Filipino-Chinese traders have rallied behind the proposal to further reduce tariffs on rice below the current 35 percent to alleviate the inflationary pressures caused by high rice prices, but farmers vehemently opposed to such measure stating it could cause billions of losses to farmers.
In a statement, the Federation of Filipino Chinese Chambers of Commerce and Industry, Inc. (FFCCCII) led by President Dr. Cecilio K. Pedro, called Finance Secretary Ralph Recto’s proposal “pro-active”. The DoF recently proposed halving rice tariffs from 35 percent to 17.5 percent, which it said could reduce rice retail prices by P5 per kilo.
“Lowering rice tariffs holds the potential to address inflation worries for Filipino consumers and promotes economic stability,” said Pedro, who also emphasized FFCCCII's commitment to supporting Filipino farmers and fishermen. The traders’ group also advocates for a dialogue with the Department of Agriculture to strike a balance between supporting local rice producers and the need to strengthen the nation's economic resilience.
Moreover, FFCCCII reaffirms its advocacy for modernizing agricultural technologies and providing essential support to boost rural incomes and ensure food security across the Philippines.
The group said that the reduction in rice tariffs is aligned with the Finance Department’s goal to reduce rice prices by 20 percent in September. “This measure aims to make rice more affordable, considering that rice imports contribute substantially to the nation's staple supply,” FFCCCII said.
“FFCCCII remains committed to fostering socioeconomic prosperity and advocating for the welfare of all stakeholders in the Philippines,” the group said.
In a separate statement, the Federation of Free Farmers (FFF) vehemently opposed the plan to cut rice tariffs stressing that such move could only cause P43 billion losses to farmers.
The group presented its own computation of losses as a result of the planned rice tariff reduction. It said that a P5 per kilo reduction in tariff payment, while not guaranteed to reduce retail prices, could depress palay prices by P3 per kilo if cheap imported rice is dumped into wholesale markets, where domestic rice is also sold by millers and traders.
“This could result in a loss of P33 billion to rice farmers, who normally harvest 11 million tons of palay in the second half of the year,” the farmers’ group said.
Moreover, assuming an additional 2 million tons of rice imports during the second semester, the DoF tariff proposal would mean foregone customs revenues of P10 billion that are legally earmarked for rice farmers’ productivity programs. “Together with the losses from lowered palay prices, farmers stand to lose a total of P43 billion from the proposed tariff cut for 2024 alone,” the FFF said.
FFF National Manager Raul Montemayor noted that “When government reduced tariffs on non-ASEAN rice imports from 50% to 35% starting in May 2021, rice retail prices actually rose, instead of going down. Savings from lower tariffs were simply pocketed by importers and middlemen and were not passed on to consumers.”
The FFF further claimed that exporting countries took advantage of earlier tariff cuts by raising their prices. Rice exports from Pakistan were about eight percent cheaper than Vietnam rice before the tariff cuts in 2021. They have now equaled - if not surpassed - Vietnam prices, Montemayor added.
“Any new tariff reduction will be useless if our foreign suppliers jack up their prices, especially since they know that we have no choice but to buy their rice,” added Montemayor.
The group further said that the tariff cut in 2021 also failed in significantly expanding the country’s rice sources beyond Vietnam and Thailand, with non-ASEAN countries accounting for less than four percent of total imports in 2023.
More than two-thirds of rice imports were for premium grades, which give better profit margins to importers.
“The main beneficiaries of decreased tariffs will be the relatively well-off, who can better afford to buy good quality rice," said Montemayor.
The FFF urged government to look for alternative ways to bring down rice prices for the poor without hurting local farmers.
“Government can just buy rice locally or even import - if absolutely necessary - and distribute these to poor consumers through its KADIWA and other outlets. The private sector can take care of supplying unsubsidized rice to consumers who can afford to buy them. Tariff cuts are not needed since import prices are expected to go down soon anyway, as stated by Secretary Recto himself,” added Montemayor.
The FFF reminded the government of previous adjustments in tariffs on rice, corn and pork, but which did not bring about cheaper prices for consumers.