The Federation of Free Farmers (FFF) urged the Department of Agriculture (DA) to properly manage rice imports while encouraging farmers to expand their production amidst the COVID crisis. In a recent public statement, DA Secretary William Dar announced that the government had approved a Php 8.5 billion supplemental budget for a DA Rice Resiliency Project that would improve the country’s level of rice self-sufficiency and make it less reliant on imports.
The DA statement indicated that the total rice requirement of the country for 2020 would be 14.46 million metric tons (MTs). The DA’s regular programs amounting to Php 17 billion would generate an output of 12.6 million MTs, equivalent to 83% of the country’s requirement. The supplemental program would in turn yield an additional 867,184 MTs, bringing the self-sufficiency level to 93%. The balance of 7% of national requirements, or 978,392 MTs of rice, would then be serviced by imports.
The FFF questioned the DA’s assumption that imports would be limited to 7% of local requirements given that the Rice Tariffication Law (RTL) has removed all restrictions on the volume and timing of imports. It warned that if cheap rice imports continue to flood domestic markets, it could create a serious glut that would depress palay prices and ultimately discourage farmers from expanding their production.
“Secretary Dar just recently announced that import sanitary permits have already been issued for 1.8 million tons of rice, and that the DA is now interceding with exporting countries like Vietnam to honor their supply contracts for these imports. He added that the government itself is planning to import another 300,000 MTs. If all these imports come in, we would end up with a surplus of over a million tons in 2020. This glut will inevitably lead to a fall in palay prices and end up penalizing the very rice farmers that the DA wanted to support.”, explained Raul Montemayor, FFF National Manager.
“In fact, the 2.1 million MTs of rice imports are already more than enough to cover the domestic shortfall in production, even without having to spend Php 8.5 billion for a supplemental program. There is also nothing to stop additional imports from coming in during the second half of the year. However, this will further discourage our farmers to plant and make the country even more dependent on imports for its food staple.”, added Montemayor.
The FFF urged the DA to carefully calibrate the entry of imports in order to avoid the recurrence of a supply glut that resulted in a drastic drop in palay prices in 2019 following the enactment of the RTL. It reiterated its proposals for the DA to avail of trade remedies such as safeguard duties that will allow the government to temporarily impose additional tariffs on rice imports in order to mitigate the harm inflicted on local rice farmers.
The FFF also followed up on its earlier call for the Department of Finance to look into the reported undervaluation of imports and misapplication of tariff rates on rice imports.
The FFF further advised the DA to review the cost-efficiency of its interventions under the proposed Php 8.5 billion Rice Resiliency Program. “The figures indicate that the DA will end up spending Php 9.80 for every additional kilo that will be produced under the new program. In comparison, the regular rice program will spend only Php 1.35 for every kilo of output. If the DA is able to find more cost-effective ways to increase local production, it can provide support to more farmers and to a larger area without any additional cost to the government.”, said Montemayor.