The Federation of Free Farmers (FFF) decried the mangling of the Rice Competitiveness Enhancement Fund or Rice Fund which was originally intended to help rice farmers adjust to competition once the quantitative restrictions (QRs) on rice imports are removed. Last November 14, 2018, the Senate passed Senate Bill 1998 on third reading after its approval was certified as urgent by President Duterte. The bill allows for the free flow of rice imports into the country without any licensing and other restrictions from the NFA. Tariff collections from rice imports will be placed in the Rice Fund and earmarked for competitiveness-enhancing programs for rice farmers.
Senate Bill 1998 was sponsored by Senator Cynthia Villar, Chairperson of the Senate Committee on Agriculture and Food, and was reportedly unanimously approved by fourteen senators present during the Senate session. A bicameral committee will now be convened to reconcile the conflicting provisions of the Senate and House versions of the tariffication bill.
Dioscoro Granada, Secretary-General of the FFF, noted several defects in the Senate bill’s provisions on the Rice Fund. “Logically, the government should first complete a long-term development plan for the rice industry before it allocates the funds and resources to support the plan. The Senate bill does the opposite by pre-allocating the Rice Fund for various programs while requiring the DA to complete the Rice Road Map 180 days after the passage of the law.”, Granada explained.
“The Senate has also allocated the Rice Fund directly to several line agencies of the DA and other departments, thereby bypassing the DA Secretary. And yet, the bill states that the DA Secretary will be responsible and accountable for the Rice Fund. In addition, the Senate has rejected proposals for rice farmers and other stakeholders to participate in the crafting of policies for the use of the Fund and in monitoring projects supported by the Fund. In contrast, the Senators preserved the prerogative of Congress to oversee fund usage, alter the allocation of funds, and have the final say in how the funds will be used every year. Maybe they should just place the DA under the Senate.”, added Granada.
Raul Montemayor, National Manager of the FFF, warned that the use of the Rice Fund could easily be politicized under the provisions of the Senate Bill. “Even LGUs will be allowed to receive grants for machineries and farm equipment and compete for the funds with farmers. Only P10 billion from import tariff collections will automatically go into the Rice Fund. Congress will decide how to use any excess tariff collection through the annual budget. This could open the door for politicians to dip their fingers into the Rice Fund for their pet projects or constituencies.”, explained Montemayor.
Montemayor added that the Rice Fund will not be able to offset the loss in incomes of farmers resulting from the entry of large volumes of cheap imported rice. “With an annual palay output of about 19 million tons, of which two-thirds are sold in the market, every one peso decline in palay prices will mean P12.7 billion in losses to rice farmers. NEDA is projecting that rice prices will decline by at least P7 per kilo, which will mean an equivalent P4.50 peso decline in the price of palay. Rice farmers therefore stand to lose nearly P60 billion every year. The P10 billion Rice Fund is very small compared to these potential losses.”, said Montemayor.
“Worse, the Senate Bill has not provided for any other meaningful safeguard to protect rice farmers from a sudden decline in palay prices. NFA’s price support program for farmers will be effectively curtailed because the agency will just focus on buffer stocking. NFA’s power to license not only importers but even millers, retailers and other market players will be removed. Experience has shown that the Safeguard Measures Act (R. A. No. 8800) that could allow the government to impose additional tariffs in case of a surge in imports has been ineffective and inaccessible. Now, with the way the Rice Fund has been reconfigured by the Senate, there are serious doubts whether this Fund will be of any significant help to rice farmers. In effect, while the Senate has gone all out to lower the price of rice for consumers, it has effectively abandoned the rice farmers and left them on their own.”, Montemayor added.