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NEDA, DOF chiefs defend Rice Tariffication Law

With presumptive president Ferdinand Marcos Jr. expressing intent to amend the Rice Tariffication Law (RTL), the chief of Socioeconomic Planning and Finance defended the landmark legislation enacted during the Duterte administration.

In a statement, Socioeconomic Planning and National Economic and Development Authority (NEDA) chief Karl Kendrick Chua said the RTL is “the best model that we have to help both farmers and consumers.”

“By removing quantitative restrictions, we are able to address both the needs of consumers for a lower retail price of rice and use the tariff revenues to fund the RCEF and provide even more assistance to farmers with excess tariff revenues,” Chua said.

Republic Act No. 11203 or the RTL, which took effect on March 5, 2019, replaced the quantitative restrictions on imported rice with tariffs of 35% to 40% and established the Rice Competitiveness Enhancement Fund (RCEF) funded by the tariff revenues.

The RCEF is an appropriation of P10 billion, collected from rice import tariffs, in six years or up to 2024 to fund programs for farm mechanization, seed development, propagation and promotion, credit assistance, and extension services.

Meanwhile, rice import tariff collections in excess of the P10 billion to be allocated for RCFEF will be appropriated by Congress the following year for Rice Farmer Financial Assistance (RFFA) —the direct financial assistance to rice farmers, titling of agricultural rice lands, expanded crop insurance program, and crop diversification program.

“Last year, we collected P18.9 billion from rice tariff collections. We gave all that back to rice farmers. Those calling for the removal of the RTL risk taking away what we are giving to farmers to improve their productivity. Further lowering the price of rice for all Filipinos is really possible if we help farmers improve productivity. That is exactly what the RTL is doing by providing them with mechanization, seeds, and other support,” Chua said.

For his part, Finance Secretary Carlos Dominguez III said that in the first three years of RTL’s implementation, the government has earned a total of P46.6 billion in rice import duties, which directly benefited palay farmers through a P10-billion annual RCEF.

“This law is an opportunity to revolutionize the agriculture sector and help our farmers become more competitive in the global economy,” Dominguez said.

In April, Marcos renewed his suggestion to amend the RTL, which allows the unlimited importation of rice as long as private sector traders secure a phytosanitary permit from the Bureau of Plant Industry, and pay the 35% tariff for shipments from neighbors in Southeast Asia.

“Hindi natin kailangang mag-import ng bigas kung sapat naman ang supply ng ating magsasaka dahil ang dapat mas pinapalakas pa natin ang pagtanim at pag-ani ng ating mga palay,” Marcos said.

(We do not need to import if our supply is enough. We need to strengthen our planting and harvesting of palay.)

Chua, however, said that contrary to the claims of some critics of the RTL, the increase in importation did not hurt local rice production.

In 2021, palay production increased to 20.0 million metric tons (MMT), 3.5% higher compared to 2020, despite the increase in rice imports in 2021 to 2.9 MMT.

The NEDA chief also argued that that RTL the has been key in managing inflation.

“Prior to 2019, rice was the single biggest contributor to inflation. Today, and since the passage of RTL three years ago, it has had a negative to minimal contribution to inflation,” Chua said.

Stable supply from higher production and more imports led to low and stable prices for rice, the NEDA chief said.

The latest inflation figures revealed that rice inflation averaged 1.4% in Q1 2022, he added.

“Even during the first quarter of this year, when rice production slightly declined, inflation of rice was below 2%. That's because we are able to temporarily import. Importation is a way to address supply and price volatility. If we did not have that, people would have faced much higher inflation today,” Chua said.

The RTL has also lowered prices of rice to the current average of P39 per kilo or a per-kilo reduction of about P7 compared to its cost in 2018 when it peaked to around  P46 per kilo, according to the Department of Finance.

The country’s chief economist said the RTL benefits two million farmers, 110 million consumers, and tens of thousands of retailers, wholesalers, millers, and those in the warehousing and transport businesses.

Chua also recommended for the next administration to continue its implementation and use it as a model for other reforms in the agriculture sector.

“We hope that this and our dialogue with the transition team of the new administration will help them better understand the costs and benefits of the policies that we have proposed. The RTL is the best model to help both farmers and consumers. We are proposing the same model for livestock, poultry, and dairy, and we hope to do that for other crops as well,” the NEDA chief said.

Meanwhile, citing data from the Department of Agriculture (DA), Dominguez said that since the implementation of RCEF, more than one million rice farmers have received over 8.6 million bags of certified inbred rice seeds, which are proven to be higher yielding than traditional home-saved seeds.

Over 830,000 hectares of palay farms nationwide are now yielding more rice than before, the Finance chief said.

With RCEF, the Finance chief said that 950,000 farmers now enjoy access to 19,542 units of farm machinery equipment.

Over 90,000 rice farmers have benefited from 4,978 batches of training sessions; and  14,459specialists, trainers, and extension intermediaries have received training on modern rice farming techniques, he said.

Likewise, some 220 farm schools have been established since the implementation of RCEF, bringing the total to 470, while 49,649 rice farmers have accessed over P1.5 billion-worth of loans from the Land Bank of the Philippines (LandBank) and Development Bank of the Philippines (DBP) under the credit component of RCEF, according to Dominguez.

With RTL, the role of the National Food Authority (NFA) has been limited to ensuring emergency rice stocks exclusively procured from local palay growers.

“The revenues from RTL support the reform and modernization of our agriculture sector. This is a complete reversal of the P11-billion annual average tax subsidies the government provided to NFA every year from 2005 to 2018,” Dominguez said.—AOL, GMA News