The panic (and fear) about uncontrollable inflation and its short term impact on the country’s economic performance led to an ill-planned, myopic regulation in Executive Order 62 – which reduced import tariffs on rice and other basic food items from 35 to 15 from July 2024 to 2028.
Threatened by cases filed before the High Tribunal calling for a temporary restraining order or injunction filed by various farmers’ groups and another one before the Ombudsman’s office for abuse of authority and lack of consultation with stakeholders, the National Economic and Development Authority (which President Marcos Jr. heads and signed the EO 62 last week) is now saying that it is open to “tweaking” and adjusting such tariff on imported rice and other food products as the need arises.
In the first place, why did the NEDA Board (chaired by the President and is composed on numerous Cabinet members) recommend such a position without “proper consultations and dialogues” with the sectors to be affected (as claimed by farmers), principally the rice, hog and other farmers, who are already wriggling from a losing agriculture sector and would be further squeezed into oblivion by this EO?
Curiously, the EO comes months before a midterm election in 2025 (national for senators and local for congressmen and LGU officials) and for which the administration and its allies badly need campaign funds.
The impact of surging imports would reduce local retail prices of rice and other food items for the benefit of (voting and non-voting) consumers (including farmers).
The new pronouncement from NEDA somehow expects to quell the uneasiness of farmers’ groups, some stakeholders said.
Open for adjustment
Reports quoting NEDA Secretary Arsenio Balisacan said the government is open to adjusting tariff rates on rice imports if global prices show a steady decline.
“If world prices are going down, then you have to do what you can to adjust the tariff, that’s what many countries do. If the situation changes, the government must have that flexibility to re-examine its tools,” Balisacan said. (A lot of promises but no commitment in writing).
Under the order, the in-quota and out-quota tariff rates for rice will be reviewed every four months. The NEDA is tasked to submit its recommendations to the President through the Office of the Executive Secretary.
Retail prices
Meanwhile, retail prices of rice are expected to drop to as low as P40 per kilo as early as July once EO 62 takes effect. Clearly this is what the government wants, but at what cost to farmers?
“We expect that the prices for well-milled rice… to drop to P45 to P46 [per kilo], for regular-milled rice, it will range between P40 and P42, and P43 [per kilo]. For premium rice, it would range around P47 to P48 [per kilo],” Orly Manuntag, spokesperson of the Grain Retailers Confederation of the Philippines, the group that tends to benefit most from import surges.
House Speaker and Leyte Representative Ferdinand Martin Romualdez said the lower tariffs will likely bring down average rice prices to P45 per kilo in Metro Manila. (Here goes the promising campaign pitch).
While reduced import tariff would benefit the consumers, lowered tariffs would be detrimental for the local rice industry if left unchecked,” warned Eleaner Roque, tax principal of P & A Grant Thornton to Business World.
She warned that “lowering the cost of imported rice without looking at how the local farmers can compete may be detrimental in the long term. The government should evaluate both short-term and long-term solutions for food sufficiency without neglecting the needs of our local farmers.”
Enrico P. Villanueva, a senior lecturer at the University of the Philippines Los Baños Economics Department, said only 20 percent of the country’s rice supply.
Raul Montemayor, national manager of the Federation of Free Farmers told Business World that reducing rice prices to as low as P40 is not realistic unless the government would only import low-quality rice.
“At current cost, insurance and freight rate of $600 per ton… the exit pier costs would be at P40.71 per kilo, Add in profit margins, freight, and handling costs, the retail price will be approximately P50 per kilo,” Montemayor said.
“I don’t see how they can sell rice at only P40 per kilo. The only way this can happen is if the cost, insurance, and freight costs go down to $500 or they bring in cheap and low-quality rice,” he added.
#WeTakeAStand #OpinYon #NEDA