Unimpeded rice imports may hold back inflation
AFTER nine straight months of rising prices, the government took its first big step to stop the rise last Tuesday. It removed all restrictions on rice importations. Since food prices make up the biggest part of inflation figures and rice is the principal food item of Filipinos, unimpeded rice importation should have an impact on the whole market situation in the country.
For years, rice imports had been controlled and limited, with each trader needing to apply and obtain an accreditation permit from the National Food Authority (NFA), then an order from the NFA Council on the volume of rice to be imported. With this system, the government has sought to help Filipino farmers have a market for their harvests.
A bill has been filed in Congress to replace this system of restrictions with a tariff of 35 percent on imports from Southeast Asia and 180 percent on imports from elsewhere. But with the worsening price situation in the nation’s markets, President Duterte said there is no need for the importers to wait for the new law as long as they pay the tariffs.
We will now watch the markets to see whether the announcement of “free-for-all” rice importations will have the desired effect of stopping the rising inflation rate which had already reached 6.7 percent last September.
There was more bad news from abroad last week. World oil prices continued to rise as Iran faced restrictions on its oil exports with the United States withdrawal from Iran’s agreement with Western nations. As a result, oil firms in the Philippines raised their prices anew, with diesel up by another P1.45 per liter last Monday. The higher fuel price will be reflected in even higher food market prices, since it now costs more to transport food products from the farms to city markets.
The decision to allow unimpeded rice importation is the first important government move to stop rising inflation. Other moves have been proposed by various quarters, including suspension of the 2 percent TRAIN excise tax on diesel which started in January. There is also a proposal to suspend the Value-Added Tax (VAT) which has been in place for years.
For now, we await the effects of the new policy of unimpeded rice imports. We hope it will help stop the unabated rise in prices in these final weeks of the year which also happen to be our traditionally blessed Christmas season.