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LIBERALIZED TRADE OF RICE CUTS PRICE

THE Department of Finance (DOF) said the passage and implementation of the Rice Tariffication Law (RTL) in 2019 has slashed prices of the country’s staple food to the current average of P39 per kilo or a reduction of about P7 per kilo compared to its cost in 2018 when the per kilo retail cost was at around P46.

Freed from local entrenched interests that took advantage of the protectionist policy on rice for decades, this staple food is now more affordable, especially for low-income Filipinos who spend about 16 percent of their total household budget on rice.

President Rodrigo Duterte signed the RTL into law on February 14, 2019, as Republic Act (RA) No. 11203. The law, which later took effect on March 5, 2019, replaced the rice import quantitative restrictions with tariffs.

“The Rice Tariffication Law was finally achieved after more than thirty years of failed attempts under previous administrations. The law opened the Philippine rice market and, in turn, reduced the price of our country’s staple food for more than 110 million Filipinos,” Finance Secretary Carlos Dominguez III said in a press release.

As a result of this reform, which he proposed three decades ago when he was agriculture secretary, rice is no longer a main contributor to inflation, Dominguez said.

“It took the strong political will of the President for rice tariffication to finally happen for the benefit of our consumers,” Dominguez added.

With rice made affordable through the RTL, the National Economic and Development Authority (NEDA) estimates that three years from now, the proportion of malnourished children and the population at risk of hunger in the country would be reduced by 2.8 percent and 15.4 percent respectively.

These estimates are equivalent to around 2.1 million fewer people at risk of hunger and malnutrition, NEDA said.

In 2018 before the RTL took effect, the retail price of regular-milled rice (RMR) spiked at P46.04 per kilo. After RTL, the average price of this rice variety went down to P39.13 as of April 2022 or cheaper by P6.91 per kilo.

Another key benefit of RTL is the flow of billions of pesos in funds to the agricultural sector through the creation of the P10-billion Rice Competitiveness Enhancement Fund (RCEF), which is used exclusively to finance programs that will sharpen the competitiveness of palay growers by way of providing them with easy access to fertilizer farm machinery and equipment, high yield seeds and cheap credit; and offering them skills training programs on farm mechanization and modern farming techniques.

Under the RTL, all import duties collected from rice imports beginning March 5, 2019 go to RCEF and opther agriculture modernization programs. In the first four months of 2022 alone, the Bureau of Customs (BOC) already collected P6.6 billion in duties from rice imports, which is already two-thirds of the P10 billion earmarked annually for RCEF.

The National Food Authority (NFA) monopolized rice importations before the RTL, with a few private traders granted import permits that enable them to control the price and supply of rice through hoarding and other manipulative practices.

With RTL, the role of the NFA has been limited to ensuring emergency rice stocks exclusively procured from local palay growers.

Dominguez said that with rice tariffication, the government was able to handle the Covid-19 crisis “with strength on the food security front.”

He pointed out that despite logistical restrictions resulting from the mobility restrictions or lockdowns imposed nationwide to protect people and communities from the pandemic, the government was able to sustain the flow of produce from local farms to Filipino consumers.

The agriculture sector was “one of the brightest spots” of the Philippines response to the pandemic owing in large part to the RTL, Dominguez said.

Meanwhile, the government’s total revenues rose by 12.6 percent during the first quarter of 2022. The BOC reported tax intake growth of 26.4 percent reflecting robust recovery of imports and continuing gains from digitalization.

BIR also reported a 7.0 percent collection growth, reversing the impact of frontloading of tobacco excise tax payment. Non-tax revenues rose by 19.8 percent showing robust rise of dividends from Government-Owned and Controlled Corporation (GOCC).

In a separate press release, the DOF said that expenditures rose by 8.2 percent boosted by 29.2 percent higher allotments to Local Government Units (LGUs) because of the implementation of the Supreme Court ruling on the Mandanas-Garcia case and an 18-7 percent rise in interest expense due to the availment of Covid-related support financing during the last two years.

The budget deficit dropped by 1.4 percent to P316.8 billion. Revenue growth of 36.0 percent for the month of March 2022 outpaced expenditure growth of 18.1 percent, narrowing the deficit by 2.0 percent from P191.4 billion in March last year to P187.7 billion in March this year.