Dominguez defends rice tariffication law

Published May 15, 2022, 8:00 AM

by Chino S. Leyco

The Department of Finance (DOF) has defended the implementation of the rice tariffication law (RTL), which allows unrestricted importation of rice at 35 percent tariff, as presumptive president Ferdinand “Bongbong” R. Marcos Jr. is poised to suspend the three-year law enacted by outgoing President Duterte.

Finance Secretary Carlos G. Dominguez III said on Sunday, May 15, that the rice liberalization under the RTL has lowered the price of staple food for 100 million Filipino consumers as well as provided billions of pesos in funds to the agriculture sector.

For consumers alone, Dominguez said the RTL brought down rice prices to the current average of P39 per kilo, or a reduction of about P7 per kilo from a peak of around P46 prior the law’s enactment in 2018.

President Duterte signed the RTL into law on Feb. 14, 2019 as Republic Act (RA) No. 11203. The law, which later took effect on March 5, 2019, replaced rice import quantitative restrictions with tariffs.

Marcos, apparent winner of the presidential race, on the other hand, said that he would favor the suspension of the rice tariffication law if elected. He also made a campaign promise to bring down the retail prices of rice to P20 to P30 per kilo.

Rice food is now more affordable, especially for low-income Filipinos who spend about 16 percent of their total household budget on the staple food because of the RTL, Dominguez pointed out.

He added that RTL also freed the rice industry from local entrenched interests that took advantage of the protectionist policy on rice for decades.

“The Rice Tariffication Law was finally achieved after more than 30-years of failed attempts under previous administrations. The law opened up the Philippine rice market and, in turn, reduced the price of our country’s staple food for more than 100 million Filipinos,” Dominguez said.

As a result of the reform, which he first proposed three decades ago when he was Agriculture Secretary of then President Corazon C. Aquino, rice is no longer a main contributor to inflation, Dominguez said.

“It took the strong political will of the President for rice tariffication to finally happen for the benefit of our consumers,” the finance chief added.

With rice made affordable through the RTL, the National Economic and Development Authority (NEDA) estimates that three years from now, the proportion of malnourished children and population at risk of hunger in the country would be reduced by 2.8 percent and 15.4 percent, respectively.

These estimates are equivalent to around 2.1 million less people at risk of hunger and malnutrition, the NEDA said.

In 2018 before the RTL took effect, the retail price of regular-milled rice (RMR) spiked to P46.04 per kg. After RTL, the average price of this rice variety went down to P39.13 as of April 2022, or cheaper by P6.91 per kg.

Another key benefit of RTL is the flow of billions of pesos in funds to the agriculture sector through the creation of the P10-billion Rice Competitiveness Enhancement Fund (RCEF).

The fund is used exclusively to finance programs that will sharpen the competitiveness of palay growers by way of providing them with easy access to fertilizer, farm machinery and equipment, high-yield seeds and cheap credit; and offering them skills training programs on farm mechanization and modern farming techniques.

Under the RTL, all import duties collected from rice imports beginning March 5, 2019 go to the RCEF and other agriculture modernization programs.

In the first four months of 2022 alone, the Bureau of Customs already collected P6.6 billion in duties from rice imports, which is already two-thirds of the P10 billion earmarked annually for RCEF.

The National Food Authority (NFA) monopolized rice importations before the RTL, with a few private traders granted import permits that enabled them to control the price and supply of rice through hoarding and other manipulative practices.

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

Dominguez said that with rice tariffication, the government was able to handle the Covid-19 crisis “with strength on the food security front.”

He pointed out that despite logistical restrictions resulting from the mobility restrictions or lockdowns imposed nationwide to protect people and communities from the pandemic, the government was able to sustain the flow of produce from local farms to Filipino consumers.

The agriculture sector was “one of the brightest spots” of the Philippines’ response to the pandemic owing in large part to the RTL, Dominguez said.