MANILA, Philippines — The Rice Tariffication Law (RTL) is the appropriate tool to transform the country’s rice industry, according to Agriculture Secretary William Dar.
“Our mid-term review showed that the RTL provides for the appropriate policy framework and productivity-enhancing provisions to catalyze the transformation of the rice industry – from one that is focused on self-sufficiency to one that is less reliant on rice imports,” Dar said.
“While the initial implementation of the RTL proved to be challenging due to start-up glitches, coupled with a protracted pandemic, the law served as the major gamechanger that spearheaded the structural transformation of the country’s agriculture sector,” he said.
The RTL creates the Rice Competitiveness Enhancement Fund (RCEF) primarily to assist farmers enhance their productivity and improve the competitiveness of the rice sector.
Under the law, the DA is allotted at least P10 billion annually from 2019 to 2024 to bankroll four RCEF components that augment the existing Philippine Integrated Rice Program (PIRP).
Of the annual budget, P5 billion is allocated for farm mechanization, P3 billion for inbred rice seed development, propagation, and promotion; P1 billion for credit assistance, and P1 billion extension and training services.
Dar said the record harvests of palay or unhusked rice for two consecutive years prove the success of the programs and initiatives under the RTL.
In 2021, palay production reached an all-time high of 19.96 million metric tons (MT), 3.4 percent more than the previous year’s record of 19.29 million MT.
“The additional funding translates to increased productivity from 3.69 MT per hectare in 2019 to 4.03 MT per hectare in 2021 wet season. This is about P5,100 per hectare increase at P15 per kilogram of dry palay,” Dar said.
Dar said the implementation of the RTL led to the drop in retail prices of regular milled rice (RMR) from its peak of P46 per kilo in 2018 to an average of P37 from January to December 2021.
He said the law also contributed to taming inflation from a high of six percent in 2018 to an average of negative two percent from 2019 to 2021,noting that the RTL benefitted indigent rice consumers because of lower market price of rice which constitute the bulk of their expenditures.
In addition, Dar said the RTL generated extra revenues for the government from the proceeds of the tariffs on imported rice which reached P37 billion from March 2019 to June 2021.
Earlier this week, the Federation of Free Farmers (FFF) opposed figures presented by the Department of Finance (DOF) which showed that the RTL made rice more affordable by cutting the retail price by P7 per kilo, from its alleged peak of P46 per kilo during the rice crisis in 2018.
The FFF alleged that the DOF figures were deceptive because they compared current rice prices to their levels in 2018, when prices were abnormally high due to the rice crisis.
“In fact, the average prices for RMR during the first three years of RTL were essentially the same as those in 2016 and 2017,”FFF national manager Raul Montemayor said.
The group cited rebased data from the Philippine Statistics Authority (PSA), which showed prices for RMR averaged P39.02 per kilo in 2016 and P39.52 in 2017. After rising to an average of P42.80 during the 2018 crisis, prices leveled off at P40.57 in 2019 and P38.64 in 2020.
FFF said that in 2021, RMR prices averaged at P37.60, or only P1.42 cheaper per kilo than in 2016.
“Although RTL allowed the entry of cheaper imported rice, the savings were mostly captured by importers and traders and were not passed on to consumers. Also, most of the imports were for premium rice grades for sale to well-off consumers, not the more affordable grades that NFA (National Food Authority) used to import for the poor. That is why poor consumers today are actually paying almost the same as in 2016 and 2017,”Montemayor said.
He said the P27 per kilo rice that NFA used to distribute has also disappeared from the market since the RTL reduced the agency’s function to just buffer stocking.
Dar said the timely implementation of the RTL, prior to the Covid-19 health crisis, ensured rice security, as the private sector was able to build adequate rice inventory that averted possible supply shortage, especially during the strict lockdown periods.
“The shortage would have been severe that year as it coincided at the height of the Covid-19 lockdown,”Dar said.
He said the RTL proved to be instrumental in continuing to contain potential shortages and price spikes by ensuring stable prices during the Covid-19 months and controlling the upsurge in inflation from 2020 to 2021.
DAR said the RTL has also increased the purchasing power among the bottom 40 percent of the income groups due to the savings they gained from lower rice prices.
“Rice is the top expenditure item among the country’s poverty-stricken general population. Making the rice sector more competitive is one of the priority agenda,”Dar said.