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Diokno says temporarily lowering tariff to ensure stable supply at cheap prices
The Department of Finance (DOF) wants to temporarily cut the tariff on imported rice from 35 percent to 0 percent—or at most 10 percent—to ensure the supply of the staple at affordable prices.
“It is crucial that the government continue to adopt a comprehensive approach to help ensure that rice supply remains sufficient at reduced prices,” said Finance Secretary Benjamin Diokno.
Rice, which accounts for about 9 percent in the consumer basket, was one of the triggers of the two-month high 5.3-percent inflation in August from 4.7 percent a month ago, according to the Philippine Statistics Authority.
PSA said the bottom 30 percent of households felt the impact of higher rice prices the most. Data showed that regular milled rice in August 2023 averaged P43.34 nationwide, up 8.9 percent year on year, while well-milled rice averaged P47.63, higher by 8.1 percent.
Diokno said the economic team acknowledged the emerging challenges, given the inflationary uptrend.
“To manage upward pressures in the price of rice, the imposition of price control on rice through Executive Order No. 39 serves as a short-term measure against non-competitive practices by some market players. Price controls, when carefully calibrated and closely implemented, are effective in the near term,” Diokno said.
President Ferdinand Marcos Jr. earlier approved the imposition of price ceilings on regular milled rice at P41 per kilo and well-milled rice at P45.
The DOF also proposed encouraging the timely importation of rice by the private sector, and the full implementation of the Super Green Lane that authorizes the use of electronic data interchange to speed up processing and clearance of shipments by the country’s most qualified importers.
Another proposal is the temporary exemption of trucks that carry agricultural goods from the increase in toll rates. Diokno said this could be done by working with tollway concessionaires and operators.
“There is also a need to avoid a non-competitive behavior in the rice industry by pursuing cases of hoarding, smuggling, and economic sabotage, when applicable, strictly monitoring the prices of imported rice in the logistics chain, and encouraging the public, including retailers, to report individuals violating price caps on rice,” he said.
At the same time, he said programs must be pursued to protect the vulnerable sector by safeguarding the farmers from the effect of the price ceilings; to provide targeted subsidies to small traders and retailers of rice; and to provide support to low-income households to address the impact of the surge in rice prices.
Diokno said the government would also intensify the use of the Quick Response Fund (QRF) to assist the agricultural sector during calamities, as well as the National Disaster Risk Reduction and Management Fund (NDRRMF), which might be used for pre-disaster preparation activities.
The government will also speed up the 2023 El Niño Mitigation and Adaptation Plan as well as expand the Kadiwa program to directly connect producers and consumers.
Diokno said he remained optimistic that despite the spike in inflation in August, the continued year-to-date decline in inflation was a testament to the government’s continued effort towards addressing high inflationary pressures.
“This suggests that we remain on track for the full-year average to be within the target in 2024,” Diokno said.
Meanwhile, Nueva Ecija farmers complained of the declining rates in the buying price of palay (unhusked rice), which they fear may drop to as low as P15 to P16 per kilogram (kg) in the next few weeks.
The palay harvest in Nueva Ecija is expected to peak by mid-September to late October 2023 yet the buying price for the staple has already gone down to P17 to P18/kg.
“We’re afraid that traders, millers, and other merchants would buy our harvest at a uniform lower price,” a group of farmers said in a field monitoring activity by the National Rice Program (NRP) of the Department of Agriculture (DA).
Farmers are appealing to the President to intervene so that they would get better rates for their produce and not be at the mercy of prices dictated by the traders, agents and millers.
They lamented that their production had been substantially decimated by the recent prolonged downpour caused by the typhoons and the southwest monsoon, resulting in many of their standing crops bending to the soil, making them irrecoverable.
Those who harvested earlier were able to benefit from high prices for palay and did not suffer losses, unlike the majority who will be harvesting in the coming weeks.
Heavily affected by the prolonged downpour from habagat and typhoons, were the farms of Licab, Quezon, Zaragoza and other areas, according to an inspection done by the National Rice Program.
They said that aside from the downpours, another factor that led to the sudden decline in palay prices was the imposition of price caps on Sept. 5.
They also appealed to the President to order the National Food Authority (NFA) to buy fresh palay at the farmgate level. Farmers say they have no choice but to sell their wet palay to traders at a loss.
The NFA does not buy fresh palay. It buys clean and dry palay with moisture content of 14.2 percent at P19/kg.
Based on data released by the Philippine Statistics Authority (PSA), palay output in the first semester of 2023, reached 9 million MT, 3.4 percent higher than the 8.7 million MT in the same period in 2022.
The USDA said in its latest World Agricultural Production report that the Philippines’ milled rice production may reach 12.6 million MT in the milling year 2022 to 2023, up 1 percent from 12.54 million MT from MY 2021 to 2022.
In other developments:
• Agri party-list Rep. Wilbert T. Lee filed a measure to make rice production profitable for farmers and make the staple food cheaper for consumers through a subsidy program for the country’s 2.6 million rice farmers. Under Lee’s proposed House Bill No. 9020 or the “Cheaper Rice Act,” the Department of Agriculture in coordination with the Department of Trade and Industry and other relevant agencies will establish a subsidy program to ensure that farmers can sell their palay at a price high enough to encourage them to increase production. Aside from buying palay from farmers at higher prices, HB 9020 also mandates the government to sell the rice it acquires to consumers at cheaper rates.
• Ako Bicol party-list Rep. Elizaldy Co suggested a contract growing arrangement between the government and local farmers to stabilize the prices of rice in the market. Co said contract growing will benefit both the consumers and farmers because it would result in steady rice prices and ensure a profitable market for farmers. He said contract growing should involve large agricultural corporations managing vast tracts of farmlands. He also proposed that a portion of the farmers’ yield – possibly 50 percent – would be contracted at an agreed price under the scheme while the remaining yield would be sold at market rates to allow farmers to still capitalize on market price surges. — Othel V. Campos and Julito G. Rada
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