The Federation of Free Farmers (FFF) urged the government to immediately take steps to curb the drastical fall in palay prices following the enactment of the Rice Liberalization Law (Republic Act 11203). Around 1.8 million tons of rice imports have reportedly arrived in the country since January 2019, resulting in a glut that has forced local traders to reduce their buying prices from farmers in order to compete with imports.
Data from the Philippine Statistics Authority (PSA) indicates that farmgate prices have gone down by 23% from their peak in September 2018. With about 2 million hectares and 8 million tons of palay harvested in the first semester of 2019, farm losses as a result of the drop in palay prices is estimated to have reached Php40 billion as of the end of June 2019.
Raul Montemayor, National Manager of the FFF, warned that palay prices may drop even further during the coming main harvest season that will start in September. “Many local traders could not unload their stocks from the previous season due to the large volume of imported rice in the market. Unless they find a way to free up their inventories, they will either stop buying palay, or they will buy at much lower prices in order to cover for anticipated trading losses. Either way, farmers will end up carrying the bag.”, said Montemayor.
Montemayor suggested that the Department of Agriculture (DA) immediately start the process for availing of trade remedies that will allow the government to legally impose additional tariffs on top of the regular 35% tariff for rice imports from Thailand and Vietnam. These include general and special safeguard duties and anti-dumping duties that can be temporarily imposed to address market emergencies and unfair trade practices. By raising tariffs, imports will become more expensive, thereby providing room for local traders to dispose of their stocks and buy again from farmers at higher prices.
Montemayor argued that the imposition of remedial tariffs should not result in higher rice prices for consumers because of the large margin between the cost of imported rice and current retail prices. “Based on data from the Bureau of Customs (BoC), imported rice in coming into the country at around Php 24 per kilo, inclusive of tariffs. But it is being sold at Php 35 or higher at the retail level. At the moment, there is a lot of profiteering going on. Even if import prices go up because of the remedial tariffs, there is still room for retail prices to actually go down.”, explained Montemayor.
The FFF added that importers should be required to secure food safety certificates before bringing in rice from other countries. The FFF learned that, at present, the Bureau of Plant Industry (BPI) only requires a certification that rice imports are free from pests and diseases that can infect local crops. Imports are randomly tested for hard metal content, chemical residues and general food safety only after arrival. “By the time a particular shipment is found to be unsafe for human consumption, the rice would already be out in the market and it would be impossible to trace and retrieve the tainted stocks.”, said Montemayor.
The FFF urged government to attend first to the fall in farmgate prices instead of focusing their attention on the Php 10 billion Rice Competitiveness Enhancement Fund (RCEF). “Not a single centavo of the RCEF can be used to help farmers cope with falling palay prices. Because RA 11203 provided that RCEF funds will be channeled directly to small research agencies instead of through the DA bureaucracy, a lot of time is needed to recruit and train additional staff, put up satellite offices, buy facilities and equipment, conduct biddings and distribute seeds and machineries. Farmers will start receiving help from RCEF only in the first semester of 2020 at the earliest. In the meantime, palay prices continue to fall, and this should be the government’s priority”, said Montemayor.
Montemayor added that the RCEF is actually small compared to the losses that farmers stand to incur due to the flood of imports. “It will help, but it is not the saving grace that some legislators are projecting it to be. RCEF is intended to improve the competitiveness of rice farmers by reducing their costs of production and increasing their yields. This will not happen overnight, nor is success guaranteed. Although RCEF funds can be used for mechanization, better seeds, credit, training and extension, other interventions that are not funded by RCEF such as irrigation, fertilizers and pesticides, and marketing are equally important.”, explained Montemayor.