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Farmers see reduced rice tariffs depressing palay farmgate prices

FARMERS said that the further reduction of rice import tariffs could dampen palay (unmilled rice) farmgate prices, and estimated the income lost to farmers at P33 billion

The Federation of Free Farmers (FFF) said in a statement that every P5 per kilogram drop in the retail price of the grain could bring down the palay farmgate price by P3 per kilo if “imported rice is being dumped into retail markets.”

Finance Secretary Ralph G. Recto, on Monday, proposed to lower rice import tariffs to 17.5% from 35%, with the government seeking to bring down rice prices by 20% by September.

“Any new tariff reduction will be useless if our foreign suppliers jack up their prices, especially since they know that we have no choice but to buy their rice,” FFF National Manager Raul Q. Montemayor said.

The FFF said that exporting countries took advantage of earlier tariff cuts by raising their prices. Most Philippine rice imports are shipped in from Vietnam or Thailand.

It added that the reduced tariffs had failed to diversify the Philippines’ rice sources, as non-ASEAN (Association of Southeast Asian Nations) countries accounted for less than 4% of imports.

The Department of Finance (DoF) said that the further reduction in rice tariffs could potentially result in P10 billion in foregone revenue for the government.

“When government reduced tariffs on non-ASEAN rice imports from 50% to 35% starting in May 2021, rice retail prices actually rose. Savings from lower tariffs were simply pocketed by importers and middlemen and were not passed on to consumers,” Mr. Montemayor added.

Executive Order No. 50 extended the reduced tariffs on rice imports until December. Rates were kept at 35%, regardless of the minimum access volume and country of origin.

“The main beneficiaries of decreased tariffs will be the relatively well-off, who can better afford to buy good-quality rice,” Mr. Montemayor said.

“Tariff cuts are not needed since import prices are expected to go down soon anyway, as stated by Secretary Recto himself,” he added.

Rice imports amounted to 1.97 million metric tons as of May 23, according to the Bureau of Plant Industry. — Adrian H. Halili