Gov’t works on rice tariffication
The government plans to finalize the amendment of the Agricultural Tariffication Act of 1996 before the expiration of the special tax treatment on rice in June, said an official of the National Economic and Development Authority (NEDA).
NEDA deputy director general Rosemarie Edillon said the agency is now working on a roadmap with the Department of Agriculture (DA) to minimize the effects of the transition to tariffication of the staple from a protected trade environment.
Agriculture Secretary Emmanuel Piñol was initially against ending the quantitative restriction (QR) on rice, believing it would be detrimental to the welfare of farmers and prevent them from developing their competencies as producers.
NEDA, on the other hand, is pushing for the liberalization of the Philippine rice market to significantly drive down the cost of the staple that consumes 20 percent of the budget of the poor.
Edillon said because of this effect, the removal of the QR is an integral part of the strategy to reduce the poverty incidence in the country to between 13 to 15 percent by the end of the Duterte administration.
At the same time, it would enable the agricultural sector to transition to the production of more high-value crops, she said.
In lieu of the QR, NEDA also wants to pursue a strategic trade policy on rice and come up with measures for more effective use of agricultural lands.
Piñol later relented on his position, seeing the lack of time to negotiate for another extension.
Edillon said the reconciliation of position with the DA would now pave the way for the amendment of the decadeold law that exempts rice from tariffication.
“As you can see from the pronouncements of Secretary Piñol, he is also going for it (removal of QR). The direction is going to tariffication,” she said.
Edillon said a sponsor for the introduction of amendments to the law has been identified but declined to identify the lawmaker.
She said it is important to amend the law before the expiration of the QR to make the legal framework consistent with the administration’s economic and development strategies.
“The first thing that really needs to be done is to amend the law as it exempts rice from tariffication. Otherwise, we would have an inconsistent framework. For our part, we are working with them (DA) as well to come up with a roadmap to protect the farmers that would be affected with the tariffication,” she said.
The extended QR, which would lapse in June 2017, is meant to protect the livelihood of Filipino rice farmers while they are strengthening their production capability. This extension was came after two years of negotiation with the World Trade Organization (WTO) and various member countries under the Aquino administration.
It would take roughly the same amount of time to negotiate for another extension if the law is not amended in time for the expiration of the QR. This would make the legal framework for rice tariffication out of sync with the strategy of the administration for lowering food prices.
Through the QR, the Philippines imposes a high tariff of 35 percent on imported rice, the volume of which has been restricted to 805, 200 metric tons (MT). Importing outside the QR is even more expensive as inbound shipments would be levied a duty of 40 to 50 percent.
To fill the supply gap, the National Food Authority ( NFA) imports rice through tenders and intervenes in the market by selling the staple at a cheaper price.
NEDA projects additional revenues of P15 billion annually from duties on rice imports assuming a tariff rate of around 35 percent – consistent with the tariff on rice imports within ASEAN – is imposed.
Allowing free importation of rice would mean less domestic production because of competition, but Edillon earlier said this does not mean that the government would abandon the provision of support to rice farmers entirely.