Rice farmers from various parts of the country have demanded that the government retain the NFA’s price support program for palay to help farmers cope with the projected decline in palay prices as a result of liberalized rice imports. Last February 14, 2019, President Rodrigo Duterte signed the Rice Tariffication Law which effectively removes all restrictions on rice imports. The Department of Agriculture (DA) is currently conducting a series of consultations with stakeholders in order to comply with a March 5, 2019 deadline set by the NFA Council to complete the Implementing Rules and Regulations (IRR) of the tariffication law.
During the recent IRR consultations in Munoz, Nueva Ecija and Lipa City, Batangas, many farmers reported that palay buying prices have declined to as low as P12-15 per kilo compared to over P20 last year due to apprehensions of private traders over the influx of cheap imported rice. Some trader-millers have reportedly stopped buying for fear that they will be unable to unload their stocks at a profit once the imports are allowed to come in. Palay prices may go down further once the tariffication law and its IRR are finally enforced.
At present, the NFA buys palay from farmers at P17 per kilo and the DA adds incentives of a little over P3 per kilo. However, the tariffication law appears to limit the role of the NFA to maintaining buffer stocks, and it is unclear if it can continue to buy palay from farmers even if it has already accumulated enough buffer stocks. Some DA officials opined that the law provides room for price support activities, although it will be up to the NFA Council to decide. Others have argued that the tariffication law is intended to remove any form of government intervention in the rice business, including buying palay from farmers at a support price.
Raul Montemayor, National Manager of the Federation of Free Farmers (FFF), stressed that government price support programs are not prohibited under the rules of the World Trade Organization (WTO) even when the quantitative restrictions on imports are removed. “In fact, the Philippines was able to successfully lead the campaign in the WTO to exempt such public stockholding programs from any monetary limit or restriction. This is in recognition of the fact that such programs are intended to assist poor farmers.”, said Montemayor.
Leonilo Binalangbang, chairman of a farmer cooperative in San Jose, Occidental Mindoro, deplored the apparent lack of planning and preparation of the government to assist farmers once the tariffication law takes effect. “It will take time before the mechanization, seed and other programs of the government will be able to reduce the cost of production of local farmers and enable them to compete with imports. But the effect of these imports will be immediate and could be deadly. That is why we believe the NFA should be allowed to continue buying from us at the support price in case palay prices drop because of the imports. Otherwise, many farmers will go bankrupt.”, said Binalangbang. He further lamented the fact that the NFA has been given a procurement budget of only P7 billion for 2019 which is good for only for around 8 days supply of rice equivalent. This is despite the fact that the buffer stock is supposed to provide the country’s food requirements for at least 15 days.