Rice imports undervalued by P4 billion, farmers’ group says

MANILA, Philippines — Local farmers are claiming that there has been undervaluation of rice imports by more than P4 billion with the opening up of the market, contrary to what the government has reported.

The Federation of Free Farmers (FFF) said importers may have reduced their tariff obligations by deliberately lowering the declared value of their imports in connivance with their suppliers abroad.

This after the Department of Finance reported that the Bureau of Customs collected P5.9 billion in tariffs from 1.43 million metric tons of imported rice following the enactment of the rice tariffication law last March.

Under the law, importers are allowed to bring in any volume of rice at any time provided they pay a 35 percent tariff based on the declared value of their imports.

FFF national manager Raul Montemayor argued that using the DOF figures, it would come out that the average landed price of the rice imports before imposing tariffs was $227 per MT.

“But, data from international monitoring groups such as the Food and Agriculture Organization indicate that the real landed cost of these imports should have been around $391 per MT if these were 25 percent broken rice,” Montemayor said.

“In effect, importers appear to have undervalued their shipments by 42 percent and paid P4.24 billion less than what was due from them,” he added.

Farmers even claimed that most of the private sector imports were for five percent broken rice which commands a higher price in the market and gives a better profit margin for traders.

“This type of rice should have landed at $422 per MT at the lowest, instead of just $227. In this scenario, the tariff discrepancy would amount to around P5.1 billion,” Montemayor said.

He added that the loss in tariff revenues as a result of rampant undervaluation would not only affect the government, but would also be disadvantageous to rice farmers.

Under the law, rice tariff collections in excess of P10 billion per year would be appropriated by Congress annually for additional support programs for rice farmers affected by tariffication.

“Because of undervaluation of imports, tariff collections may not breach the P10 billion threshold, or the excess may be too small to provide any meaningful assistance to affected farmers,” Montemayor said.

Further, the undervaluation is expected to further depress palay farm gate prices as the $227 per MT landed cost of imported rice translates to around P17.30 per kilo wholesale in the domestic market.

 “Many farmers are already anticipating a drastic reduction in palay prices in the coming harvest season because the National Food Authority is already full and their P7 billion procurement fund is almost used up,” he said.

Local farmers continue to lament the delay in the release of the Rice Competitiveness Enhance Fund amid a prolonged El Nino drought and the decline in palay prices.

“You cannot apply a law retroactively. We will file an Ombudsman case against DBM (Department of Budget and Management) officials for willful violation of the law if they do not release the P10 billion RCEF in full within the year,” Montemayor said.