THE Federation of Free Farmers (FFF) said halving rice tariffs from 35 percent to 17.5 percent may depress local palay prices by P3 per kilogram and does not guarantee retail prices of rice and inflation will go down.
Department of Finance (DOF) Secretary Ralph Recto recently proposed the tariff cut, saying this could reduce rice retail prices by P5 per kg.
FFF said previous adjustments in tariffs on rice, corn and pork did not bring about cheaper prices.
The group said lower rice tariffs can pull down palay prices “if cheap imported rice is dumped into wholesale markets, where domestic rice is also sold by millers and traders.”
Raul Montemayor, FFF national manager, has urged the government to look for alternative ways to bring down rice prices without hurting local farmers.
“Government can just buy rice locally or even import if absolutely necessary and distribute these to poor consumers through its Kadiwa (Centers) and other outlets. The private sector can take care of supplying unsubsidized rice to consumers who can afford to buy them. Tariff cuts are not needed since import prices are expected to go down soon anyway, as stated by Secretary Recto himself,” said Montemayor.
FFF added lowering rice tariffs may result to P33 billion losses to rice farmers who normally harvest 11 million tons of palay in the second half of the year. The group said assuming an additional 2 million tons of rice imports arrive during the second semester, the DOF tariff proposal would mean foregone customs revenues of P10 billion that are legally earmarked for rice farmers’ productivity programs.
That would be a total of P43 billion in 2024 alone.
Montemayor said when government reduced tariffs on non-Asean rice imports from 50 percent to 35 percent starting May 2021, rice retail prices actually rose instead of declined.
“ Savings from lower tariffs were simply pocketed by importers and middlemen and were not passed on to consumers,” he said.
FFF said exporting countries took advantage of earlier tariff cuts by raising their prices, citing that rice exports from Pakistan used to be about 8 percent cheaper than Vietnam rice before the tariff cuts in 2021 but are now equal in price.
“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,” Montemayor said.
The group also said the tariff cut in 2021 also failed to significantly expand the country’s rice sources beyond Vietnam and Thailand as non-Asean countries account for less than 4 percent of total imports in 2023.
FFF said more than two-thirds of rice imports were premium grades which give better profit margins to importers.
