Rice tarrification: A litany of broken promises

(First of two components)

The rice tariffication regulation (RTL) was born on Feb. 14, 2019 when President Rodrigo Duterte signed it, promising a bunch of advantages for customers and beneficial properties for the economic system.

Removing quantitative restrictions, or limits in quantity, on rice imports had been touted to considerably cut back costs that buyers, significantly the poor, pay for rice.

Farmers would get assist lowering manufacturing prices and rising their yields to compete with cheaper imports and nonetheless earn cash.

The authorities, significantly the National Food Authority (NFA), can be free of its expensive and graft-prone features of importing, shopping for excessive from farmers, after which promoting low and infrequently at a loss to customers.

Market gamers would then be capable to freely and brazenly function and compete with one another with minimal authorities interference. The liberalization and deregulation of the rice market would finally profit the consuming public and the economic system as an entire.

But has RTL lived as much as these rosy promises and protections two years after it was applied? Sadly, information present that it has not.

Consumers are not any higher off at the moment than earlier than RTL. Producers have incurred billions of pesos in losses. Only the intermediaries in between them—merchants, wholesalers, retailers and importers—have really benefitted from the regulation.

In flip, the federal government has been pressed to intervene and spend billions of pesos on issues that emerged from the regulation’s enforcement. This even because it has misplaced most of its powers to manage profiteering and stabilize costs. The authorities has been remiss in doing its homework and complying with many of the regulation’s provisions.

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Retail costs for customers didn’t go down as promised (customers ended up paying Php 6.16 billion extra for rice).

Data from the Philippine Statistics Authority (PSA) present that the typical retail worth of rice in 2020 was solely 36 centavos per kilo decrease than it was in 2017. This interprets to a saving per client of solely 12 centavos per day.  In 2019, or the primary yr of RTL, rice was really costlier than it was in 2017 by 73 centavos per kilo in retail.


The declare that RLT has tamed inflation is misleading as a result of inflation charges can range considerably relying on the bottom interval used. It is true that costs at the moment are considerably decrease than they have been throughout the rice disaster in 2018.  But 2018 was an irregular interval, and the costs then can’t be the premise for figuring out actual worth modifications ensuing from the RTL.

When evaluating retail costs to these in 2017, which is the latest “normal” yr previous RTL, customers are literally no higher off.  Inflation has stabilized up to now few months not as a result of costs have gone down. They have really remained “high” opposite to RTL predictions.

Rice costs remained caught at near-2017 ranges regardless of the flood of rice imports following RTL enactment. This is a far cry from the predictions that RTL would carry down rice costs by as a lot as P7 per kilo and that imported rice would be capable to match NFA’s promoting worth of P27 per kilo. In 2019, rice imports reached a complete of 3.17 million tons, or practically 2.5 occasions our provide deficit. In 2020, imports fell to 2.12 million tons, however this was nonetheless round 75 p.c greater than our precise importation wants. All of these imports have been cheaper than native rice. Yet, retail costs hardly modified when in comparison with 2017 ranges.

RTL was supposed to learn poor customers specifically, nevertheless it additionally failed to take action. Before the regulation took impact, NFA was importing principally regular-milled rice (RMR) with 25 p.c broken grain on the market to poor customers.

The regulation then banned NFA from importing rice and promoting shares besides throughout emergencies or as replenishment for outdated inventories. Private merchants took over imports however opted to usher in premium rice grades as an alternative on the market to comparatively well-off customers. Nearly three-fourths of complete imports in 2019-20 have been for rice with solely 5 p.c broken grain. When NFA’s backed P27 per kilo rice disappeared from native markets, poor customers had no selection however to purchase regular-milled business rice (RMR) at a median of P37 per kilo.

In financial phrases, customers needed to fork over an additional P8.59 billion in 2019— in comparison with 2017—for his or her rice wants.  In 2020, retail costs have been solely marginally decrease than they have been in 2017, leading to comparatively small client financial savings of P2.43 billion or about P22 per particular person for the entire yr.  Overall, customers misplaced out as an alternative of gained something throughout the first two years of RTL.

As predicted, palay costs plunged with the enactment of RTL and the following flood of rice imports. In 2019, farmers obtained practically P2 much less per kilo than in 2017 for the palay they bought commercially. They didn’t fare significantly better in 2020, struggling a cumulative loss of P56 billion within the first two years of RTL. On the typical, farmers’ incomes fell by round P6,000 per hectare per season.

The billions spent by the NFA and a few native authorities models (LGUs) did not prop up palay costs considerably. Farm gate costs throughout the principle harvest seasons of 2019 and 2020 slumped to traditionally low ranges. Prices did go up in April to June 2020, however this was largely attributable to transportation bottlenecks and elevated demand for rice for reduction operations following COVID-19 lockdowns.

RTL promised that the beneficial properties of customers would far outweigh the losses of farmers. In actuality, each customers and farmers misplaced, with the farmers shedding 9 occasions greater than customers.

Stuck in place

Proponents of the RTL additionally stated that the discount in palay costs can be offset by greater yields, decrease prices of manufacturing, and improved productiveness ensuing from the yearly P10 billion Rice Competitiveness Enhancement Fund (RCEF) and different interventions.

The newest PSA information present that there was virtually no enchancment in output in 2020 in comparison with 2017. The common yield per hectare in 2019-20 was solely 3 p.c higher than what it was in 2016-18. At this fee, it should take as much as 20 years earlier than our farmers attain the six (6) metric ton per hectare degree that may carry them at par with their Vietnamese and Thai counterparts.

Interestingly, rain-fed areas carried out higher in phrases of productiveness development in comparison with irrigated areas the place most of the RCEF funds have been invested and the place main enhancements in competitiveness and yields have been anticipated to return from.

RCEF has been beset by quite a few issues arising from RTL provisions that positioned the burden of implementing multi-billion-peso packages on small analysis companies with restricted capability and manpower. The COVID pandemic has hampered additional the well timed distribution of seeds, machineries and different help to farmers.

Only about half of the P20 billion allotted for the primary two years of RTL has been disbursed thus far. Even then, it’s uncertain if P10 billion a yr in RCEF help is usually a game-changer within the trade that generates a gross output worth of solely P320 billion a yr.

RCEF has additional compartmentalized the help packages of the DA, dividing the nation into program and non-program areas and limiting interventions to a set menu of seeds, machineries, credit score and extension.  As a consequence, the impression of these piecemeal interventions are sometimes negated by the shortage of irrigation, advertising and marketing and different help companies which are equally if no more essential for farmers.

Until now, no clear impression monitoring and evaluation system is in place to find out if the efforts to make farmers each cost-competitive and worthwhile are succeeding. In reality, even the Rice Road Map, which is meant to chart the trade’s path in direction of competitiveness and meals safety and delineate important targets and milestones, has not but been accomplished.

The common space harvested in 2017-18 declined by p.c in 2019-20. This may very well be a sign that some farmers are shifting away from rice. Those who can be unable to regulate to cheaper imports have been anticipating assist in shifting or diversifying to different crops and livelihoods. Until now, nevertheless, there is no such thing as a clear program for this transition. Farmers are mainly left on their very own. Tariff collections from rice imports in extra of P10 billion per yr have been alleged to be tapped for crop diversification packages, however the funds have since been reallocated by the Senate for money transfers for the poor.(Editor’s notice: Raul Montemayor is nationwide supervisor of Federation of Free Farmers)

(Part 2: Who advantages from a deluge of rice imports?)

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