The Federation of Free Farmers (FFF) questioned the soundness of the moves of the Department of Agriculture (DA) in allowing the unimpeded entry of rice imports even as it is encouraging farmers to expand their production through a P8.5 billion Rice Resiliency Program (RRP).
DA Secretary William Dar recently revealed that Sanitary and Phytosanitary Import Clearances (SPSICs) have been issued for 2.7 million tons of rice imports and expressed confidence that these imports will materialize after Vietnam announced the resumption of normal rice exports. Secretary Dar also announced that another 300,000 tons will be imported by the government through the Philippine International Trading Corporation (PITC). At the same time, the DA claimed that the RRP will yield an extra 1 million tons of rice and improve the country’s self-sufficiency level from 87% to 93%.
Raul Montemayor, FFF National Manager, warned that the simultaneous expansion of both imports and local production will only lead to depressed farmgate prices. “Based on our computations, we will have an ending inventory by December 31 of this year of 3.9 million tons of rice, good for 110 days, if both these policies are pursued. This will create a glut that will bring down prices during the main harvest season from September to November this year and will even spill over to the dry season harvest from February to April next year.”, explained Montemayor.
“If the DA will allow 2.7 million tons of rice imports anyway, it might as well do away with the RRP and save the government P8.5 billion. We still end up with a comfortable ending inventory of 3 million tons, good for 85 days. The RRP will only result in depressed prices and higher indebtedness and more losses for farmers. A mere one peso drop in farmgate prices will negate whatever gains farmers will get from improved yields from the RRP.”, added Montemayor.
The FFF projected that the situation may even get worse if the recent projection of the US Department of Agriculture of 3.3 million tons of imports materializes and the DA issues the corresponding SPSICs.
The FFF urged the DA to craft a clear-cut and logical strategy on how to maximize local rice production even with the removal of quantitative restrictions (QRs) on imports and the enactment of the Rice Tariffication Law. “There are tools and remedies that are allowed by the World Trade Organization (WTO) and local laws to manage the entry of imports. It depends on whether the DA wants to use them, or it just wants to create a glut so as to bring down palay and rice prices.”, said Montemayor.
The FFF added that it was unfair to allow the unimpeded entry of rice imports when the DA has not yet fully delivered on its promises to provide support to farmers affected by the tariffication law. Recent reports indicate that only about half of the Rice Competitiveness Enhancement Fund (RCEF) budget for 2019 has been released so far, even as another P10 billion is supposed to be disbursed in 2020. There have also been reports of undue delays in the provision of cash transfers, loans, irrigation, seeds, and other support services to affected farmers.