Philippines. Removal of rice import quota seen to lower rice prices

07.12.2016

The lifting of quantitative restrictions (QR) on rice imports next year can lower prices of locally grown rice which may bode well for the country’s food inflation.

In a statement, the National Economic and Development Authority (NEDA) said the removal of QR for rice imports by July 2017 is expected to decrease prices of well-milled rice by P7.00 and farm gate price by P5.00.

“We must help our rice farmers prepare for this and help them transition to higher value crops as we ensure food security and make basic prices more affordable to the poor,” said NEDA Director-General and Socioeconomic Planning Secretary Ernesto M. Pernia.

This, after food inflation remained unchanged in November 2016 at 3.5 percent, with rice prices breaking its five-month long increasing trend and corn prices continuing in its downward trend since August.

Rice prices account for 38 percent of total food inflation.

“The decrease in rice prices signals the recovery of the rice sector from the devastation of typhoons Karen and Lawin. We must foster technological advances in agriculture to decrease the susceptibility of our crops to natural calamities,” said Pernia.

Inflation in November 2016 slightly rose to 2.5 percent from 2.3 percent in the previous month due to the increase in the prices of major non-food commodities.

“The increase in inflation can be attributed to the increase in domestic prices of petrol products, which comprise the bulk of the non-food commodity basket usually purchased by the average Filipino household,” added Pernia.

Non-food inflation increased due to the uptick of prices in all major non-food items such as housing, water, electricity, gas and other fuels (1.3 percent from 0.9 percent), and transport (0.5 percent from 0.2 percent).

“Overall we expect the full year inflation for 2016 to be well within the government’s inflation target band of 2 to 4 percent. The overall balance of risks is tilted on the upside, with supply-side factors as the main contributor to price adjustments,” added Pernia.

He explained that international and domestic risks are tilted upward from a possible rally in oil prices, depreciation of the peso against the United States dollar, and pending petitions for electricity rate increases.

Special fund to support rice farmers

Meanwhile, a lawmaker at the House of Representatives is pushing for the creation of a special fund for rice farmers to ensure sustainable rice production amid the imminent lifting of the QR on rice by 2017.

“We need to create a special fund for rice farmers. The revenue to be collected from rice import tariffs should be used to ensure a healthy rice economy that leans toward helping our farmers cope with the worst-case scenario once the rice quantitative restriction is lifted next year,” Occidental Mindoro Rep. Josephine Ramirez-Sato said in a statement on Tuesday.

Sato made the call after meeting with Pernia, who assured her that the Duterte administration intends to use revenues from the planned imposition of tariff on imported rice to support rice farmers.

Sato expressed concern that resource-poor farmers, particularly rice producers, would not be able to compete once imported rice start to flood the market.

She said many rice farmers remain landless and had to cope with the challenge posed by excessive rice importation.

“The government should put in place necessary measures as safety nets in the form of direct support to the farmers particularly those with small landholdings, such as seed and fertilizer subsidies, free irrigation; training to improve production, packaging of rice products, and access to emerging market chains,” she reiterated.

She said the Department of Agriculture (DA) and other agencies involved in promoting food self-sufficiency and security should come up with programs that would boost local rice production and allow farmers to compete against cheaper, imported rice.

The Occidental Mindoro solon said that while consumers would generally benefit from the expected flood of imported rice, the scenario would surely “kill” rice farming, which is the way of life for many farmers in the countryside.

Sato is also worried that the lifting of the QR on rice would force farmers to shift to planting other crops, or worse, give up farming, adversely affecting the country’s rice self-sufficiency goals in particular and food self-sufficiency in general.

“The unrestricted or unregulated importation of rice would not only affect farmers, but would also slow down agricultural production, affecting the country’s economic growth,” she said.


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