Flaws in the new rice regime

In the ensuing free-wheeling importation of rice for the Philippines after the passage of the Rice Tariffication Law (RTL) last February, two weaknesses in the implementing rules and regulations need to be immediately tweaked to correct seeming flaws.

The priority would be the disbursement of the Rice Enhancement Competitiveness Fund (RCEF) – which by now should be amply fattened by the recent surge in rice importation – to ascertain that the mechanisms for improving our rice farmers’ competitiveness are laid down effectively.

Special attention should be given to the survival of millions of rice farmers whose earnings in the last harvest season suffered a serious blow as farm gate prices slid to record lows in over eight years.

The National Food Authority (NFA) should be able to focus on areas where palay farm gate prices have dropped to below-breakeven production costs, thus helping those affected farmers recover from onslaught of cheap imported rice.

Currently, the NFA is capable of reaching only a small percentage of affected rice farmers. The Department of Agriculture (DA) must look at ways of finding funds to boost the NFA’s buying capacity especially during the first years of the RTL.

Market stabilizer

Ensuring that the NFA’s role is transparent and efficient are two areas that need particular attention. More than ever, the NFA must prove that it can fulfill its role as a rice market stabilizer in the country, especially during this period when rice regime is undergoing changes.

Transparency is needed in the NFA’s buying role to avoid corruption that has historically plagued the agency. Its buying and selling function must be streamlined to provide the balance needed to support local rice production while ensuring that consumers get lower-priced and readily available local rice.

Managing the country’s rice inventory means keeping bodegas optimally stocked to prevent shortages, avoiding what happened last year that caused inflation levels to rise, while holding in check rice traders that are tempted to manipulate market prices.

A full review of the NFA’s role, as well as its relationship with the DA, should be completed to keep it attuned to the new regime of rice tariffication and the country’s goal to improve the competitiveness of local rice production.

Road map

It must also be attuned to the Philippine Rice Industry Roadmap (PRIR) that is currently being finalized as mandated in the RTL’s liberalization regime agenda.

The first drafts of the PRIR focus on improving rice farmers’ productivity, with commensurate quantifiable targets that define increasing the average yield of every hectare farmed, reducing the cost of production of producing palay, managing post-harvest losses, and bringing down marketing costs.

The initial blueprints also recognized that low productivity areas, which are often without adequate irrigation sources, would have to be “delisted” from the list of rice producing areas, and instead encouraged to go into more productive agricultural pursuits like hog-raising or fruit-growing.

In the latest PRIR draft, 57 of the 80 rice-producing provinces will be prioritized in the allotment of the P10-billion-a-year RCEF, which would involve distribution of certified seeds, farm equipment and mechanical tools, credit, and training.

Timely fund releases

Perhaps the more important issue in the implementation of the RCEF will be its timely release of funds. We should be expecting some relief for affected rice farmers at the start of the planting season this month with the availability of approximately P2 billion recently for seed distribution.

The newly formed National Program Coordinating Team (NPCT) of the agriculture department, which would oversee the RCEF program implementation, has identified over a million rice farmers who will receive 80 kilograms of certified rice seeds for two consecutive seasons.

The Development Bank of the Philippines and the Land Bank of the Philippines have also made available some P420 million for lending to individual farmers and accredited cooperatives and associations for the coming planting season.

The Department of Budget and Management is expected to release soon some funds for the promised mechanization of prioritized agricultural regions. The same goes for training funds for rice farmers.

While all this money comes one planting season late, which had aggravated rice farmers’ situation with lower farm gate prices for palay, we should expect the next harvest season to be much better in terms of enabling farmers to recover this loss.

Timely safeguards

The other weakness in the new rice regime that needs more work would be in the timely imposition of safeguards to mitigate excessive importations of rice, especially if it affects local palay prices.

While the DA had recently suspended its chance to ask for safeguard duties on rice imports for the remainder of the year, there may be future instances when this safety net will be needed.

Having safeguard duties approved involves time, which does not match with the rice planting cycle. By the time duties are approved by the Tariff Commission, the harvest season is over, which dampens importers’ appetite to bring in rice, and makes moot an imposition of duties.

In fact, import traders are now apprehensive about getting stuck with imported rice that would be compete with locally harvested rice that are receiving a certain amount of government support through the NFA.

If there is one good thing that can be gleaned from the above, this new liberalized rice regime seems to be responding well to market forces despite the few hiccups – which could be a promise of better things to come.

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