SEVERAL agricultural groups strongly oppose the Finance Department’s proposal to reduce tariffs on imported agricultural products, particularly rice.
They said that this move could discourage local farmers from planting, potentially causing the sector’s downfall. However, the Department of Agriculture believes that the price of imported rice could significantly decrease if the proposal is approved.
Whenever Amy goes to the market, she first checks various stores to find rice that fits her budget.
Her P300 budget for a week’s supply of rice is insufficient due to high prices.
Hence, she now buys imported rice because it is cheaper than local rice.
“It’s cheaper here in the market compared to our place. So, how much is it there? It’s P60 here, P57. The P3 difference is still worth it,” according to Aling Nancy, Consumer.
However, the Finance Department sees a solution to further lower the price of imported rice in the market.
Finance Secretary Ralph Recto proposes reducing tariffs on imported rice from the current 35% to 17.5% to 20%.
This measure aims to lower rice prices, which is one of the factors driving inflation in the country.
The tariff reduction is part of the government’s efforts to decrease rice prices by 20% by September.
The Department of Agriculture is open to this proposal by the DOF.
According to the DA, the price of imported rice in the market could become even more affordable.
“Reducing the tariff from the current 35% to 17.5% will lower the price of imported rice by around P4 to P5,” Asec. Arnel de Mesa, Spokesperson, DA stated.
At Alfonso’s store, the price of Vietnamese or imported rice is P48/kg, while local rice is over P50/kg.
“This would be beneficial for us because it would be more affordable, increasing sales,” said Alfonso, Rice Retailer.
If farmer groups are asked, they are not in favor of reducing the tariff on imported products, especially rice, because they believe it will cause losses in the sector.
SINAG warns DOF: Rice tariff reduction will kill agri sector
The Samahang Industriya ng Agrikultura (SINAG) disagrees with DOF Sec. Recto’s proposal, arguing that previous tariff reductions have not resulted in cheaper rice prices.
“Since 2021, rice tariffs have been lowered, but prices have not decreased; in fact, they have increased.”
“Only importers and traders benefit from tariff reductions, not consumers, producers, or the government,” according to Jayson Cainglet, Executive Director, SINAG.
Cainglet warns that reducing tariffs could demotivate farmers, leading to the sector’s downfall.
However, DA Spokesperson de Mesa clarifies that the plan is not final and requires a lengthy process for approval.
He also states that farmers will not be affected by this proposal.
“Farmers will not be significantly affected since imported rice will enter during lean months,” De Mesa added.
Tariff reduction on imported rice may only serve politicians—economist
Economist Dr. Michael Batu suspects that Finance Secretary Recto’s tariff reduction proposal might have ulterior motives.
Consumers do not feel the impact of lower tariffs because imported rice prices remain similar to local rice prices.
“So, clearly, there is price manipulation happening in the middle of the value chain in the rice industry. So, what does it mean by the middle of the value chain? That’s where the traders are, that’s where the warehouse owners are,” stated Dr. Michael Batu, Economist.
Dr. Batu argues that reducing tariffs could deprive farmers of benefits, as the tariffs fund the Rice Competitiveness Enhancement Funds for the sector.
“If tariffs are reduced, where will the funds for improving farmers’ competitiveness come from?”
“My suspicion is that individuals in the middle of the value chain, possibly politicians or their friends, are benefiting from this system, which is why the problem remains unresolved,” Dr. Batu stressed.
Sen. Cynthia Villar objects to proposed tariff cut on imported rice
Senate Committee on Agriculture Chairman Cynthia Villar also opposed the Finance Department’s proposal.
“No. Our assumption is 35 percent. You don’t want it to be lower? Of course, if the tariff is higher, more will be given to local farmers. Because all the proceeds from the tariff go to the Rice Competitiveness Enhancement Fund. So, our assumption is larger to give more to the farmers,” said Sen. Cynthia Villar, Chairman, Committee on Agriculture
Senator Villar added that they are open to allowing the DA to import tariff-free rice to assist the poor, especially during calamities.
