ECONOM ICS

POLICY
AND SOCIAL
PERSPECTIVES
BRIEF 17
A Decade of Downfall: Figure 1: Decrease of Rice imports
Philippines per year
in the

Philippines Best Rice Importer (2010)

Philippines
Best at Welcoming Importers of Rice
(2020)

The Philippines has a decades-long policy of protecting

the rice sector and intervening in the rice market. Since
the early 1980s, the country has maintained domestic
rice prices above international prices. In March 2019,
the government of the Philippines promulgated a bill
called the Rice Tariffication Law (Republic Act No.
11203). The policy reform abandoned the quantitative
restrictions on imports that have been in place for more
than thirty years, replacing them with ad valorem tariffs
to finally comply with the principles and rules of the
World Trade Organization (WTO). Another important One of the main issues concerning the RTL is that Filipino
rice farmers are having, and may continue to have, a hard
aspect of the reform was the elimination of the role of
time competing with imports that come with a cheaper
the National Food Authority (NFA) in rice imports. For
price tag.
many years, the NFA had a monopoly on the
importation of rice, and more recently, it issued a
limited number of import licenses to private traders. The According to the RTL, farmers should be protected by
the Rice Competitiveness Enhancement Fund (RCEF).
NFA has long been considered a source of huge
The annual amount of P10 billion from this program
inefficiencies and inappropriate interventions in
should address the income increase of Filipino farmers and
markets (Clarete, 2019; Galvez, 2019; Ramos, 2019).
funding the farmers with assistance. The assistance can
Economics and Social Perspective- Policy Brief No.17

The RTL opened up the market to private sector traders,

eliminating the de facto market power exercised by the range from the development of inbred rice seeds, rice farm
equipment, and skills enhancement.
NFA for decades. The role of the NFA is now limited to
Given the ongoing battle of rice farmers who should be
maintaining food security rice stocks procured from
benefitting from the Rice Competitiveness Enhancement,
Philippine farm.
the farmers claim that they do not feel that they are being
helped out by the government.
This policy reform has generated important debate,
Problems have emerged, the effects of liberalizing rice
often spilling over into the popular media. The Law has
imports in the country’s largest agricultural industry.
been criticized by some policymakers, notably members
Farm gate prices of palay or unhusked rice plummeted
of congress, prominent farmers’ groups, and a few
this quarter by 17%, while rice consumers’ savings have
members of academia. The main argument is that by
not been as large as expected. Observers point to the
reducing paddy price, it would impoverish small rice
traders/importers who may be the biggest winners of the
growers who are already close to the poverty line and
rice law. Retail prices only fell by 4% according to data
vulnerable to market and other shocks. Other
from the Philippine Statistics Authority. Millers have
stakeholders have pointed out the risk for the national
stopped milling, and feed millers are short
food security of increasing the import dependence,
of darak (rice bran) because of that. It is expected that
becoming more exposed and vulnerable to shocks in the
the members of the local rice value chain — i.e. farmers
international rice market. Some farmer’s groups and
with significant marketable surplus, seed traders, and
cooperatives are particularly vocal regarding the
millers, traders who have yet to learn the business of ECONOM ICS
POLICY
importing rice — find the net value they received from
the industry are significantly lower.
AND SOCIAL
PERSPECTIVES
BRIEF 17
Figure 2
SUGGESTIONSBAND
RECCOMENDATIONS

For our recommendation R.A 11203 or Rice

Tariffication Law is not necessary here in the
Philippines specially for our local farmers. As
we all know majority of Filipinos don’t have
enough trust on our government because of the
consecutively news about their corruption.
Why would they have entrusted their future,
livelihood and money to the government if the
government is not trustworthy at all. We
believe that this law is not helpful to the
majority of Filipino community and the charts
and statistics given on our s ource is the
evidence why it should not be implemented.
The government could make or enhance
another law to help our fellow farmers rise
It is the rice consumers and the government who are from poverty without decreasing the price of
better off. Rice prices had gone down and the tariff rice and without importing rice from other
revenues which will go to the RCEF had accumulated countries. The government should support
to at least P6 billion, based on a casual read of reports local product to help our economy grow and
coming from the Department of Finance. I add to the list also for the benefit of its own fellowmen.
of winners the importers who have shifted to importing
rice, particularly higher value rice, whose local demand
is significant thanks to a growing middle class.
Although they pay the 35% import tariff, the local rice
market is still far from competitive, and these initial
players are still at liberty to earn margins higher than the
taxes they pay the government. Such net incomes can be
made even higher if importers undervalue rice imports,
as some observers claim. But if Customs does its work
well, its post-entry audit can take this illegal trade
margins from importers. rice and palay markets, the
public sector may come in significantly to create a
FIGURE 3
market for our rice farmers, temporarily.
https://www.yummy.ph/news-trends/rice-tariffication-law-effects-a00260-
20190906#:~:text=One%20of%20the%20main%20issues,Competitiveness%20Enhancement%20Fund%20(RCEF) .
https://www.bworldonline.com/rice-tariffication-problems-and-measures-to-deal-with-them/
https://www.bworldonline.com/rice-tariffication-problems-and-measures-to-deal-with-them/
https://www.manilatimes.net/2020/08/06/business/agribusiness/rice-tariffication-law-good-or-bad/751260/