No choice but to open up market

Is the Rice Tariffication Law (RCL) to blame for the problems that our rice farmers are facing right now, in particular the low palay farmgate prices allegedly caused by the influx of cheap imported rice?

Before, rice imports to the Philippines were subject to quantitative restrictions or limitations in terms of the amount or quantity that can be imported into the country. The Minimum Access Volume (MAV) for rice was at 350,000 metric tons and anything beyond that amount is subject to high tariffs.

The RCL abolished quantitative restrictions, meaning anybody can bring in rice from abroad provided that they pay a 35 percent import duty if the rice is sourced from ASEAN member countries. The tariff increases to 40 percent from non-ASEAN countries if imports are below 350,000, and 180 percent if imports are from non-ASEAN countries and above 350,000 tons.

The law also removed the power of the National Food Authority to manage the import quota, limiting the NFA to buy rice from local farmers for buffer stocking purposes to be distributed during calamities and emergencies.

To provide a safety net for local farmers who stand to be adversely affected by cheap rice imports, there is a Rice Competitiveness Enhancement Fund (RCEF), amounting to P10 billion a year which is supposed to fund intervention programs aimed at improving productivity on top of the regular programs of the Department of Agriculture.

The tariffs will go to the RCEF which will get a P10 billion budget over a six-year period. Half of the amount will be for rice farm machinery and equipment, rice cooperatives, and local government units; 30 percent for rice seed development, propagation, and promotion; 10 percent for rice credit assistance; and 10 percent for rice extension services.

Sen. Cynthia Villar, sponsor and principal author of the RTL, explains that the passage of the law was required under the country’s agreement with the World Trade Organization or WTO.

She said the agreement with the WTO in 1995 allowed the country to limit rice imports for a specified period to give the government enough time to strengthen and make rice farmers competitive with the expected influx of grain imports. With the period allowing the imposition of restrictions on rice imports having lapsed in 2017, the country was required to liberalize and allow full importation, but subject to tariffs.

Villar said that the country was given 22 years to make rice farmers competitive but failed, and now nothing can be done since the agreement with the WTO is something which cannot be disregarded.

After becoming a member of the WTO in 1995, the Philippines secured a preferential trade deal in the form of quantitative restrictions on rice importation to prevent the influx of cheap rice from abroad and protect local farmers from foreign competition. The trade deal was extended several times to allow more time to prepare the farmers, but was no longer renewed when it expired in June 2017. There was also increasing pressure from WTO member countries for the Philippines to abandon its protectionist policies and fulfill its obligation to liberalize rice importation.

The Senate Committee on Agriculture and Food has started its inquiry on the implementation of the RTL. Villar said that some claims, such as prices of palay plunging to as low as P7 billion because of the law, are exaggerated and false.

Supporters of the bill reminded parties opposing the law to  consider the plight of local farmers who stand to lose more as cheap rice imports start flooding the market without any support program in place.

Villar said the RCEF has not been given a chance to be fully implemented and deliver on its promise to improve the competitiveness of the agriculture sector, farmers will never make it, especially in this age of liberalization.

The senator also revealed that flaws in the implementation of the RCL would be tackled through an oversight committee she would lead, but they would instead focus on why half of the P10-billion RCEF under the measure was not utilized in accordance with the law. It appears that the Department of Budget and Management gave P5 billion to the DA for its rice programs earlier this year as a supplement to its annual rice fund, but the National Economic and Development Authority said that the money was part of the RCEF and must be used for projects that meet the mandate of the law.

Meanwhile, under the law, P5 million worth of farm equipment and machinery will benefit rice farmers in each of the 947 rice-producing towns in the country. Villar said that to bring down labor cost through mechanization, under the RCEF, rice farmers will receive as grant-in-aid P5 million worth of farm equipment annually for the next six years and will be trained how to operate and maintain the equipment.

Villar also lauded Agriculture Secretary William Dar’s decision to provide a P15,000 loan per farmer at zero interest, payable over eight years. The program is expected to initially benefit some 100,000 farmers owning lands one hectare and below.  It is estimated that there are some two million rice farmers.

The Agricultural Credit and Policy Council and the Land Bank of the Philippines recently inked an agreement to roll out the Expanded Survival and Recovery Assistance Program for Rice Farmers (SURE Aid) under which small rice farmers need to set aside only P1,875 a year to pay off their loan.

Landbank will administer the P1.5 billion fund, while DA-accredited service conduits will be tapped to disburse loans to eligible beneficiaries particularly in unbanked and unserved areas.

The program will initially benefit farmers listed in the recently updated and validated Registry System for Basic Sectors in Agriculture which is the national database of farmers, fishers and other farm laborers containing basic information like location and farm size.

Dar earlier said that he aims to double farmers’ income in five years and grow agriculture production by at least three percent annually.

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