The Federation of Free Farmers (FFF) urged President Duterte to veto the Rice Tariffication Bill and ask Congress to correct specific provisions that will severely tie the hands of government in addressing rice price spikes and other emergencies in the future. The Bill was submitted to the Office of the President earlier this year and will lapse into law if it is not acted upon within 30 days.
The tariffication bill will remove practically all restrictions on rice imports, and will allow any importer to bring in unlimited volumes of rice from abroad and at any time, even if local farmers are harvesting. Importers will only need to secure a food safety certificate from the Bureau of Plant Industry (BPI). This is in contrast to the present system wherein National Food Authority (NFA) Council limits the volume of imports based on the estimated gap between supply and domestic consumption. Even NFA’s power to import rice if there is a domestic shortage will be removed, since the agency will only be allowed to buy from local farmers for its buffer stocks. The buffer stocks can be released only during calamities and emergencies.
In the domestic market, the NFA’s power to license not only importers, but all players in the rice market, including traders and retailers, will be eliminated. NFA will also stop monitoring the rice trade and will lose its authority to apprehend unscrupulous rice traders and seize contraband stocks. The agency will most likely stop buying from farmers once it acquires sufficient buffer stocks, even if palay prices are going down. In turn, cheap NFA rice will not be available anymore in the market, unless there is a declared calamity or emergency.
Raul Montemayor, National Business Manager of the FFF, warned that the rice tariffication bill as presently crafted will expose the government to serious social and political risks in the future. “The economic thinkers are saying that a free market will ensure that rice prices will go down even without NFA. They could be correct, but what if they are wrong? What if importers collude to bring up prices? What if they refuse to import because prices are too high? What if palay prices suddenly go down because of excessive imports? The government will be practically powerless in all these scenarios under the proposed bill.”, Montemayor explained.
“The tariffication bill should focus only on the removal of volume restrictions on rice imports. This is all what we have to do under our commitments to the World Trade Organization (WTO). The issue of what happens to the NFA and the role of government in the rice trade must be addressed separately, and only after a comprehensive study and following genuine consultations with stakeholders.”, added Montemayor.
The FFF noted that rice prices have already gone down and inflation has stabilized, even while the import restrictions and NFA’s powers are still in place. “The spike in rice prices last year was not because of the import restrictions. Private importers were given a quota of more than 800,000 tons, but they did not fully avail of the quota. Nor was it because of the ineptness of the NFA, because it was the representatives of NEDA, Central Bank, and DOF in the NFA Council who repeatedly rejected proposals to raise the NFA’s palay buying price, or to undertake additional imports, in order to replenish the agency’s stocks. These were the very same agencies who blamed NFA for the rice crisis they created and who now want to render the NFA inutile.”, explained Montemayor.