Rice import ‘surplus’ crisis

COMMONSENSE - Marichu A. Villanueva (The Philippine Star) - September 4, 2019 - 12:00am

For the first six months this year, the economic managers of President Rodrigo Duterte pat each other’s back for having successfully slowed down inflation in our country. As measured by consumer price index (CPI), the annual inflation rate fell to a two-year low of 2.4 percent in July from 2.7 percent in the previous month.

Of particular interest is the food inflation which reached its lowest in nearly three years. The prices of food and non-alcoholic beverages increased by 1.9 percent in July. The food basket – which included the price of rice in the markets – slowed down markedly from a 2.7 percent rise in June. It was the lowest food inflation since September 2016.

Just almost a year, we – as rice-eating consumers – were groaning over the spiraling prices of our country’s staple. It was during that period when the respective heads of the Department of Agriculture (DA) and the National Food Authority (NFA) squabbled over rice import issues. Invariably, the NFA stockpiling for buffer rice in case of emergency or correcting artificial movement of market forces like rice hoarding etc. failed anew to stem the rising prices of the staple.

Bringing down the price of rice by as much as P7 per kilo from a high of P35 to P45 was the selling point that paved the way for the immediate passage into law during the 17th Congress of the Rice Tariffication Law (RTL) in March this year.

While we consumers now enjoy cheaper priced rice, it is, however, causing nightmares to our Filipino farmers. 

In a public hearing conducted yesterday by the Senate committee on agriculture, farmers and farmer-rights advocates complained that buying prices for palay have dropped to as low as P7 to P8 per kilo, much lower than the production cost at P12 per kilo. This was confirmed by the president of the Federation of Filipino-Chinese Chambers of Commerce and Industry Inc. (FFCCII) Dr. Henry Lim Bon-Liong who himself is engaged in the rice business. Bon-Liong, however, believes that government intervention this early could prevent the situation from getting any worse.

This is the challenge that newly appointed Agriculture Secretary William Dar is now facing. Appointed only a month ago by President Duterte, Dar announced last Monday, the government is looking at imposing “special” safeguard measures, including anti-dumping duties and penalties, amid the reported influx and over buying of imported rice into the country.

Among these safeguards that Dar could use for one is the Anti-Dumping Act that was passed into law in 1999. This was enacted four years after the Philippines joined the World Trade Organization (WTO) following the Senate ratification of the General Agreement on Tariff and Trade-Uruguay Round in December 1994. The Philippines was one of the first signatory countries to earn its distinction as one of the founding members of the WTO.

Basically a tariff measure, the Anti-Dumping Law, or Republic Act (RA) 8752, was authored by Albay Congressman Joey Salceda. Still a neophyte Congressman in 1995, the technocrat-turned politician Salceda initiated the measure in a bid to protect the entire Philippine economy from the globalized trading regime ushered in by the country’s accession to the WTO. RA 8752 was precisely crafted to enable the Philippine economy to address the serious downside effects of the globalized trading system as a card-bearing member of the WTO.

“Mayabang tayong Pilipino eh. We always wanted to be among the first,” Salceda quipped.

This was why then Senate president, the late Sen. Edgardo Angara pushed for the approval into law of the Agriculture and Fishery Modernization Act (AFMA) that provided billions of pesos worth of government funding assistance to help Filipino farmers cope with WTO. Over a period of years, budget for AFMA was included in the annual appropriations that included the infamous “farm-to-market” road projects in various congressional districts.

Sadly, many of these annual appropriations of AFMA went to corrupt projects called “farm-to-pocket” of unscrupulous lawmakers through the years. This led to the removal of “farm-to-market road” projects in the annual budget that could have transformed Philippine agriculture competitive with the rich countries providing subsidies to their farmers.

Fast forward. Salceda could only credit the “preemptively anticipated” scenario the Anti-Dumping Act now can be effectively applied by the government as the Philippine agriculture remains susceptible to free trade regime as manifested by the passage into law of the Rice Tariffication.

Now as senior member of the 18th Congress, Salceda sought the support of Speaker Alan Peter Cayetano to correct the mistakes of the past Congress. 

“The Rice Tariffication Law had the unintended consequence of farm gate prices of palay dropping at record levels put the whole agricultural sector at risk. With no offsetting measures, it has implications on the social, political and security dimensions of the country,” Salceda wrote in a letter sent yesterday to the Speaker. 

With the surge of rice imports and injury to domestic industry apparent, Salceda suggested to invoke R.A. 8800 or the Safeguards Law to impose 30% - 80% percent tariff on imported rice outside the Minimum Access Volume (MAV) of 350,000 metric tons. “RA 8800 is well recognized under our commitments with the WTO and the provisional measure has a maximum period of one year,” he cited.

Another immediate measure, Salceda added is to ensure the Rice Competitiveness Enhancement Fund (RCEF) of P10 billion to help farmers really reach the intended beneficiaries. Under the RTL, the P10 billion RCEF would be sourced from tariff collections of imported rice. 

Bureau of Customs deputy commissioner Edward Buco disclosed the government has so far collected P9.2 billion in revenues as of August, just six months after the Rice Tariffication Law took effect.

Amid the rice import “surplus” crisis, Salceda’s third option is for the government to restore the quantitative restrictions that were removed with the passage of the Rice Tariffication Law. It’s the call of Agriculture Secretary Dar.

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