Rice tariff law a year later: Prices down but farmers lose

By: Karl R. Ocampo, Philippine Daily Inquirer, 4 Mar 2020

MANILA, Philippines — Rosadilla Limbres has been planting rice for three decades in Bukidnon province, but she finds the last three years the hardest.

She and her husband used to cultivate a 3-hectare farm in Barangay Kibawe, where palay (unhusked rice) with high moisture content now sells for as low as P15 a kilogram, down from P20 in the past years.

During the last harvest, however, Limbres, 64, was forced to till just 1 hectare after her husband died from an illness.

“I cannot sustain 3 hectares anymore,” she said. “We just plant enough for our food and let the remaining 2 hectares be. We cannot gamble another planting season and spend again for fertilizers and laborers and inputs. It’s not going to be worth it.”

The story of Limbres highlights the plight of rice farmers a year after the Duterte administration implemented the rice tariffication law (RTL), which opened the floodgates to imports of the grain.

Deregulation of imports was envisioned to bring about a more food-secure Philippines. Rice would become more affordable and farmers would no longer cough up unnecessary expenses to increase yield and raise their income.

Barely surviving

But the picture is not as rosy as economic managers have painted it to be. While rice prices have gone down, farmers are barely surviving.

Between April and September last year, rice farmers lost P8.22 billion, according to the state-run think tank Philippine Institute for Development Studies (PIDS).

A study by the Federation of Free Farmers (FFF) found farmers in a worse situation. Losses they incurred exceeded by P34 billion the gains that the rice tarrification law gave consumers, according to the group.

“The results of the first year of RTL implementation are totally the opposite of what its proponents were promising,” said Raul Montemayor, FFF national manager.

“[They said] RTL was a ‘no brainer’ because the gains of consumers in terms of lower rice prices would surely outweigh the losses of farmers from lower farm-gate prices. Official data now indicate that they were overly optimistic, if not mistaken, in their projections,” Montemayor said.

Much has changed in the rice industry since the new policy was enacted.

Prices for both palay and rice went down, as the country’s rice imports recorded its highest volume yet.

World’s biggest importer

For 2019, the Philippines earned the dubious distinction of being the world’s biggest rice importer. It brought from other countries a total of 3 million metric tons (MT), or 7 percent of the entire globally traded stocks, dethroning China, which imported 2.5 million MT. Assistant Agriculture Secretary Andrew Villacorta said the influx of imported rice had given the country a surplus of 2 MT to 2.5 MT, enough buffer for 80 to 100 days.

With so much supply, palay prices have yet to recover. Philippine Statistics Authority data show that as of the third week of February, the average farm-gate price of palay was P16.06 a kilo, lower than the P17.23 between 2015 and 2017.

In some provinces, the average price was P11.78. Prices of fertilizers and other inputs, in contrast, continued to go up.

‘Transition challenges’

Despite the bleak figures, Finance Secretary Carlos Dominguez III said at the World Rice Congress in November last year that these were “temporary transition challenges” and that the government was responding with decisiveness.

Agriculture Secretary William Dar also remained hopeful. At a press conference in February, he reiterated that “the rice tariffication law is one of the game changers where the growth of the agriculture sector can come from.”

Indeed, the Duterte administration has channeled hundreds of billions of pesos into the local rice industry to help farmers transition to the tariff regime.

Under the new rice law, the government is mandated to subsidize the sector with P10 billion in the rice competitiveness enhancement fund (RCEF). The amount was for the purchase of machinery and equipment (P5 billion), seed subsidy (P3 billion), provision of credit (P1 billion) and extension services (P1 billion)—initiatives that are aimed at lowering the cost of producing rice and making farmers competitive.

The National Food Authority has spent roughly P14 billion to procure palay at P20 a kilo, while the country’s top 33 rice-producing provinces have committed P5 billion for their own procurement program.

The Department of Agriculture (DA) has set aside P7 billion for its own rice programs and an additional P2.5 billion for rice-related loans, while Land Bank of the Philippines lent P236 billion to the agriculture sector in 2019, mostly loans to rice cooperatives and organizations.

The administration also shelled out P3 billion for unconditional cash transfers to 600,000 small-scale farmers.

Crop diversification

The DA is beginning to prepare its crop diversification program in which farmers would be assisted in shifting to planting other crops that command higher prices. The program will begin next year.

The question, however, is whether these funds have reached their intended beneficiaries.

Except for credit, RCEF components had yet to be completed as of Feb. 18. The completion rates for the distribution of seeds and extension services during the period were 87.85 percent and 87.90 percent, respectively, while mechanization has yet to begin.

No machinery yet

Dar admitted that farmers had not yet received any machinery and equipment promised them, a year after the tariffication law was implemented, citing budget delays.

There are 1,212 rice-producing municipalities or at least 60,000 farmers who await these interventions, which do not cover producers not on the country’s farmers registry.

Despite the shortcomings, PIDS still considers RTL a “propoor” policy, noting that it has cut rice spending across all income brackets—except for those who produce the staple.

On the whole, the Department of Finance reported that rice prices had gone down to its lowest levels in six years, enabling consumers to buy more of the staple.

PIDS senior researcher Roehlano Briones said consumers were expected to benefit P197 billion yearly in the first five years since the law’s implementation in March 2019.

The biggest gain of P367 billion would be felt by Filipinos in the top income group, while P87 billion would benefit the bottom income group.

The flipside is that palay prices have sunk to their lowest levels in eight years.

The administration is aware that the new policy would displace farmers who would not be able to survive the new market landscape. They would mostly include smallholder producers in far-flung areas who live below the poverty line.

Lands sold

Those who do not have enough buffer to sustain losses have already sold their lands, most of which have been converted to factories, poultry farms and residential developments.

Others have migrated to the city to become “habal-habal” drivers, fast-food and factory workers, and household helpers.

Socioeconomic Planning Undersecretary Rosemarie Edillon said rice prices might begin to stabilize only by 2022, the last year of President Duterte’s term.

Until then, Filipino farmers may have to be more patient if they can still afford to do so.

“Farmers know how to sacrifice. We are so used to it, so good at it, but don’t push us to our limit,’’ said Joe Pangalilingan, a farmer in Nueva Ecija province.

“At this rate, we would not be able to feed our families anymore. There is not enough government help,” he said.