Lifting of restrictions on rice imports to cut retail price

THE lifting of the quantitative restrictions (QR) on rice imports in favor of tariffs will bring several benefits to the economy, among them, slashing the retail price of the food staple by as much as P7 per kilo and helping free some 730,000 Filipinos from poverty, according to the Department of Finance (DOF).

DOF Undersecretary Gil Beltran said a 35 percent import tariff on rice in lieu of restricting rice import volumes would encourage private traders to bring in the staple into the country, which would, in turn, allow the influx of cheaper rice in the domestic market.

A reduction in rice prices would be beneficial to the majority of poor households that spend at least 20 percent of their budget for rice, the DOF said citing studies done by the National Economic and Development Authority (NEDA).

Pulling down rice prices is crucial to poverty reduction because this staple is a major driver of inflation, said Beltran, who is also the DOF’s chief economist.

The QR allows the country to limit the volume of rice imports entering the Philippines with a tariff of 35 percent. Importing outside the volume restrictions will entail a higher import tariff.

The economic managers of the present administration earlier decided to allow the expiration of the QR without applying for another extension before the World Trade Organization (WTO),

At an expected import rate of 35 percent, Beltran said the proposed tariffication will generate P27.3 billion, which the government can use to augment funding for social protection projects like cash transfers for the poorest families as well as for palay productivity programs.

Beltran siad such cash transfers could cut poverty incidence by as high as 3 percent and let at least 730,000 people out of the poverty trap.

“The tariff revenues that will be generated from rice imports can augment the funds used for the government’s social welfare programs for the poor (e.g., Conditional Cash Transfer) and rice productivity programs that will enhance efficiency.

Tariff revenue is estimated at P27.3 billion annually from 2017 to 2023,” Beltran said.

Instead of subsidizing imports, Beltran said the national government could reallocate its funds to invest in public goods and services that directly benefit the farmers. These include farmto-market roads, irrigation, and storage which reduce production and marketing costs. DOF