PH gov’t yet to resolve undervaluation of rice imports

Published March 11, 2021, 7:00 AM

by Madelaine B. Miraflor

The Federation of Free Farmers (FFF) is still urging the Philippine government to resolve what they called as unabated undervaluation of rice imports, which already resulted in nearly P6 billion in losses in government revenues since 2019.

FFF National Manager Raul Montemayor noted that the Bureau of Customs (BoC) still does not include prices for certain grades of rice from various countries in its weekly Memoranda on Rice Reference Prices.  

This, according to him, somehow allows the undervaluation of imports.

Based on FFF estimates, government losses from uncollected tariffs is now around P900 million in just the first two months of 2021.

This is in addition to the almost P5 billion lost in 2019 and 2020 due to “misdeclaration” of rice import values.

The FFF noted, for example, that several shipments of rice with 5 percent brokens from China, which were apparently routed through Singapore, had an average declared Free on Board (FOB) value of only P12.12 per kilogram (/kg). This was significantly lower than rice from Pakistan or Cambodia that cost over P16/kg, or Thai and Vietnam rice valued at P19/kg or more.

“Although clearly undervalued, these shipments probably evaded questioning because the BoC had no reference prices for rice coming from China,” Montemayor said.

“Rice of the same grade and quality continued to be classified under either wrong or different tariff lines,” he further said.

He said that without these reference prices, a customs examiner cannot determine properly if a shipment is undervalued or not.  

“In turn, importers undervaluing their shipments can escape detection by ‘suggesting’ to examiners that their shipments be classified under tariff lines that have no reference prices,” Montemayor further said.

Montemayor also debunked BOC’s claim that increased tariff collections from rice imports in 2021 were due to the agency’s improved import valuation system.  

Recently, the BoC reported that tariff collections had risen by 58 percent to P2.04 billion in January 2021, compared to the same period last year.  The agency also claimed that the average valuation of rice imports grew by 11.5 percent.

For its part, FFF noted that higher collections were inevitable since international rice prices had been rising since the fourth quarter of 2020.  

Additionally, the volume of imports grew from 380,140 metric tons (MT) in January to February 2020 to 495,268 MT in the same period this year.

A more detailed analysis of the BoC’s own data on imports, however, reveals that the degree of undervaluation of rice imports actually worsened in 2021.

“During the first two months of 2021, declared import costs were 22 percent lower on the average than the BoC’s own reference rates. For the whole of 2020, the average discrepancy was only 20 percent,” Montemayor said.

“In January-February 2021, 89 percent of the total import volume could be considered undervalued, since declared import prices fell below BoC reference prices. In 2020, only 80 percent of imports were technically undervalued,” he added.