Rice liberalization to boost GDP — NEDA

by Czeriza Valencia (The Philippine Star) – Jul 5, 2019

MANILA, Philippines — The ongoing liberalization of rice trade in the country can potentially boost gross domestic product (GDP) growth by 0.44 percentage point as the agriculture sector would be diversified,” the National Economic and Development Authority (NEDA) said.

Results of a joint assessment conducted with the Food Policy Research Institute (IFPRI) showed free importation of rice at 35 percent tariff would spur investments in high-value crops and move uncompetitive rice cultivation areas into productivity.

“Before the rice tariffication law was passed, the government had been monopolizing the rice trade. This set-up had been restricting the flow of private funds going to the sector,” said NEDA Undersecretary Rosemarie Edillon said.

“The preliminary results of the policy simulations done by NEDA and IFPRI show that, at the macro level, rice liberalization generates positive impacts on GDP across all sectors. Under 35 percent tariff rate, GDP would improve by 0.44 percentage point. The agriculture sector would expand as there would be more crop diversification – as uncompetitive rice areas shift to other high-value crops with relatively higher net returns,” she added.

The rice tariffication law was passed with the intention of lowering domestic rice prices by increasing supply.

This as the world market is sees capable of supplying the additional import demand from the Philippines in the long term.

This was met by strong opposition from farmer groups saying this effectively weakens the domestic rice sector.

The law does provide for production assistance through the P10-billion Rice Competitive Enhancement Fund (RCEF), half of which would be used for improving the level of farm mechanization.

The remainder of the fund would be used to support the propagation and promotion of inbred rice seeds for use by local farmers as well the creation of credit facilities for rice farmers.

Edillon said increasing government investment in research and development as well as irrigation will increase farm yields in competitive rice production areas.

She also stressed the need to support local farmers through cash transfers in the short term and help them in the adoption of climate-resilient technologies.

“The agriculture sector, particularly the rice sector, is vulnerable to climate shocks, which have been increasing in frequency and intensity. So we want to be prepared and provide interventions ahead of time,” Edillon said.

NEDA and IFPRI would consolidate inputs and recommendations before releasing a policy note containing official results and recommendations.