Finance Secretary Ralph Recto estimates the government’s foregone revenues from the reduced tariff rate on imported rice will amount to roughly P20 billion this year.
“At 15 percent for the year, my estimate is roughly about P20 (billion), P22 billion,” Recto told reporters last Friday.
The National Economic and Development Authority (NEDA) Board earlier agreed to reduce the duty rate to 15 percent for both in-quota and out-quota rates from 35 percent until 2028, with the aim to lower the price of rice further and make it more affordable.
“We are reducing inflation. And once we’re able to reduce inflation, hopefully we can reduce interest rates. And that will create more growth so we can recover those what you claim to be losses,” Recto said.
The finance chief however said the government is not relying on rice importation.
“Let me put it this way as well. We are not relying on importing rice. That is on the short term. We continue to, part of our Philippine Development Plan, is to increase rice productivity. We will continue to make those investments with our farmers, irrigation, mechanization, so on and so forth; post-harvest facilities. So the time will come that we do not have to import our food requirements, particularly rice,” Recto said.
“ We are not abandoning our farmers. In fact, we will be investing more. If you look at the record, in 2022, the budget of the Department of Agriculture was only something like P80 (billion) to P85 billion. Today, it’s roughly P200 (billion) to P220 billion. So that’s a significant increase. And I expect another increase in 2025,” he added.
NEDA Secretary Arsenio Balisacan previously said rice contributed about two percentage points, or over 50 percent, to the headline inflation in the past three months.
“So if you are able to reduce the price of rice, then its contribution to inflation would dramatically go down,” Recto said.
Balisacan said even at the reduced rate of 15 percent, the rice sector continues to enjoy comparatively high tariff protection from competitive imports as the tariff is higher than for the 90 percent of the total 11,484 tariff lines under the Asean Harmonized Tariff Nomenclature 2022.
In a statement, the Samahang Industriya ng Agrikultura (SINAG) said to pull down retail prices of rice, the government must instead provide production subsidies instead of lowering tariffs.
Rosendo So, SINAG chairman, said imported rice is at $635 per MT or P45.07 per kg at landed cost and about P52 per kg at retail.
So said to reach the P29 retail price as the economic clusters project, imported rice should only be at $356.75 per MT.
This means least P21 to P22 per kg would have to be subsidized through taxpayers’ money, he added.
In a separate statement, the Federation of Free Farmers (FFF) said if there will be no undervaluation, reduction in tariffs from 35 percent to 15 percent will reduce tariff collections by more than half from P48.72 billion to P20.88 billion.
Raul Montemayor, FFF national manager, said if imports will be undervalued by about 22 percent or a cost, insurance and freight cost of $500 instead of $600 per MT and the tariff rate reduced to 15 percent, only P7.4 billion will be left to fund cash transfers and other support programs over and above the P10 billion Rice Competitiveness Enhancement Fund.
Montemayor said import cost would go down by about P7 per kg, which could lead to a drop in palay prices of P4.32 per kilo.
FFF said the reduction in farmers’ incomes would reach P86 billion on an annual basis as farmers’ losses would reach P72 billion in one year if the drop in palay prices is proportional to the drop in rice import costs.
“It remains to be seen (if) the reduction in rice import costs due to the lower tariff will be passed on in part or in full to consumers. However, the impact on palay prices will be more direct and immediate because imports and domestic rice compete with each other in the wholesale and not retail, markets,” Montemayor said.
Data from the Bureau of Plant Industry showed that rice imports that arrived in the country as of May 30, 2024 reached 2.086 million MT of which 1.522 million MT is from Vietnam equivalent to 72.9 percent.
Based on DA’s monitoring of public markets in the National Capital Region, the price as of last Thursday of local well-milled rice was between P48 and P55 per kg and regular milled, P45 to P52 per kg.
The price of imported well milled rice is at P52 to P55 per kg, while the price range of imported regular milled rice is at P49 to P51 per kg.
Imported rice ranges from P57 to P65 for the special variety and P50 to P65 for premium.
For local rice, the special variety costs P56 to P65 per kg and premium, P51 to P58 per kg. With Jed Macapagal
