MANILA, Philippines–Keeping the high import duties slapped on rice while allowing the private sector to influence the commodity’s supply would auger well for rice prices, according to the country’s chief economist, amid calls to remove the quantitative restriction (QR) on imports.
Also, Socioeconomic Planning Secretary Arsenio M. Balisacan told reporters last Friday that the government was looking at the possibility of repealing RA No. 8178, or the Agricultural Tariffication Act of 1996, which put in place the QR on rice importation.
Balisacan, who is also the director-general of the National Economic and Development Authority (Neda), noted that the QR puts the burden of rice demand and supply on the government, while market forces are being limited by the quota system.
The Neda chief had partly blamed high rice prices for the higher poverty incidence registered in the first half of last year, as the commodity accounts for a fifth of low income families’ budgets.
Since the government imposes a quota on rice imports, domestic prices are vulnerable to shocks resulting from meager supply.
The World Trade Organization last year allowed the Philippines to extend its QR on rice until 2017, in a bid to buy more time for local farmers to prepare for free trade in light of the government’s goal of achieving rice self-sufficiency.
The extended QR slaps 35-percent duty on imported rice under a minimum access volume (MAV) of 805,200 metric tons. Importation outside of the MAV limit are levied a higher tariff of 50 percent.
For Balisacan, retaining the high duties on rice is already a “very transparent, efficient and market-friendly instrument.”
The Philippines’ most favored nation or MFN rate—the additional tariff imposed when imported outside of Asean—on the commodity remains at about 40 percent.
Importation, meanwhile, should be the task of the private sector to allow market forces to determine prices, the Neda chief said.
Balisacan disclosed that during last Friday’s economic development cluster meeting, various government agencies, including the Department of Agriculture, agreed to draft their proposals geared towards potentially scrapping the QR system.
But while RA 8178 is still in place, and acknowledging that it may take time to repeal the law, Balisacan said the government “needs to be vigilant in monitoring the supply and demand of rice,” adding that “we have to find a way to reduce upward price pressures on food.”
Also, the government should focus on initiatives to increase rice farmers’ incomes rather than just increasing their production, Balisacan said. “We must determine if their inputs are expensive. We need to raise farmers’ productivity.”
To do so, irrigation systems should be improved, and farmers should also be given access to new agricultural technologies that yield higher harvests, the Neda chief said.