Traders back tariff reduction on imported rice

The Federation of Filipino-Chinese Chambers of Commerce and Industry Inc. (FFCCCII),  which groups the Filipino-Chinese business organizations in the country, has strongly called for the reduction in tariffs on rice imports amid high prices of the staple food in the country. 

In a statement, FFCCCII President Cecilio K. Pedro said they support Finance Secretary Benjamin Diokno’s proposal to reduce the tariff rates on imported rice temporarily to zero percent or a maximum of 10 percent amid the current supply gap and high prices of rice.  "We support government efforts to stabilize rice prices and supply," he said.
 

“The FFCCCII believes that Secretary Diokno’s proposal to temporarily reduce the said rates from the existing 35 percent to zero percent or maximum of 10 percent would not only translate to a decrease in rice prices and temper the increasing inflation in food prices, but also address the demand-supply gap in this sector,” the group said. 
 

According to the group, reducing the rice import tariff will “undeniably mitigate the pinch our countrymen are feeling due to the sharp increase in the price of rice, our staple food.”
 

“We believe that the temporary lowering of tariff, coupled with other calibrated measures to be taken by this administration’s economic team, will result in the long-term stabilization of the prices of rice and improve the inflation situation,” Pedro said. 
 

Already, the Tariff Commission has announced that it will conduct a public hearing on a petition filed by the Foundation for Economic Freedom (FEF) seeking to reduce the most favored nation (MFN) tariff rates on rice from 35 percent to 10 percent instead of the price cap on rice. 
 

In an advisory, the Commission scheduled an online hearing on Friday, Sept. 15, that all interested parties are required to register online via a QR code provided by the agency. 
During the public hearing, interested parties shall be afforded opportunity to be present and present evidence in support of their positions on the subject matter. Parties, who intend to make presentations during the hearing are also required to submit copy of their presentation to the Commission. 
 

The public hearing was scheduled after the FEF issued a position on Sept. 2 this year calling on the government to lift or reduce import tariffs for rice from 35 percent to 10 percent to arrest the surging price of rice rather than impose a price ceiling on rice.
 

FEF explained that the price cap will harm consumers because it will drive supply away from the market, fuel a black market for rice, cause traders to cheat consumers by mixing inferior broken rice with regular and well-milled rice, and incentivize traders to hoard as the price ceiling is below their procurement and selling prices.
 

“Lower-income consumers in particular will suffer when regular milled rice becomes less available in markets at a controlled price and is passed on as well-milled rice by traders,” FEF said.
 

EO 39 will similarly harm farmers because traders will use the price cap to justify lowering their buying prices for palay or simply refuse to buy palay from the farmers as they will lose money due to the high farmgate price of palay.  
 

In addition, FEF said that the price ceiling will not be effective in solving the demand-supply gap and arrest increasing food price inflation.  ”It will only aggravate the current tight rice supply situation into a full-blown rice crisis.  An Executive Order cannot repeal the law of supply and demand,” it added.