Beltran: Rice tariff to cut down prices
Imposing a tariff system on imported rice is seen to bring down prices of the staple as it will encourage cheap rice to enter the market.
But a local economist warned the government that smuggling of the goods could still persist.
Economics professor Fernando Fajardo, executive director at Cebu Business Club, agrees that lifting 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.
But he warned that higher tariff could still encourage smuggling activities.
"(Yes it could bring down rice prices) but if the tariff is high, smuggling will still persist," he told The FREEMAN.
In his economic bulletin, Finance Undersecretary Gil Beltran said that replacing the QR system with a tariff system would cut retail rice prices by about P7 per kilo.
A reduction in rice prices would be beneficial to the majority of the poor as they spend at least 20 percent of their household budget on the staple, he said.
Beltran noted cutting down rice prices is crucial to poverty reduction because this staple is a major inflation driver.
The Department of Finance said this would introduce competitive pricing to the market for rice while the tariff revenue will be given to the affected farmers to boost their productivity or help them switch to high-value crops
The Philippine government intends not to apply for another extension of the QR system by the World Trade Organization.
WTO first allowed the Philippines to impose a 10year QR on rice imports in 1995 to give farmers more time to prepare for free trade. It was extended in 2004 until 2012, and then was renewed again in 2014.
During the negotiations for the second extension, which was granted in 2014, the Philippines had agreed to, among others, increase the Minimum Access Volume (MAV) to 805,200 metric tons and reduce the in-quota tariff to 35 percent corresponding to the ASEAN Trade in Goods Agreement (ATIGA) duty and a most-favored nation (MFN) rate of 40 percent for volumes imported outside the MAV.
The proposed tariff system filed as House Bill 4904 has yet to be approved by the Committee on Agriculture and Food.
The bill amends Republic Act 8178 and authorizes the President to set import duties on the staple grain upon the expiry of the country’s waiver for the special treatment on rice granted by WTO on July 1.
The imposition of a tariff system on imported rice will also help increase funding for conditional cash transfers, which could cut poverty by up to three percentage points, DOF said.
“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.
Beltran said a three percentage-point reduction in poverty incidence is equivalent to about 730,000 people.
The Duterte government aims to cut the poverty rate from the current 21.6 percent in 2016 to 14 percent by the end of its term in 2022.
Lorenciana