Devastating and disappointing

September 05, 2019

It was touted to be a sort of magic bullet to help both rice farmers and consumers. Yet six months after the Rice Tariff Law took effect, the situation is turning out to be a nightmare, especially for the farmers.

The impact of the new law, Republic Act No. 11203, has been painful and quite swift for rice farmers who are incurring losses due to falling palay prices amid the unimpeded deluge of imported rice. The national average farmgate price of palay dropped to P17.62 per kilo in the second week of August, a 20.9% slide compared to the same period last year, according to Philippine Statistics Authority.

Other reports said that also in August, “farm gate prices of paddy rice dropped to a record low of P12 per kilogram (kg) to P14/kg in many parts of the country, a steep drop from an average of P20/kg price for fresh palay earlier this year.”

And just the other day, published reports revealed that “farmers in Nueva Ecija, Isabela, and Ilocos Norte provinces said the average farmgate price of palay had dropped to as low as P7 per kg” and that many rice traders and millers have stopped buying local grains because of so much imported rice coming into the country.

The devastating situation affecting rice farmers is not about to end as the worst is yet to come with the start of harvest time this September. With continued decline of prices of palay, local farmers are in for staggering losses estimated at P114 billion for this year alone.

The Federation of Free Farmers (FFF) also revealed alleged undervaluation of imported rice to evade tariffs that are estimated to reach P4.24 billion so far.

The Bureau of Customs reportedly collected P5.9 billion from the importation of 1.43 million metric tons (MMT) of rice. “P5.9 billion generated from 1.43 MMT worth of imports at a P52 to the dollar exchange rate suggests a landed cost of $227 per metric ton, much lower than the estimate provided by the United Nations Food and Agriculture Organization (FAO) of $391 for the 25% broken gains variety,” an FFF statement said.

“Most of the private sector imports were for 5% broken rice which commands a higher price in the market and offers a better profit margin for traders. This type of rice should have landed at $422 per ton at the lowest, instead of just $227,” the FFF said.

A Rice Competitiveness Enhancement Fund (RCEF) worth P10 billion was envisioned under Tariff Law to make local rice farmers “globally competitive” but with undervaluation on rice imports, the FFF warned that “tariff collections may not breach the P10 billion threshold, or the excess may be too small to provide any meaningful assistance to affected farmers.”

While the adverse impact of the new law has been swift on farmers suffering from the drastic drop in palay prices, the opposite is happening for consumers who have yet to fully feel the supposed beneficial impact of more rice imports. Retail prices of well-milled rice have not budged as much and the little decline in prices has been slow in coming.

“Retail prices in the second week of August down just 7.3 percent to P42.71/kg from P46.06/kg last year. Week on week, retail prices even bafflingly went up from P42.59/kg,” a report said, pointing to huge profits in rice trading. “It is the trader who is making profit at the expense of both the farmer and the consumer,” according to Alyansa Agrikultura chair Ernesto Ordoñez.

“Traders are so into importing right now because they feel like no one is controlling the prices, their margin of profit is too big and that is not the intent of the law,” former Agriculture Secretary Manny Piñol had said. “Because of the good profit, everybody would like to import to the detriment of the Filipino farmers, no one wants to buy local anymore.”

But current Agriculture Secretary William Dar has acted to ease the burden of Filipino farmers. He asked provincial governments to participate in economic enterprises by allocating P200 million each for palay procurement and buying palay at P17/kg directly from marginalized farmers. He also facilitated a P1.5 billion fund to provide needy rice farmers with a zero-interest loan of P15,000 from the Land Bank, payable up to eight years.

Still, government needs to do more and act swiftly to achieve the intended benefits of the Rice Tariff Law for rice consumers and farmers alike.