Possible amendments to the rice tariffication law (RTL) should address the ills plaguing the domestic rice sector, according to policy advocacy group Action for Economic Reforms (AER).
In a position paper submitted to the House Committee on Agriculture and Food, AER said Republic Act (RA) 11203 is just the first step towards improving rice production and efficiency.
The committee conducted a technical working group meeting on Tuesday to discuss the declining farm-gate prices of rice. A number of sectors had attributed this to the implementation of RA 11203.
“The RTL is not a silver bullet. It is a disruptive yet transformative reform but it is not a ‘be-all, end-all’ solution to the age-old problems that beset the rice sector. Even before RTL, the rice sector and agriculture as a whole were already experiencing problems. Rising inflation attributable to food prices, particularly rice was a major problem in 2018,” AER said.
The group said the aim of RTL is to make rice accessible to the public and that it has supported the local rice industry through the creation of the Rice Competitiveness Enhancement Program (RCEP), which is funded by revenues derived from importation.
The P10-billion RCEP provided beneficiaries with seeds, farm technologies, cash transfers and access to credit, it added.
AER said possible amendments to the law should complement RTL’s objectives, owing to the potential of RTL as a “long-term, sustainable solution.”
“There are more transparent and efficient ways to protect the rice industry. One of them is through tariffs, rather than having decades-long quantitative restrictions that have not significantly improved the sector’s competitiveness,” said AER Researcher Patrick Acupan.
“The solution is two-pronged: lower palay’s cost of production and strengthen the ability of farmers to sell palay at good prices. We have to improve the competitiveness of domestic producers—long-term and sustainable solutions are always better than instant or band-aid solutions.”
The House Committee on Agriculture’s Technical Working Group agreed that the lack of drying equipment and facilities forces farmers to sell palay of varying quality. As a consequence, farmers do not have much bargaining power when negotiating prices with traders.
“Implementation of such reforms must continuously be data-driven. We cannot emphasize enough the role of data in this context. The RTL also lacks a reliable forecast that farmers could rely on in predicting the seasonal trends in farm-gate prices and import arrivals,” Acupan said.
AER called on Congress to take a second look at the teeth of the Philippine Competition Commission in going after marketing cartels, an amendment of the NFA Charter to fine-tune its role given the new policy environment, and putting the National Irrigation Administration directly under the Department of Agriculture.
“It [RTL] is a policy doomed to fail when policy-makers turn a blind eye on the binding constraints that the RTL does not inherently address. For this, other complementary policies are urgently needed to complete the reform that RTL started. Hopefully, this will protect farmers from welfare losses while securing welfare gains for our consumers.”
‘Isolated situation’
The National Economic and Development Authority (Neda) said the problem of low farm-gate prices of palay is an “isolated situation,” noting that buying price for the staple remains “generally higher” than quotations recorded last year.
During the hearing, NEDA-Agriculture, Natural Resources and Environment Staff Director Nieva Natural said the reports of some farmers’ groups that palay prices in some areas of the country have gone down are not representing the national situation.
“These [low palay prices] happening in selected areas and for limited durations,” Natural told lawmakers. “The latest preliminary data from PSA [Philippine Statistics Authority] shows that on average price of dry palay in September 2021 is still 3 percent to 5 percent higher than the prices in the same period of 2020 and 2019.”
According to Natural, rice importation due to RTL does not appear to be the primary factor for low palay prices since importation in January to September rose by only 0.51 percent year-on-year.
“We think the low palay prices [that] we experienced in some areas is primary is due to lack of bargaining powers of farmers,” she said.
“For example: they [farmers] are not organized and lack of post-harvest equipment or drying facilities, especially at this time, we are experiencing typhoons or rainy season and hence they forced to sale their palay at a cheaper price to traders because of the high moisture content [of the palay].”
She said the implementing agencies of the RTL should implement appropriate interventions such as strengthening and organizing farmers, and providing them the needed post-harvest equipment and other support interventions to make them more competitive.