Protection of rice farmers sought

WITHOUT appropriate protection from the government, particularly the Department of Agriculture (DA), farmers will be ultimately burdened by the entry of more rice imports following the expiration of quantitative restriction (QR) on the product.

Quantitative restriction is a mechanism which provides limits to the importation of rice to protect local farmers who will suffer once the restriction is eventually lifted.

Economists however are divided over its continued implementation since while it protects the farmers it is seen to keep the prices high to the detriment of the consuming public.

In one of his press briefings, former Economic Planning Secretary Arsenio M. Balisacan, said that although the QR affords some protection for our farmers, the cost, the overall cost on the economy has been so high, especially among the poor.

He said that QR has led to a double-digit inflation for rice when overall inflation was only 2 percent to 5 percent prompting him to describe it as ‘very anti-poor’.  

Balisacan added that this is one of the reasons there is a need to move for the tarrification of the QR. He said imposing a tariff of 30 percent to 40 percent would be enough to protect farmers from imported rice that would come into the country.

For his part, Philippine Competition Commission (PCC) Economics Director Benjamin E. Radoc, Jr., warned that the DA must prepare the sector first before we open the market to foreign entities.

He noted that lifting the QR on rice will benefit the consumers but will be very costly on the side of the farmers.

 

Pro-consumers

As the state’s antitrust agency, the PCC perceives the lifting of the QR presents opportunities to consumers as they can now choose between local rice and foreign rice, which is expected to be cheaper due to low production cost. 

Once the QR expires, Radoc said the country will be flooded with Thai and Vietnamese rice, which he described as not only cheaper, but also of better quality.

“Filipino rice farmers are not the best producers of [the staple] for these reasons: because of technology, the culture of land that we have. So, if you are the DA, help them identify where they are better at,” he said.

 

Assistance to Farmers

For this reason, the PCC official said the DA must study the comparative advantage of Filipino farmers and further look into opportunities it can offer to farming households.

Radoc also urged the DA to cooperate with local government units in assisting farming households to develop a “more diversified set of income”.

As an alternative, the government can offer regular jobs and entrepreneurship opportunities to members of farming household, while preparing the rice sector.

As for imposing tarrifs on rice imports, Radoc said that it is not the “proper way” to address the problem.

“If you lift the QR and replace it with tariffs, what difference will that make?”

For instance, imposing a high tariff on imported rice that are on a par with those produced locally would not benefit consumers as this would not result in lower prices.

“At the end of the day, we want to have a healthy competition for the consumers to benefit, and we do that because we force the producers to be more efficient,” Radoc said.

 

4th extension?

The QR on rice was first granted by World Trade Organization in 1995 to give Filipino farmers more time to prepare for free trade, which essentially meant that our local rice production would be able to squarely compete with imported rice that would not be subjected to import taxes or even import limitations.

The first extension was given until 2004, and extended two more times, with the second until 2014, and the third by July 2017. 

If ever the Philippine government would ask for a fourth extension, the reason would still be the same: to give Filipino farmers more time to prepare for free trade.

But it has been 22 years since Philippines was given a chance to prepare its agriculture sector for the entry of more imported rice – 22 years but nothing has really improved in the sector.

 

Increase tariff 

At this point of time, it seems that the proposal of National Economic Development Authority in handling the country’s rice production is more sensible than asking for the extension of QR, as suggested by DA Sec. Manny Piñol.

Currently, the government allows 805,200 metric tons of rice to be imported at a tariff rate of 35 percent. Above this minimum access volume, any importation is charged a higher tariff of 50 percent.

With the QR removed, the NEDA is thinking of raising tariffs on all rice imports to 40 percent, even 50 percent.

This higher tariff will definitely increase importation revenues and would likewise provide Filipino rice farmers the protection they needed against the flooding of imported rice as it would allow them to sell at better prices and consequently earn better.

But this would also make rice smuggling a bigger temptation, especially if the National Food Authority’s rice importation role is diminished.

The best the government could do, as Radoc said, is to prepare the sector the best way it can.

Provide the farmers with financial, moral and mechanical or technological support, among others.

 

 

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