Rice tariff law to shave 0.3%-point off inflation

MANILA, Philippines — The National Economic and Development Authority (NEDA) lauded Congres’ approval of the rice tariffication bill, saying this would ease food supply pressures and pave the way for the improvement of agricultural productivity.

The two chambers of Congress approved on Thursday the rice tariffication bill which amends the Agricultural Tariffication Act of 1996, replacing the quantitative restrictions (QR) on rice imports with tariffs, thus removing unnecessary government intervention in the rice market.

Socioeconomic Planning Secretary Ernesto Pernia said liberalizing the rice market would reduce wholesale prices of rice by at least P1 kilo and trim headline inflation by 0.3 percentage points.

“We view this as a positive development as the administration’s economic team exhausts all efforts to tame increases in the prices of goods. With only the President’s signature before rice tariffication becomes a law, we are making a big step in the realization of our agricultural reform agenda,”he said.

Pernia said the bicam-approved bill addresses not only the tariffication of rice in compliance with the Philippines’ obligation to the World Trade Organization, but it also addresses food security by increasing the availability and accessibility of cheaper rice to the consuming population.

“The economic team has always been mindful that food remains to be the major contributor to inflation. Efforts to address food supply concerns, especially rice, will definitely help bring down consumer prices,” he said.

Rice tariffication also helps improve the productivity of farmers and, as a result, enables them to increase their incomes.

The bill provides for the establishment of a rice competitiveness enhancement fund (RCEF) from an annual appropriation of P10 billion for the next six years.

If the tariff revenues exceed P10 billion in any given year, the excess revenue would still be plowed back to RCEF to support productivity enhancement programs for rice farmers.

“The RCEF will be used to provide key interventions to support our farmers and enhance their competitiveness, including farm machinery and equipment to improve farm mechanization, rice seed development, propagation and promotion, expanded rice credit, and extension services,” Pernia said.

Part of the rice tariff revenues in excess of P10 billion shall also be used to provide direct financial assistance to rice farmers adversely affected by the removal of the quantitative restriction on rice imports.