Farmers blast proposal to cut rice tariff
At A Glance
- Federation of Free Farmers (FFF) national manager Raul Montemayor warned that the suggested cut could cause palay prices to drop by P6 per kilo.
- Pointing out that farmers' income losses could reach P120 billion in one year and he debunked a claim that these would be offset by the P10 billion allotment for the Rice Competitiveness Enhancement Fund (RCEF) under R.A. No. 11203 (Rice Tariffication Law).
- Based on estimates, the tariff cuts could result in government's foregone tariff revenues of P12 billion a year on current declared values of imports and assuming three million tons of imported rice, says Montemayor.
- He adds that rice importers have been undervaluing their shipment values by an average of 22% in order to lower their tariff liabilities.
- In June 2023, Montemayor says the average declared landed cost of rice with 5% broken was only P22 per kilo, compared to the P29 per kilo reference price of the Bureau of Customs.
The Federation of Free Farmers (FFF) strongly rejected proposals by the National Economic and Development Authority (NEDA) and some big business groups to reduce tariffs on imported rice in response to escalating prices of the commodity as this could result in a P12-billion annual foregone revenues for the government.
In a statement Wednesday, Sept. 6, FFF cited one recently floated recommendation would decrease the current 35 percent tariff to 10 percent, supposedly to allow cheaper imported rice to augment local stocks.
FFF national manager Raul Montemayor warned that the suggested cut could cause palay prices to drop by P6 per kilo. Pointing out that farmers’ income losses could reach P120 billion in one year, he debunked a claim that these would be offset by the P10 billion allotment for the Rice Competitiveness Enhancement Fund (RCEF) under Republic Act No. 11203 or the Rice Tariffication Law.
Montemayor said that based on estimates, the tariff cuts could result in government’s foregone tariff revenues of P12 billion a year, based on current declared values of imports and assuming three million tons of imported rice, he said.
According to Montemayor, rice importers have been undervaluing their shipment values by an average of 22 percent in order to lower their tariff liabilities.
In June 2023, Montemayor said that the average declared landed cost of rice with five percent broken was only P22 per kilo, compared to the P29 per kilo reference price of the Bureau of Customs.
“In effect, importers have already been paying a net tariff of almost 10% all along because of this practice of undervaluation,” he pointed out.
Montemayor further expressed doubts that a tariff reduction would result in cheaper prices for consumers. He said that retail prices continued to increase even after the government slashed tariffs on rice from non-ASEAN countries from 50 percent to 35 percent starting in 2021.
“Gains from tariff reduction are simply being captured by importers and traders, with minimal benefit to consumers, and at the expense of farmers. Besides, importers are bringing in mostly premium grade rice which provide better profit margins, and not the regular milled rice that the poor usually buy,” Montemayor said.
Instead of heeding tariff reduction proposals, President Ferdinand R. Marcos Jr. should hold its proponents to account for the damage they have inflicted on small farmers and the agriculture sector resulting from their past flawed prescriptions, Montemayor said.
He also recalled the repeated assurances from the Executive Branch that tariffs on sensitive agricultural products like rice would not be diminished under the Regional Comprehensive Economic Partnership (RCEP) trade agreement, which the Senate ratified last February 2023.