 400,000 MT per quarter.

“The DA is now controlling the issuance of SPSIC (sanitary and phytosanitary import clearance) and importers are also afraid partly because of the coronavirus,” she said.

Dar likewise debunked claims that the Philippines could have a hard time importing from Thailand and Vietnam as the two neighboring countries face their own challenges.

“After this summer harvest, we will start importing again so that on rainy days, we will have enough supply of rice,” Dar said.

Right now, rice inventory of the country is good for 80 days or almost three months. After the summer harvest season or by May, inventory is expected to be sufficient for five months.

The United States Department of Agriculture-Foreign Agricultural Service said while the Philippines would be bringing in less rice this year, the country is still expected to maintain its status of being the world’s biggest rice importer.

Last year, the Philippines bought a record high of 2.9 million metric tons of rice as it opened up the industry to liberalization.

Parahas has yet to reap the benefits of the P10-billion Rice Competitiveness Enhancement Fund. For this summer cropping, he received 40 kilos of inbred seeds and is now undergoing training at a farmers’ field school in Pangasinan.

“We have yet to receive the P5,000 cash assistance but they said it’s coming already. I think things will be better if we receive the money soon.  If palay prices increase again, we will be able to recover all our expenses and losses,” he said.

 The National Economic and Development Authority (NEDA) cited the incidents of calamities, typhoons nd flooding in some areas as reasons why farmgate prices suddenly dropped.

“Right now, prices are going up and we hope this is the trend we will continue to see,” NEDA assistant secretary Mercedita Sombilla said.

Over the past weeks, the farmgate price had breached the P16 per kilo mark.

“RTL is the long term solution to develop, strengthen and modernize the rice sector and the whole agri sector. We want to achieve greater food security by making rice available and help the rice sector become competitive,” she said.

For the mechanization component, 624 farmer cooperatives and association are the expected recipients of tractors, tillers, harvesters among other machines. Another 900 FCAs are expected to be included.

The FFF, however, insists that farmers lost around P68 billion with the influx of cheap rice imports, more than 22 times the P3.3 billion reported by Dar.

“I think they are playing around with numbers and providing a lot of misleading data to deflect criticisms against RTL,” FFF national manager Raul Montemayor told The STAR.

“And why is he depending on PIDS (Philippine Institute for Development Studies)? The department should have its own monitoring and evaluation,” Montemayor said.

“His data only shows that farmers lost more than consumers gained, which validates our basic assertion that the first year implementation of RTL failed to provide what the proponents promised ,” he added.

According to the FFF study, average retail prices of regular milled rice declined by P2.61 per kilo while prices for well-milled rice fell by P1.99 per kilo.

When multiplied by consumption volumes, this resulted in a gain for consumers of P34.16 billion in the form of lower prices.

On the other hand, farmgate prices of palay declined by P3.62 per kilo and resulted in total losses to farmers of P68.18 billion, or double the gains for consumers.

Rice watch group Bantay Bigas said Dar’s statement was “inconsiderate and insensitive to the family of rice farmers who have suffered from bankruptcy, indebtedness, hunger and distress due to the damage of rice liberalization to their livelihoods.”

“He has proven that he is nothing but an apologist of a failed neoliberal policy wrecking havoc not only in the local rice industry but in the entire agriculture sector,” Bantay Bigas spokesperson Cathy Estavillo said.

“It is even more infuriating that instead of sincerely providing measures to address the impact of the law and assess its effectiveness, Dar has been defending these palliative measures as if farmers are telling lies about the losses they incurred,” she said.

Bantay Bigas estimates that farmers have lost P74.8 billion due to depressed farm gate prices.

The group urged Dar to review his computations as it reiterated its demand for the repeal of the law.