Based on the premise of saving the local rice farmers, the Rice Trade Liberalization Law struggled to prove itself as an effective trade policy for its main supposed beneficiary after two years.
Notably known as an agricultural country, the Philippines raises its pride through its natural resources and over 14 million hectares of agricultural land. But despite having a 4.80 million hectares for rice farming alone, international trade protection and multi-billion-peso government programs, the country’s rice industry still struggled to reassure both its producers and consumers.
But after consecutive presidential terms that continually pushed for quantitative restrictions (QRs) on rice importation, the Duterte administration planned on reforming the Philippine rice sector in 2019. On February 14 that year, Rice Trade Liberalization Law or Republic Act 11203 was formally signed by President Rodrigo Duterte.
Taking effect on March 5, the abovementioned law, also commonly known as Rice Tariffication Law (RTL), consequently removed the government limits (QRs) and replaced it with a minimum of 35% to 50% tariff on imported rice, eliminated the jurisdictions of National Food Authority (NFA) on the rice industry, and enabled unlimited importation, exportation, and trading of rice, hence liberalization.
RTL also promised how rice will be more affordable which will then result to 2.1 million less hungry people and malnourished children by 2025, and how rice farmers will have an income boost along the way and become globally competitive.
Most importantly, RTL emphasized how all rice tariff revenues will go to the Rice Competitiveness Enhancement Fund (RCEF) program which is wholly allocated for the procurement of modern farm equipment and seedlings, expanded financial assistance, and training for local rice farmers.
Now, two years into its implementation and a year left of the Duterte administration, has RTL really proved itself as the real solution for the rice farmers, consumers, and rice industry in general?
At the Silo (a tower at a farm)
Even though RTL opened the Philippine rice market, the minimum 35% tariff imposed on imported rice balances its value with the produce of Filipino rice farmers in the market.
For Sen. Cynthia Villar, who chairs the Senate committee on agriculture and food and is one of the principal authors of the said law, RTL is working well on stabilizing the prices of quality rice to consumers while increasing the incomes of rice farmers.
Also, despite the crisis brought on by the ongoing COVID-19 pandemic, the country’s rice sector continues to gradually show its results as farmgate prices increase and the rice production might achieve a record of 20.4 million metric tons (MMT) of palay (paddy rice) this year.
“The RTL is a transformative but disruptive policy reform. While we have anticipated transition to take time, the benefits that it brings to both consumers and palay farmers during this time of crisis cannot be denied,” said Department of Agriculture (DA) Secretary William Dar.
According to a report of the DA’s Philippine Integrated Rice Program (DA-PIRP) projects, it is expected that the rice farmers are motivated by the higher farmgate prices since it provides more incentives to continue planting. For instance, as of April 2021, Nueva Ecija farmers sold their freshly harvested palay at P 16 to P 18 per kilo while dried palay at P 20 to P 22 per kilo.
As of March 2021, the RCEF program was also able to provide the following interventions to rice farmers: (1) 9,236 machinery and equipment delivered to 3,180 farmers’ cooperatives and associations; (2) 1.65 million bags (20 kg/bag) of certified seeds distributed to 661,567 farmers; (3) loaned a total of P 2 billion to 5,956 farmers, and 97 FCAs, where 7,317 of its members are sub-borrowers; and (4) trained 226 specialists, 8,110 trainers, and 71,962 farmers, and established new 90 farm schools and enhanced 43 farm schools.
At the market
One of the main goals of RTL is to improve food security by providing an access to affordable and high-quality rice for Filipinos. But, according to the Federation of Free Farmers (FFF), retail prices were only marginally lower, where an average price of a kilogram of well-milled rice in 2021 was P 41.04 compared to P 42.03 in 2017 and a kilogram of regular-milled rice was P 36.14 in 2021, against P 37.09 in 2017.
This consequently resulted in a relatively small consumer savings of P 2.43 billion or P 22 per person per year and FFF calls for the government to step in and ensure that the RTL’s benefits are justly shared along the rice value chain.
However, Dr. Roehlano Briones of the Philippines Institute for Development Studies (PIDS) firmly stands on how there is no other policy like RTL that has served the major population of the Filipinos this well.
“But let’s be fair, if we alleged that the price of rice dropped has not been so large, well, if you correct for inflation, it has been quite astounding actually. No single policy reform has delivered this much for such a large section of the population, and especially at the poor, as this reform,” Briones argued.
Briones further explained by giving an example that the P 37 kilogram of regular milled rice in 2015 is very different from the P 37 kilogram of the same kind of rice in 2021 if interpreted with the inflation through the years. He concluded that millions of Filipinos now enjoy lower rice prices.
At the rice farmland
Being that most of the provisions stated in the RTL address the calls and needs of the local rice farmers, one would expect that they must have benefitted the most from this law.
But according to FFF National Manager Raul Montemayor, the producers themselves have lost billions of pesos in income these past two years.
Montemayor explained how the local rice farmers absorbed P 56 billion in foregone revenue until now and that instead of them, market intermediaries or middlemen such as traders, importers, and wholesalers are the ones who got the most advantage through RTL.
“Wholesalers and retailers gained an extra P 35 billion in 2019 and another P 43 billion in 2020 even as farmers reeled from their losses during the two-year period. In 2020, importer margins declined significantly due to the uptick in international rice prices. Still, importers managed to earn an extra P 6.51 billion,” Montemayor said.
He also revealed how P 34 billion worth of tariff revenues from March 2019 to May 2021 that should have been allocated for the RCEF program are P 7 billion short due to under-evaluation and misdeclaration of imports. And he compared how rice production and productivity in 2021 is almost the same as in 2017, which would mean that the country’s self-sufficiency in rice has become lower and Filipinos just became more dependent on imported rice.
Kilusang Magbubukid ng Pilipinas (KMP) Chairperson Danilo Ramos also asserts how RTL brought the Filipino rice farmers to a deeper hole of adversity as the government gives more opportunities to importations instead of providing them assistance for local boost.
“Before, there’s only 442 import clearances issued by the BPI (Bureau of Plant and Industry). But, just last year, the government has approved 5,008 import clearances for 4.49 million metric tons of rice. This September, just in time with the harvesting peak, they brought in 327, 164 metric tons of imported rice, which then resulted in a local price slump of Php 9 per kilo of palay. That alone lost us Php 20,000,” Ramos exclaimed.
Ramos also narrated how natural disasters, like the recent Typhoon Maring, devastated their livelihood, withholding only 5 cavans of rice instead of harvesting 19-23 cavans, yet they don’t receive the necessary assistance or financial aid from the government. With that, he called attention to how the agri-budget is being allocated for other non/anti-farming purposes.
“Commission on Audit (COA) report revealed that there will have been Php 34.45 billion irregularities in the Department of Agriculture (DA) in 2020. We barely receive enough help, yet Php 9.8 billion were returned to the National Treasury. And instead of processing our rightful land distribution, the Department of Agrarian Reform (DAR) allocated Php 411 million for the NTF-ELCAC last year,” Ramos lamented.
Ramos further called on the government for the abolition of the law and stop appealing to import liberalization, deregulation, and privatization. He emphasized that as an agricultural country, the Philippine government should provide sufficient support subsidies to strengthen the local production of rice, vegetables, fishery, poultry, and livestock.
At the Malacañang
However, on May 15 this year, Duterte signed an executive order to lower tariffs on imported rice. The Malacañang reasoned that this move is to diversify the country’s market sources, maintain affordable prices, and reduce pressures on inflation.
Sen. Cynthia Villar and Sen. Imee Marcos stood at the opposition and denounced this, since lowering the tariffs from 30% to 5% would evidently hurt the local rice farmers. The supposed signed executive order was a proposal by the DA back in February 2021.
“For a change, the DA should prioritize local producers. The benefits and advantages for processors, importers, and traders are already too much,” said Rosendo So, chairperson of Samahang Industriya ng Agrikultura.
“Yes, at the end, what we want is cheaper rice. This is very good for the consumers I think, my figures have shown it, [but] it’s bad for the farmers. So, can we help the farmers in the meantime while we’re trying to let these consumers avail this marvelous benefit from the cheaper rice,” claimed Briones.
