MANILA, Philippines — The planned imposition of additional safeguard duties on rice imports has been put on the back burner due to strong opposition from economic managers on concerns the higher tariff could fan inflation.
Finance Secretary Carlos Dominguez said the planned imposition of additional levy on rice imports was not discussed during the meeting of the Economic Development Cluster (EDC).
“They didn’t bring it up today, the tariff issue wasn’t discussed today,” Dominguez told reporters after the EDC meeting Wednesday evening.
Last month, the Department of Agriculture (DA) said it was considering the imposition of safeguard duties on imported rice as early as October as prices of unmilled rice fell to a near-decade low amid oversupply due to the flood of imports.
Agriculture Secretary William Dar said there was a need to arrest the influx of foreign rice ahead of the main harvest season as the country currently produces 93 percent of its rice requirements and, therefore, needs to import only the remaining seven percent.
The DA also raised the possibility of doubling tariffs on imported rice to give farmers respite from falling palay prices. By raising tariffs, imports will become more expensive, forcing local traders to dispose of their stocks and buy again from farmers at higher prices.
“Well apparently they don’t have the confidence in pushing this idea and maybe they don’t have all the numbers to their satisfaction. So, we didn’t discuss it today,” Dominguez added.
He pointed out the planned imposition of additional duties should be backed up by data.
“I’m sure the DA is looking at the data so we’ll certainly listen to them, if and when they bring it back,” he added.
Instead, Dominguez said the EDC discussed the planned cash transfer program or the 4Ps to be extended to badly-affected rice farmers with the National Food Authority (NFA) as well as the Department of Social Welfare and Development (DSWD) finalizing the program.
“They’re still determining who are the most affected farmers and determining how much they will provide assistance to them. And quite frankly, not everybody, not all farmers in the Philippines were affected in the same way,” he said.
Bruce Tolentino, a member of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP), had said the proposed imposition of a safeguard duty on rice imports to protect farmers from the detrimental effects of an import surge could push rice prices higher and fan inflation.
“Any kind of additional tariffs will kick prices up and will add to inflation. From the central bank, no,” Tolentino replied when asked if the BSP is supporting the proposed imposition of a safeguard duty on rice imports.
Tolentino is not convinced inflation has already hit the bottom at a 41-month low of 0.9 percent in September as oil prices remained volatile amid the knee-jerk reaction from the attacks in the oil production facilities in Saudi Arabia as well as the expected further decline in rice prices.
“It could go lower. Well even purely from base effects. If you look at the rice prices it is still going lower and oil is not going up,” Tolentino added.
Inflation averaged 2.8 percent in the first nine months of the year after falling below one percent at 0.9 percent in September from 1.7 percent in August, allowing the BSP to cut benchmark rates by a total of 75 basis points so far this year.
According to Tolentino, the government has raised about P15 billion since the rice tariffication law was passed last March that imposed 35 percent duty on rice imports instead of quantitative restrictions, exceeding the P10 billion per year rice competitiveness enhancement fund (RCEF).