By CHINO S. LEYCO
The rice tariffication law has yielded more than enough to fund the government’s compensation program for farmers who suffered a reduction or loss of income arising from the liberalized importation of the Filipino staple food, the Department of Finance (DOF) said.
Since the removal of the quantitative restrictions (QRs) on rice trading was implemented in March last year, the Bureau of Customs already raised ₱12.3 billion, well above the minimum P10 billion requirement for the rice competitiveness enhancement fund (RCEF).
In a statement, Finance Secretary Carlos G. Dominguez III said the ₱2.3-billion excess as of end-December last year gives the government more funds to immediately extend direct aid to farmers and make the farm production more efficient.
To recall, the rice tariffication law removed the QRs on rice trading and imposes a minimum 35 percent tariff on imports of the grain, with revenues earmarked for farmer productivity and competitiveness programs.
Dominguez said the rice liberalization should be viewed as an “opportunity to revolutionize the agriculture sector and help farmers become more competitive in the global economy.”
Under the law, tariffs collected from rice imports will go to the annual ₱10-billion RCEF, which will be used to finance the modernization of the agriculture sector.
RCEF is also expected to provide farmers with greater access to cheap credit, high-quality seeds, agricultural machinery and skills training on farm mechanization and other modern farming technologies.
Before rice tariffication, the cash-strapped National Food Authority (NFA) regulated private rice imports and agency was the chief importer of the grain, incurring a total of ₱187 billion in tax subsidies from 2005 to 2015 or an average of ₱19 billion a year.
Finance Undersecretary Gil S. Beltran estimated that NFA lost around ₱11 billion annually before the rice tariffication law.
But with the new tax regime on rice, Beltran said the government has already earned over ₱11 billion in less than a year, a complete reversal of the average of ₱11 billion it has been losing every year during the pre-RTL regime.
Aside from the additional revenue, Dominguez also cited the law’s favorable impact on headline inflation, which bottomed out at 0.8 percent last October mainly due to lower rice prices.
When the law took effect in March, inflation during the month immediately decelerated to 3.3 percent, and gradually tapered in the succeeding month as rice imports began to enter the market and slashed prices by about P8 a kilo on average.
Low rice prices boosted household spending, which helped drive gross domestic product (GDP) growth to 6.2 percent in the third quarter of 2019.
According to Philippine Statistics Authority (PSA) data, the average retail price of rice in the fourth week of November sunk to its lowest level in three years to ₱36.67 per kilo since the government eased rules on importation.