OBEISANCE TO FOREIGN creditors’ dictates in exchange for loans, dismal production support to farmers and the obvious preference for shortcuts to supply distortions, through increasing rice imports have all led to the miseries of rice farmers, most of whom can’t even exist at current farmgate prices and would be forced to sacrifice their children’s education– their only gateway out of the clutches of worsening poverty.
Because of previous government’s desire to get more loans to fund projects and programs that the yawning budget deficit could not afford, the farm sector had to grapple with the Rice Tariffication Law, which emasculated, if not defanged, the National Food Authority and left the sector at the mercy of rice merchants and importers– who mostly behaved in a cartelized fashion and a department that adopted as first option increasing rice imports to stave off any supply shortage and surging prices for the grain.
The abrupt jumps in rice importation prompted the government to impose through EO 62 that took effect in June 2024, which reduced the tariff from 35 to 15 percent, in the hope that local retail prices would drop, which did not. Now, the DA is recommending the return of tariff to 35 percent as a protection to local farmers, whose produce have suffered miserably with farmgate prices for palay (unhusked rice) dropping to as low as P8/kilogram.
Through all these, traders and importers had their heyday– manipulating supplies to force prices further up.
Not even the new law defining hoarding, price manipulation and operating as a cartel as economic sabotage deterred them from pursuing their illegal activities.
FARMERS ARE SUFFERING
The combined effects of indecently low farmgate prices for palay and the damage wrought by successive typhoons and habagat in July causing flooding of rice fields and destruction to farm infrastructure, have further pushed farming to the brink of death.
A sharp drop in palay (unhusked rice) prices may force thousands of children from farming families to drop out of school, as incomes plunge and households struggle to meet basic expenses, Bilyonaryo quoted Magsasaka Partylist chair Argel Joseph Cabatbat.
Cabatbat said families are reaching a “tipping point,” citing income losses caused by declining farmgate prices and recent flooding.
“For farming families, education is often the first thing to be sacrificed during a financial crisis… when their harvest is wiped out due to low palay prices and the recent flooding, they lose not only their income but their ability to pay for school fees, supplies and transportation,” Cabatbat said.
Bilyonaryo mentioned an earlier warning of the Federation of Free Farmers that the ongoing crisis has already cost local rice farmers an estimated P54 billion in income.
Cabatbat added that studies have shown a direct link between income levels and school attendance. “As losses mount, students may be forced to drop out and contribute to household income.”
[T]raders and importers had their heyday– manipulating supplies to force prices further up. Not even the new law defining hoarding, price manipulation and operating as a cartel as economic sabotage deterred them from pursuing their illegal activities.
BRING BACK NFA’S POWERS
The DA and several agriculture groups are lobbying for amendments to the RTL, the very source of agriculture’s dismal state by liberalizing rice imports and stripping the NFA of its regulatory functions in 2018, to just maintaining buffer stocks of only 15 days (up from 9 days previously) for emergency requirements like typhoons.
However, RTL does not provide a clear mechanism for disposing of old inventory, leading to warehouse congestion during peak harvest seasons.
The government declared a national rice emergency earlier this year to allow the NFA to clear out old stocks, citing elevated retail prices.
While prices have since stabilized, the declaration remains in effect, enabling the agency to sell its inventory through the state-owned Food Terminal Inc. and distribute it via Kadiwa stores.
RESTORE OLD TARIFF RATES
The rice sector is urging the government to immediately restore import tariffs and set price thresholds to protect local farmers from sharply falling palay (unmilled rice) prices ahead of the main harvest season, Bilyonaryo reported.
The National Sectoral Committee (NSC) for rice under the Philippine Council for Agriculture and Fisheries convened an emergency meeting July 28 with Department of Agriculture Undersecretary Christopher Morales to address the crisis.
With palay prices dropping to as low as ₱8 per kilo in some areas, the NSC recommended reinstating the 35 percent tariff and establishing a palay price trigger to activate import safeguards once breached.
The meeting follows an earlier NSC roundtable in Clark, Pampanga, which focused on enhancing stakeholder engagement and consultation processes.
“The Rice Tariffication Law (RTL) actually allows us to raise tariffs to as much as 35 percent for imports from ASEAN countries and 198 percent for non-ASEAN rice. It also permits the imposition of so-called safeguard duties, or even a temporary import ban, to arrest an import surge,” said FFF national manager Raul Montemayor adding that “the government does not have to wait for an amendment to the RTL to do all these.”
RAISE TARIFFS ASAP
The FFF and other agricultural groups have been pressing the government to increase tariffs to address a nationwide freefall in palay prices, which has cost farmers an estimated ₱54.5 billion and resulted in billions of pesos in lost government revenue.
The surplus supply has also disrupted rice traders and millers, while many farmers are reportedly defaulting on loans.
The government’s failure to adjust tariffs is reportedly discouraging planting, raising concerns over the country’s growing dependence on imports.
“The government must act now instead of pointing the finger at allegedly unscrupulous rice traders or the need to first amend the RTL,” Montemayor said.
While the FFF recognizes the need to amend the RTL, it warns against reverting to the previous system marred by corruption and massive government losses. Proposed reforms should instead focus on enhancing industry monitoring and regulation and granting the National Food Authority greater flexibility in managing rice supply and demand.
“The government should intervene only when rice prices go up too high, or palay prices fall below a certain benchmark. There may be no need for aggressive NFA palay buying or rice selling if the government is able to manage the entry of imports to prevent either supply shortages or gluts,” Montemayor added.