RICE TARIFFICATION LAW

CASE STUDY

Final requirement on
CBM 321 / CODE 2879

Submitted to : Proffesor Ceasar Talungon

Submitted by : Althaea Megylu G. Taer

COLLEGE OF ACCOUNTING EDUACTION

TAER, Althaea Megylu G.

 Given the ongoing clamor of rice farmers who should be benefitting from the Rice

Competitiveness Enhancement, the farmers claim that they do not feel that they are being helped out by the

government, Consumers are also affected because the Rice Tariffication Law also concerns inflation rates. Rice

sold in markets should be priced lower to become more affordable and accessible to all Filipinos as to what the

Rice Tariffication Law implies.

This case analysis would like to show the key constraints of the new imposed Rice Tariffication law not only to

the farmers but also to the other affected sectors and to come up with a hypothesis as to what to do in order to

control the constraints.

The Philippines became self-sufficient in rice in the 1970s and was a rice exporter to

neighbouring countries such as Indonesia, China, and Myanmar. However, with the rapid increase in population

and limited land resources to produce the total rice requirement, the country slowly turned into a net rice

importer. The Philippines is the second largest importer in the world next to Chine In 2017, the country imports

rice mainly from Vietnam (52%) and Thailand (29%) (Santiago, 2019). The Philippines’ membership to WTO

for 24 years aimed to counter the impact of the expected influx of cheap rice imports. The country apparently

has been extending primarily to safeguard the local rice farmers from increased competition of imported rice.

Another reason the Philippines had been pushing for a two-year extension of the restriction is to achieve rice

selfsufficiency by 2020. However, given that QR on rice shall be retained, consumers shall continue to bear the

burden of overpriced rice, with poorest households bearing the burden. Based on the 2012 Family Income and

Expenditure Survey, the richest 20% of households only devote 3% of their spending on rice w poorer income

groups tend to allocate greater share for rice (PIDS, 2012).

Rice is the staple food in the Philippines as to why the center of government agricultural

policies has always been the rice sector. The main points of its policies revolves around promoting food

sufficiency and providing the farmers high income while making the cost lower for the public, along with this

policies there are key issues and problems regarding the implementation of the rice tariffication law in the

TAER, Althaea Megylu G.

Philippines, here is to point out the following issue; the law lacks safety support to the farmers, Filipino farmers

cries out that the new policy will make them compete with cheap rice importers, making them suffer more than

it is, also, potential displacement of business and industries caused by liberalized rice importations. First are the

millers, there are around 6,600 registered rice millers in the country, employing 55, 000 workers. Industry stake

holders in a position paper, said that a complete milling facility would cost 30,000,000 to 50 million, this would

palce the whole industry to minimum of 200 billion to 300 billion ( Orly Manuntag, Confideration of grains

retailers Association of the Philippines) second, the Animal feeds and liquor industry, these two is a product of

rice milling process, the rice bran is used for making agricultural feeds a shortage in unhusked rice production

will also mean a shortage on it’s by product if feed millers produce less, then subsequently there would be an

increase in pork and chicken which bran is a main ingredient of its feeds, also another by product by milling

process is the brewer’s rice which is used by liquor industry for producing beer. Construction industry is also

affected, rice hull is used as fuel for biomass furnaces used to provide electricity in the provinces, which means

a drop in local rice production will also mean a drop in production of rice hulls. Cartels of rice trade will make

poor sectors in a much worse state, unhampered importation will not guarantee lower prices in the long run, to

rely in rice imports will make our country vulnerable on decisions of our neighbouring countries in regards to

rice production and export decisions also will put us on the border of higher world market prices.

The gains of Rice Tariffication will only be felt in the long run thus the unavoidable costs to farmers in the

short run throws them on the pit of hunger, several alternatives are proposed to lessen this cost one is the

government subsidies, government agencies come into rationalization of fiscal incentives, but this alternatice

was rejected due to the appeal of senator Ralph Recto, he argued that incentives are vital for new investments

and employment but the senator said that this program will only benefit those who are seated on companies and

enjoy the incentives that were supposed to be given to the small interprises and farmers. In the short term then,

the government has to pour resources like the cash transfers, price support, and production subsidies to provide

amelioration and compensation to farmers. We have to stay the course, even as we recognize that the transition

can take longer in light of the pandemic. Incentives to rice farmers may also be provided through conditional

cash transfers for beneficiaries staying in the rice industry. The program however, is not ready yet. The

government need to properly identify rice farmers and adopt rules to ensure effective implementation and
prevent abuse. Special safeguards may also be used following a provision in the rice tariffication law, but

safeguards raise taxes on imports and make less affordable to rice consumer. In my view, I think that the main

reason of the rejection of this alternative Is that many on the government officials are engage in corruption, that

subsidies for the poor will not be given to the rightful benefeciaries but pocketed by officials who are assigned

to distribute the subsidy.

Furthermore, my proposed solution is that the government should focus more on imposing of import

tariffs 500% to 800% to protect the local farmers just like what South Korea and Japan, the government should

provide support to local farmers by practicing or implementing the section 7 of the Rice Tariffication Law, which

gives the President the power to increase the tariffs as on rice imports from member states of the

Association of Southeast Asian Nations and even non-Asian countries. The government shuold bring back the 17peso

support price of palay, for citings was found that farm gate price of palay has plunged to P7 per kilo, lower than

the average production cost of P12, farmers have lost as much as 41.6% of their investment in just a month.

Also another solution is that Recipients of the Pantawid Pamilyang Pilipino Program (4P’s) can also receive rice

subsidies instead of cash, with these rice supplies bought from local farmers. Base on my observance, many

members of 4P’s are only relying with the subsidy given to them by the government, they are not engaging on

work that may benefit them a decent income thus they only stay at home and wait for the government subsidy

which is quite unfair to the middle class of the society who are working non stop to provide better living for

their family, I also think that based from my experience, I encountered many members of 4P’s who are not using

the money for their basic needs instead, some of the members are actively engaging on gambling. I propose that

instead of giving them monetary support, the government should consider to give them rice to eat, this will not

only lessen the possibility of wasting the government’s money but will also help the local farmers to sell their

crop in a decent price. I debunked the idea that the situation of farmers had become “hopeless” and that “little

can be done” to address the problems, because we can save our rice farmers if the government could just be

thorough in their task, work hard and provide alternatives as soon as possible.

TAER, Althaea Megylu G.

 REFERENCES

 House of Representatives. An Act liberalizing the importation, exportation, and trading of rice, lifting for the
purpose the quantitative import restriction on rice, and for other purposes. Retrieved from
http://www.congress.gov.ph/legisdocs/ra_17/RA11203.
 National Economic Development Authority. Implementing Rules and Regulations of the Rice Liberalization
Act
 FFTC Agricultural Policy Platform (FFTC-AP) https://ap.fftc.org.tw/article/1372 6/7 FFTC Agricultural
Policy Platform (FFTC-AP) Food and Fertilizer Techenology for the Asian and Pacific Region Policy Articles
Policy-
 Related News External Links Partners Contact Us 42996 read Punongbayan, JC. “[ANALYSIS] Will Rice
Tariffication Live up to Its Promise?” Rappler. Retrieved