The Department of Agriculture (DA) has filed a petition with the Tariff Commission to lower the most favored nation (MFN) tariff on rice imports to 35 percent.
The move is aimed at expanding the options of traders for sources of rice imports, according to Agriculture Secretary William D. Dar, who kept his response short when asked about the petition.
At present, the in-quota tariff for rice imports or those within the minimum access volume (MAV) is at 40 percent while those outside the MAV (out-quota) are at 50 percent.
“More sources,” Dar said in an SMS response to the BusinessMirror last Thursday when asked about the Cabinet-level Committee on Tariff and Related Matters’ (CTRM) endorsement of a petition to reduce pork and rice tariffs.
The Tariff Commission is set to conduct a hearing on the DA’s petition this Thursday.
However, the DA’s proposal to reduce tariffs did not sit well with industry groups, as they claimed there was no industry consultation conducted prior to submitting the petition.
In a statement, the Federation of Free Farmers (FFF) said the DA’s proposal to reduce tariffs on rice from non-Asean countries is “unwarranted and ill-timed.”
FFF said that there is no need to reduce tariffs for rice imports outside of Asean since the country has ample supply as repeatedly pronounced by Dar.
The group added that data from the Philippine Statistics Authority (PSA) showed that both well-milled rice (WMR) and regular-milled rice (RMR) prices are even lower than their 2019 levels.
“From July 2020, prices had shown a continuous downtrend and reached their lowest level of P40.75 per kilo for WMR and P36.09 per kilo for RMR in December 2020,” it said.
“The local price declines occurred despite the increase in international prices of rice, particularly those coming from Vietnam and Thailand.”
FFF National Manager Raul Q. Montemayor said imports from countries like India and Pakistan, which will benefit from the lower applied MFN rates, “are still cheaper than comparable products from Asean countries like Vietnam and Thailand even if they are assessed a higher 50-percent tariff. “
Montemayor added that the savings from lower tariffs on rice imported outside of Asean would be passed on to consumers.
“This sudden proposal of the DA is totally unjustified. It is a stab in the back of our rice farmers, who are still reeling from the drastic fall in farm-gate prices caused by excessive imports in the last two years following the enactment of the Rice [Trade Liberalization] Law,” he said.
“Why encourage more and cheaper imports now when local supply is more than enough, and prices are very stable?”
Philippine Chamber of Agriculture and Food Inc. President Danilo V. Fausto said lowering the tariffs on rice imports outside of Asean would pose competition to local producers who are adjusting to a new trade regime.
Fausto argued that it will also cut the government’s revenues from rice tariffs, which are being earmarked for productivity support programs for the rice sector.
“We have record production of crops, of palay. We have to sustain that. Pursuing this proposal would discourage farmers to [plant],” he told the BusinessMirror.
Unmilled rice output last year rose to an unprecedented 19.294 million metric tons volume, slightly eclipsing the previous record of 19.28 MMT in 2017.
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