The devil in the rice detail

By: Ernesto M. Ordoñez, Philippine Daily Inquirer, 4 Oct 2019

Though rice tariffication is much better than the quantitative restrictions implemented by the government-led import monopoly, the devil is in the 35-percent level.

Two years ago, we wrote about how the tariff level should be fair—neither siding with the importers nor the local producers. We said this would be good for consumers and challenge local producers, who would have to be efficient or else perish in the process.

At that time, we quoted a Philippine Rice Research Institute (PhilRice) study that suggested 70 percent as the tariff level that would level the playing field for both imported and domestic rice. A 35-percent level would be preferable.

But to be fair, the government should first give the farmers the necessary support measures to enable them to compete. A suggested road map with details such as the areas where other crops could be diverted and the budget needed was never implemented.

The government was correct in implementing the 35-percent tariff because it was a commitment to the World Trade Organization. But what the government missed was the safeguards provided by the WTO itself and our very own Republic Act 8800 or Safeguard Measures Act.

On Aug. 13, the Alyansa Agrikultura officially asked for safeguard measures because imports had already ballooned to 2.4 million tons, or twice our annual import requirement.

We expect imports to have reached 3 million tons in September. And more should be coming in because a tariff level enough to safeguard our own produce has been delayed.

A rice disaster is already happening. Farm-gate prices of wet palay now average P11.62 per kilo in Region II, P12.41 in Region III and P12 in Region VI.

Since the average production cost is P12, we will see huge losses on a large scale and the demise of the rice industry unless the safeguard is implemented soon.

In my doctoral dissertation on the successful transfer of a system to a real world setting, I said there was a need for preparation.

Critical elements must be present, such as the provision of necessary facilities, the required infrastructure and a supportive business and socioeconomic environment.

These elements are not present for the success of the 35-percent tariff.

To say that farmers can immediately shift from rice to other crops without the necessary support mechanisms is foolhardy, irresponsible and dangerous.

Agriculture Secretary William Dar should be commended for taking the bold step of initiating the safeguard measure investigations weeks ago, despite strong opposition that has delayed the necessary actions.

Food security, instead of food self-sufficiency, is our objective. But we must survive this crisis to get there.

In the late 1990s, our agriculture and farmers suffered severely when we implemented the WTO-suggested rapid tariff reduction without the WTO-approved safeguard measures.

This could happen again.

A well-known personality in another field said: “You cannot make the same mistake twice. The second time you make it, it is not a mistake anymore. It’s a choice. Enough.”

If the safeguards are not implemented immediately, the rice farmers may well behave in undesirable ways and say, “Enough.”

We must therefore attend to this rice detail before anything unfortunate occurs.