RTL, a bad law, spawns crooks and scammers
the Rice Tariffication Law (RTL) is a very bad law. It scrapped the last line of defense small rice farmers had against massive rice dumping — the QR, or quantitative restriction — and replaced that with a two-tier tariff, one for rice from the Association of Southeast Asian Nations (Asean) region and a higher one for imports out of the region. The tariff collections, this is the law’s consuelo de
bobo, are to go into an amelioration program for the small rice farmers.
The law made it clear that importing rice would be easier than putting up a
neighborhood sari - sari store. With the absence of rules and with the greed that is expected of the rice importing class, the worst did really happen. In the 10 months of 2019 alone, around 3 million metric tons of rice was imported, pushing palay prices into the P8- to P10- per- kilo level. The RTL, as expected, failed to put in a proviso against greed and reckless importation.
The desperation of the country’s 3 million small rice farmers after the plunge of their palay prices was a reenactment of what happened to poor, rural, white America in the classic Case-Deaton study: deaths of despair. Of course, no one in government noticed. For generations, small rice farmers have been invisible to the government. They are, truly, the country’s wretched. I am quite familiar with this because I come from a long line of small rice farmers.
The cold, clinical reaction of the government to the woes of the small rice farmers was this afterthought in the law — the tariff collections will mostly be dedicated to the amelioration program. Now, this is the question. Is the government making sure that rice importers do not scam the government via the undervaluation of rice imports, thus depressing the overall tariff collections?
A farm group, the Federation of Free Farmers (FFF), provides the answer. No. The government, for one reason or another, has miserably failed to provide the safeguards to make sure the right tariff collections are being made at the ports. Was it the usual corruption and greed at the port zones? Or was it just simple neglect of duty? That we don’t know. What the FFF has found out and documented is that, from March 209 to May 2020, an estimated P2.79 billion in rice import tariff was lost due to a host of problems, with the undervaluation of imports as the main culprit.
Let the figure sink in. An estimated P2.79 billion which could have gone to the rice tariff pool — a sum critical to the small farmers — was a forgone thing, according to a detailed report from the FFF. The leaders of the FFF, by way of background, are unlike us, ordinary farmers with very little formal education. It is a farming group founded by the Jesuits and Jesuit-trained intellectuals. The FFF leaders don’t even look like us — small rice farmers who are grizzled and callused. But they are numerate and trained to do rigorous research on agricultural economics. They just don’t pluck figures from thin air
The FFF study sent to the Department of Finance said there were four reasons for the huge shortfall in the RTL tariff collections.
First was misdeclaration. FOB (freight on board) prices from rice importers have been generally lower than the reference prices of the Bureau of Customs (BoC). Simply put — technical smuggling. In 2019, 70 percent of the 2,934 rice import shipments analyzed by the FFF, had FOB prices lower than the prices listed on the BoC reference rates. In 2020, it got worse. The undervaluation of rice imports intensified. Rice importers were so daring that some import shipments even failed to specify the grades of rice imported.
Second was the undervaluation of freight and insurance cost. From this scam alone, an estimated P853 million was taken off the rice tariff collections in 2019. From January to May this year, rice tariff collections fell by P241 million because of this scam.
The third reason cited was the wrong tariffs applied on imports from countries outside of the Asean.
Under the two-tier tariff scheme of the RTL, imports from the Asean have a levy of 35 percent. From outside the region, the levy is 50 percent. The FFF found out that imports from India and Pakistan had been assessed with the lesser Asean tariff of 35 percent. Clueless geography that afflicts the top propaganda people of government? Or, just corruption fronted by the supposed lack of a tariff map?
The fourth reason uncovered by the FFF was the erroneous and inconsistent classification of rice imports. Under this scam, good quality rice is declared as “fit for animal feeds” to depress the tariff rate. Specialty rice is declared as ordinary rice with a similar agenda. The list can go on and on because scammers have the motivation, the profit desire and the collaborators at the customs zones.
The P2.79 billion in lost tariff lined up several pockets, but further impoverished the struggling, desperate farmers like my neighbors and me. I am not that numerate so I can’t do a fast calculation on how many shallow tube wells the lost P2.79 billion can buy. In this time of faltering rain, the shallow tube wells could prop up the lack of adequate irrigation water.
How many bags of Urea and Triple 14 can be bought from the P2.79 billion? I don’t know. But here is a reminder. The Department of Agriculture (DA) is not the right agency to procure fertilizer for the rice farmers. The “New Thinking” at the DA includes the procurement of overpriced fertilizer, according to the Makabayan bloc in the House of Representatives.
Small rice farmers, desperate as they are, are caught between the rock and a hard place. They can’t seem to get a break from the institutions and agencies with the mandate to help them. And the RTL, this is the sad truth, has a proviso that allows the crooks to kick the dying small rice farmers.