The Federation of Free Farmers (FFF) questioned recent claims of some government officials that the Rice Tariffication Law (RA 11203) has resulted in a significant decline in rice prices. RA 11203, which took effect last March 2019, removed the quantitative limits on rice imports and now allows the entry of unlimited volumes of rice from abroad provided the proper tariffs are paid. In advocating for the passage of the law, the country’s economic managers claimed that local consumers were paying double what their ASEAN counterparts were paying for rice and that rice prices could go down by up to Php 10 per kilo once imports are allowed to freely enter the country.
Raul Montemayor, National Manager of the FFF, acknowledged that rice prices have gone down in recent months. Data from the Philippine Statistics Authority (PSA) indicate that prices for well-milled rice have gone down to Php 42.92 in June 2019, or by about Php 6 per kilo from their peak price of Php 49.36 in September 2018. Retail prices of regular milled rice went down by Php 7.54 per kilo during the same period.
“What is interesting to note however is that the present retail prices of rice are actually higher than in 2016 and 2017, when the quantitative restrictions on rice imports were still in effect and RA 11203 had not yet been passed.”, said Montemayor. “The spike in prices in 2018 was abnormal and was caused by the refusal of the economic managers to allow the NFA to replenish its dwindling stocks. It was only when President Duterte intervened and allowed the NFA and the private sector to import that prices started to go down. Therefore, it is unrealistic to compare current prices against prices during the rice crisis in 2018. It is also deceptive to attribute the current decline in prices to the Rice Tariffication Law.”, explained Montemayor.
The FFF further noted that palay prices have continued to go down, averaging Php 17.85 per kilo in June 2019 compared to Php 23.15 in September 2018 based on PSA data. This represented a 23% decline in farmgate prices, compared to only 13% for well-milled rice and 16% for regular milled rice during the same reference period. The FFF added that palay farmgate prices were generally lower in 2019 compared to prices in 2016 and 2017 when the import restrictions were still in place.
“What is most painful to farmers is that their sacrifices are apparently going to waste because consumers are not getting the full benefits from the decline in palay prices and the entry of supposedly cheaper imports. The PSA data in fact appears to show that both consumers and farmers were better off when the quantitative restrictions were still in place, if we exclude the abnormal price movements in 2018.”, said Montemayor.
The FFF also cautioned the government against its move to impose suggested retail prices or SRPs on rice. “It may be true that some importers and traders are earning extraordinary profits at the expense of consumers. However, traders can again use the cap on rice prices as an excuse to buy at even lower prices for farmers. At this point in time when rice prices have normalized, government must focus on addressing the problems of small farmers, specially since the main harvest season is about to begin.”, said Montemayor.