The Federation of Free Farmers (FFF) labeled as “misleading” the recent claims of government officials that the Rice Tariffication Law (RTL) has resulted in a substantial drop in rice prices. The RTL took effect in March 2019 and removed the quantitative restrictions (QRs) and most government controls on rice imports. Nearly three billion kilos of rice were imported during the year, making the country the world’s largest rice importer in 2019.
The Department of Agriculture (DA) and Department of Finance (DoF) have claimed that rice prices have dropped significantly by Php 9 per kilo and attributed this to the liberalization of rice imports following the passage of the RTL. Data from the Philippine Statistics Authority (PSA) appears to partially validate these claims and indicates that prices for regular-milled rice (RMR) declined from their peak of Php 45.57 in September 2018 to Php 36.37 by December 2019. Prices for well-milled rice (WMR), in turn, went down by Php 7.55 per kilo or 15% during the same reference period.
PERIOD REGULAR-MILLED RICE WELL-MILLED RICE
The FFF however has noted that around 70% of the drop in both RMR and WMR prices occurred between September 2018 and March 2019, or before the RTL took effect. Of the Php 9.20 drop in RMR prices, Php 6.54 occurred during the eight-month period prior to the enactment of the law, and prices went down further by only Php 2.66 per kilo from March to December 2019 For WMR, 11% of the total 15% drop in prices took place before the RTL became operational. “The claim that the RTL was responsible for the large drop in rice prices is therefore misleading. Official data shows that the bulk of the price decline actually happened before the law took effect. Prices dropped between September 2018 and March 2019 because the government authorized the importation of large volumes by the NFA and the private sector in response to the 2018 rice crisis.”, said Raul Montemayor, National Manager of the FFF. “This actually shows that the government could have prevented the rice crisis in 2018 if they acted sooner, even though the rice QRs were still in place. They did not have to wait for the RTL to be enacted into law. And it is intellectually dishonest for them to now claim that the drop in rice prices was primarily due to the RTL.”, added Montemayor. Additional data from the PSA also shows that while rice prices declined in 2019 when compared to 2018 levels, they remained higher than 2016 and 2017 price levels even after the RTL took effect. RMR prices for example averaged Php 37.50 per kilo during the first ten months of RTL implementation from March to December 2019. This was higher than the 2016 average of Php 36.67 and 2017 level of Php 37.09 per kilo. Similarly, average prices for WMR during the initial RTL implementation period were consistently higher than prices in 2016 and 2017 during which QRs were still in place.
“Official data actually shows that the RTL has not delivered the promised benefits to consumers. RTL proponents were arguing that QRs on rice imports had resulted in rice prices which were double or even triple what consumers in Thailand and Vietnam were paying for rice. Others claimed that rice prices would become cheaper than Php 27 NFA rice if imports are allowed to freely come in. All these claims have not materialized, and official government data shows that consumers were in fact better off in 2016 and 2017 when the QRs were still in place.”, said Montemayor. The FFF has joined calls for an urgent review and amendment of the Rice Tariffication Law to address defects and problems that have emerged during the initial implementation of the law. “It appears that some government officials are exaggerating the supposed benefits of the RTL to make it appear that rice liberalization is working smoothly and that there is therefore no need to amend the law.”, said Montemayor.