Rice tariff and the dignity of farmers

Published March 13, 2019, 12:16 AM

by Charissa Luci-Atienza & Bernie Cahiles-Magkilat

GOVERNANCE MATTERS

By FORMER VICE PRESIDENT JEJOMAR C. BINAY

Jejomar C. Binay Former Vice President
Jejomar C. Binay
Former Vice President

The Rice Tariffication Law continues to invite controversy and criticism despite the full support given by the administration, which made its immediate approval by Congress possible.

The controversy surrounds provisions that would allegedly lead to the demise of the local rice industry and the slow death of rice farmers. Assurances of safety nets notwithstanding, it seems there is little credibility ascribed to the government’s ability to help the industry and the farmers. It is up to the concerned agencies to prove their detractors wrong.

After opposing rice tariffication, the administration finally relented after incurring heavy political fallout from its mishandling of the rice crisis. The high price of rice was identified as a major factor in pushing inflation to a record high last year. Rice accounts for 20 percent of the consumption of poor families.

The law amends the Agricultural Tariffication Act of 1996 and lifts restrictions on rice volumes imposed by government. With the restrictions gone, the private sector can now bring in cheap rice which for decades has been the sole domain of the National Food Authority (NFA).

Revenues will go to a Rice Competitiveness Enhancement Fund, or Rice Fund, intended to, among other objectives, modernize the rice industry, provide credit, undertake research, and enhance farmers’ productivity.

With the law now in effect, it is expected that the entry of imported cheap rice in the market through the private sector will bring down the price of rice and result in lower inflation rates.

Optimists believe that the law will also lead to a substantial reduction in market and system inefficiencies that has condemned rice farmers to decades of poverty.

But farmers groups continue to cast doubt on the law’s benefits. One group even described it as a “death sentence” for the industry and an estimated 13.5 million rice farmers and 17.5 million farmworkers and their families.

For their part, agricultural economists urged government to proceed with much caution. Liberalizing rice importation “may address inflation in the short term but endanger the livelihood of local farmers and later drive up prices,” they said in published comments made during an international forum.

The challenge for government is to strike the balance between the interests of consumers and farmers, with one expert describing the dilemma this way: “Should I favor consumers? If I bring the price down, it’s good for the consumer, bad for the producer. If I let the price increase, it’s good for the producer because he’s selling at a high price, but it’s bad for the consumer.”

In the long term, the experts emphasize that it is incumbent on government to institute policy reforms that would increase the industry’s competitiveness while hand-holding rice farmers during the transition period.

The performance of the agricultural sector since the 1990s has been described as dismal. It is unproductive, with  agriculture’s share to GDP at less than 10 percent. Poverty is widespread in the provinces, and farmers are among the country’s poor.

The sector has been neglected for decades, lacking in vision and the efficiency needed to address the multi-layered but inter-connected concerns. It is a valid question to ask if the revenues to be generated from the tariffs can be utilized efficiently, not to mention with transparency, to transform the sector and improves the lives of rice farmers.

The promises made by government that the TRAIN Law would provide immediate relief for working class taxpayers is a cautionary tale. What came in its aftermath were higher fuel prices that led to higher transport costs for farmers. The law also increased the prices of basic goods and, coupled with the inefficiency of the NFA, triggered higher inflation. It made the price of rice beyond the reach, ironically, of the country’s rice farmers.

Given this experience, one cannot fault farmers groups from doubting government’s capability to ensure protection for our rice farmers and institute key reforms in the rice industry.

This is a challenge for government. And it is equally important to extend the needed oversight supervision over the Department of Agriculture (DA) and other related agencies to guarantee that targets are met and responsibilities imposed by the law are performed. The concerned sectors also need to exercise utmost vigilance.

Government may have the legislative tools that it needs to address the rice problem and the opportunities to improve the industry and the economic condition of our rice farmers.  But in all matters concerning governance, it is the execution that is more important. We may have the best laws, but if the execution is terrible, then we have a situation where the problem becomes magnified. And it is always the poor who suffer the most from government inefficiency.

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