Proposed tariff on rice imports seen as safety net for farmers

Revenues from the proposed imposition of a 35 percent tariff on rice imports upon expiration of the quantitative restriction (QR) – seen to reach between P27 billion and P28 billion within the current administration – is sufficient to provide for safety net measures for farmers who would be affected by increased importation, said state-run think tank Philippine Institute for Development Studies (PIDS).

In its latest policy note on the impending expiration of the special tax treatment on rice in June, PIDS said replacing the QR with a 35 percent tariff would double annual imports from the current 2.2 million tons to around 4.4. million tons on the average from 2017 to 2022.

Farmgate and retail prices, meanwhile, are projected to decrease by P4.56 per kilogram and P6.97 per kilogram respectively as a result of the unrestricted volume of importation.

PIDS said the tariff revenues would be sufficient to cover the cost of compensatory transfers to farmers under a post-QR regime at P17 billion to P18 billion annually until the end of the Duterte administration.

“The remaining amount can be used for other programs also directed to assist farmers,” said PIDS.

At a total of four million hectares of rice cultivation areas eligible for computation in the provision of transfers, the government can afford to pay a farmer with two hectares P19,000 annually.

The transfers are proposed to be provided over and above the existing production support provided by pertinent government agencies to enable them to transition to a more open trade environment.

“The purpose of the payments is to compensate farmers from income loss. It does not intend to displace ongoing productivity enhancement measures nor does it aim to increase the competitiveness of farmers.