February 9, 2018

MANILA— Majority of Filipino families will benefit from lower retail prices of rice, which is the likely result once the amendment of the agricultural tariffication law is enacted, the National Economic and Development Authority (NEDA) said.

Amending Republic Act (RA) No. 8178, otherwise known as the Agricultural Tariffication Act” of 1996, is expected to ease the temporary inflationary impact of the newly implemented tax reform law, besides world oil prices, as well as increase savings of a Filipino household.

“About 93 percent of Filipino households are rice consumers and they stand to benefit from lower price of rice. It is high time that the bill amending the two-decade-old law is passed,” Socioeconomic Planning Secretary Ernesto M. Pernia said.

According to NEDA’s preliminary estimate, headline inflation rate would be reduced by 1 percentage point if the domestic wholesale rice market reduces its price to the level of imported rice. Even with just a PhP1.00 per kilo reduction in the wholesale price of rice, headline inflation rate would also be reduced by 0.3 percentage points.

At 35 percent tariff rate, the landed cost of imported rice, particularly from Thailand and Vietnam, along with its transport cost to the local market would be around PhP30.30 per kilogram. This is about PhP4.31 lower than the domestic wholesale price of regular milled rice.

The price reduction of PhP4.31 per kilogram will enable a Filipino household of five to save as much as PhP2,362 per year.

“This amount of savings could mean a lot to ordinary Filipinos especially to those struggling to make ends meet,” Pernia said.

Pernia explained that this amount of savings is equivalent to about 13 percent of a household’s average rice expenditure of PhP17,921 as indicated in the 2015 Family Income and Expenditure Survey.

The passage of the bill amending RA 8178 will pave the way for the lifting of the quantitative restriction on rice imports and the imposition of 35 percent tariff on rice coming from member-countries of the Association of Southeast Asian Nations (ASEAN) like Thailand and Vietnam.

Since the Philippines became a member of the World Trade Organization (WTO) in 1995, it had secured a waiver to extend the imposition of QR on rice imports several times to allow local farmers to prepare for competition.

With the expiration of the Philippines’ “Waiver on the Special Treatment of Rice” last 30 June 2017, there has been increasing pressure from WTO member countries for the Philippines to fulfill its obligation to tariffy rice, Pernia said.

President Rodrigo Duterte’s issuance of Executive Order (EO) no. 23, series of 2017, which extended the concessions accorded to selected WTO countries, does not provide full guarantee that the Philippines will not be subjected to dispute in the coming months.

Meanwhile, Secretary Pernia noted that the tariff revenues to be generated will be plowed back to local farmers through the Rice Competitive Enhancement Fund (RCEF) to support projects that will modernize the rice industry and enhance its efficiency.

Part of the fund will be used to directly support rice farmers, especially those who will initially be displaced by the removal of the QR, to diversify into other economic activities.