RICE TARIFFICATION, A GAME CHANGER: CHUA
“Rice tariffication is a game changer,” according to Socio Economic Planning Secretary Karl Kendrick Chua citing that the benefits of RTL, like any reform, may not be immediate, but they are clearly starting to show.
The Rice Tariffication Law (RTL) benefits all Filipinos. At the same time, it enhances productivity and overall competitiveness of our country’s rice sector, he added.
“When the government began its campaign to reform the rice sector, the goal was to improve food security for all and give rice farmers better support,” Chua said.
“We want to ensure that all 110 million Filipinos will be able to afford rice, especially the poor who spend as much as 30 percent of their food budget on rice, and to ensure rice farmers have better means to improve productivity through better seeds and equipment.”
Chua emphasized that the old QR (Quantitative Restriction) regime did not succeed in providing affordable rice for all Filipinos, noting that prior to RTL, consumers paid double compared to our neighboring countries for a kilo of rice. Before RTL was enacted, the Philippines repeatedly applied since 1995 to extend the Quantitative Restrictions or QR on the importation of rice. “That is almost 25 years. That is how long Filipinos have been overcharged for rice and how long we have kept the rice sector from growing,” Chua explained.
“Gone are the days when the Philippine rice trade is under the control of just a few importers who were granted the import permits. Rice now abounds in the retail markets at more competitive price levels,” he said.
“But more than price benefits, the RTL has expanded the availability of different rice types and varieties in the local market, providing consumers a wider range of choices, depending on their budget and quality preference,” Chua added.
According to the studies by NEDA, the International Rice Research Institute (IRRI), and International Food Policy Research Institute (IFPRI), the law is expected to accelerate agricultural growth and facilitate the structural transformation of the economy with GDP increasing by at least 0.13 percent compared to the baseline in 2025.
More importantly, it was estimated that the RTL, by 2025, would reduce the proportion of malnourished children and population at risk of hunger in the country by 2.8 percent and 15.4 percent, respectively. This is equivalent to around 2.1 million less people at risk of hunger and malnutrition.
In anticipation of the possible adverse effects as part of this reform, Chua said that the government provided safeguards to protect rice farmers during the transition period.
These include the Rice Competitiveness Enhancement Fund (RCEF) with a guaranteed budget of 10 billion pesos per year for six years, or a total of 60 billion pesos and the implementation of the Rice Roadmap of the Department of Agriculture. The RCEF also provides support for capacity building for rice farmers to enable them to modernize and innovate.
Chua said the Philippines generally does not have a natural comparative advantage in rice production, compared with neighbors like Thailand, Vietnam and Myanmar which all have large flat plains, fewer or no typhoons, less history of land inequality, and access to the Mekong River system, which serves as a great source of natural irrigation, as well as far lower population growth rates.
“With the help of production support from RCEF, highly competitive farmers can bring down the production cost to as low as 5 to 6 pesos per kilo, or roughly the same cost that our neighbors are able to produce at,” according to the NEDA chief.
“Rice tariffication is a game changer,” Chua said, adding that the benefits of RTL, like any reform, may not be immediate, but they are clearly starting to show.
“Like any investment, let’s give the law some time to fully realize its long-term gains. We encourage everyone in the rice sector to help us and give information to our implementing and law enforcement agencies regarding uncompetitive trade practices of private traders,” Chua said.