Neda: PHL rice now cheaper than imports

03.03.2017

The removal of import caps by July would not necessarily doom the local rice sector, as the production of the staple in 36 provinces is now cheaper compared to imports, according to the National Economic and Development Authority (Neda).

In a recent presentation, Neda Assistant Secretary Mercedita A. Sombilla said the average production cost of rice in 36 provinces will be P3 per kilogram lower than the unit cost of imported rice.

This estimate assumed that the country will slap a 35-percent tariff on imported rice starting on July 1, when the quantitative restriction (QR) on rice has expired.

“Those 36 provinces represent about 61 percent of our total use, 68 percent if we are just going to take food use. So its only about 39 percent shy of 100-percent self-sufficiency,” Sombilla said.

Of the 36 provinces, she said 14 had an average yield of 3.5 metric tons (MT) per hectare and below. Sombilla said this means there is a high potential to increase the yield in these provinces if the government hikes its support for rice production. These 14 provinces are Palawan, Antique, Iloilo, Aklan, Surigao, Capiz, Masbate, Catanduanes, Eastern Samar, Northern Samar, Basilan, Samar, Guimaras  and Maguindanao.

Government support could mean encouraging farmers in these provinces to use certified seeds, hybrid seeds, cultivating these seeds in suitable areas, providing irrigation facilities, and mechanizing farm facilities.  There is really potential in the rice industry to be enhanced in order to become competitive, Sombilla said.

Apart from the 36 provinces, Sombilla also said the Neda found there are eight large provinces that may have high yields but have recorded high production cost.

These are Davao del Sur, Ilocos Norte, Bulacan, La Union, Ilocos Sur, Southern Leyte, Zambales and Occidental Mindoro. Sombilla added these provinces produce an average of 4 MT per hectare and above.

Sombilla said if the government is able to institute reforms that could bring down the cost of production in these eight provinces, these areas can be “very competitive” in producing rice.

“We should also look at how we can help these farmers lower their production cost to be more competitive,” she added.

The Neda study, Sombilla said, was based on their survey of 82 provinces nationwide. The agency examined rice production under normal yield levels, particularly in 2012 and 2014.

Sombilla said 2012 data were used for the production cost estimates, including inputs and logistics. These were adjusted to the 2015 and 2016 levels. These costs were then compared to the unit import cost of 25-percent broken rice imported from Thailand and Vietnam using 35-percent tariff plus a transport cost of P2.50 per kg.

The QR on rice, a trade privilege which the World Trade Organization has allowed the country to enjoy for two decades, will expire on June 30. This means that the government can no longer limit the volume of imported rice that may enter the Philippines starting July.

To date, Congress has yet to amend a law that will allow the governmen to convert the nontariff barrier into a specific tariff rate. Earlier, the Agriculture Secretary Emmanuel F. Piñol said the Cabinet Committee on Tariff and Related Matters has decided not to pursue the extension of the QR on rice.


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