Farmers lose P68 billion from rice tariffication law

by Louisse Maureen Simeon (The Philippine Star), 22 Feb 2020

MANILA, Philippines — Farmers lost around P68 billion due to the effects of the Rice Tariffication Law, which saw the influx of more imported rice.

The Federation of Free Farmers said losses of rice producers exceeded the gains of consumers by as much as P34 billion in the first year of implementation of the law.

According to the FFF study, average retail prices of regular milled rice declined by P2.61 per kilogram while prices for well-milled rice fell by P1.99 per kilo.

When multiplied by consumption volumes, this resulted in a gain for consumers of P34.16 billion in the form of lower prices of rice.

On the other hand, palay farmgate prices dipped by P3.62 per kilo and resulted in total losses to farmers of P68.18 billion, or double the gains for consumers.

“The results of the first year of the RTL implementation are totally the opposite of what the proponents of the RTL were promising. They were arguing that there are more consumers than producers, and that many farmers were in fact net consumers of rice,” FFF national manager Raul Montemayor said.

FFF said the reduction in rice prices that the RTL proponents had promised in the past had not been significantly realized.

“Rice prices did go down in 2019 when compared to 2018, but 2018 was an abnormal year during which prices spiked because NFA was not allowed to promptly import rice. When compared to 2016 and 2017 price levels, the data shows that we are just back to rice prices that prevailed when the quantitative restrictions on rice imports were still in place. So, where is the promised benefit from the RTL for consumers?” he added.

The farmers group emphasized that the government has been equally ineffective in propping up farmgate prices of palay (unhusked rice).

Data showed that farm gate prices continued on a downward trend despite the National Food Authority being able to buy two times its P7 billion procurement budget for palay last year.

“The NFA stands to lose up to P7 for every kilo of palay it buys from farmers at higher-than-market rates and sells as subsidized rice to consumers. As much as P5 billion out of its P7 billion procurement budget will be lost in the process,” Montemayor said.

“Despite this, they are now asking NFA to buy even more palay from farmers and expand their sales to cash transfer beneficiaries and the general public. This appears to contradict the philosophy of the RTL, under which the private sector was supposed to take over the rice market and the allegedly graft-prone and debt-ridden NFA would be relegated to buffer stocking for emergencies,” he added.

FFF reiterated its call for a thorough review of the law and its early amendment as deemed necessary. It also asked the government to urgently review and upgrade its interventions to help farmers cope with the fall in palay prices.

The law removed the quantitative restrictions and most government controls on rice imports and effectively made the Philippines the largest importer in the world with as much as 2.9 million metric tons of imported rice in 2019.