Chua hits back at rice reform critics

Published May 19, 2022, 12:55 PM

by Chino S. Leyco

The National Economic and Development Authority (NEDA) has fired back at critics of the rice tariffication law (RTL), noting that contrary to claims, the reform helped both farmers and consumers since its enactment.

In a statement, Socioeconomic Planning Secretary Karl Kendrick T. Chua said that RTL did not dampen local rice output, instead palay production improved in 2021 to 20 million metric tons, 3.5 percent higher compared to 2020.

The increase only showed that the rise in importation, which reached 2.9 million metric tons last year, did not hurt local rice production, Chua said.

He added that RTL has also 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 latest inflation figures revealed that rice inflation averaged 1.4 percent in the first three months of 2022.

“Even during the first quarter of this year, when rice production slightly declined, inflation of rice was below 2 percent. That’s because we are able to temporarily import. Importation is a way to address supply and price volatility,” Chua said.

“If we did not have that, people would have faced much higher inflation today,” he added.

Republic Act No. 11203 or the RTL replaced the quantitative restrictions on imported rice with tariffs of 35 percent to 40 percent and established the Rice Competitiveness Enhancement Fund (RCEF) funded by the tariff revenues.

“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.

The RCEF consists of an annual appropriation of P10 billion in six years to fund programs for farm mechanization, seed development, propagation and promotion, credit assistance, and extension services.

These programs were specifically identified to improve the productivity of rice farmers, reduce production costs, and link them to the value chain.

The excess from the 10 billion pesos tariff revenue collection will be appropriated by Congress the following year for 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,” Chua said.

“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,” he added.

Chua emphasized that RTL benefits two million farmers, 110 million consumers, and tens of thousands of retailers, wholesalers, millers, and those in the warehousing and transport businesses.