BSP backs removal of QR on rice

The Bangko Sentral ng Pilipinas is backing up moves to remove the import quota on rice.

“It will benefit consumers if you do that. Remove the QR (quantitative restriction) so everyone could import, but we should slap tariff,” BSP Deputy Governor Diwa C. Guinigundo told reporters recently.

Guinigundo said proceeds from the tariff protection could be spent on improving agricultural infrastructure such as irrigation and drying facilities, and providing better seeding varieties.

“It could also help improve farm-to-market roads, instead of [the government] just subsidizing farm-gate prices,” Guinigundo added.

State-run think tank Philippine Institute of Development Studies was urging a shift from the current import quota regime to tariff protection, pushing a 35-percent tariff on rice when the QR lapses in July next year.

The Department of Finance also expressed support for the removal of import restrictions on rice and transferring rice importation to the private sector.

The Department of Agriculture, however, is seeking a grace period of two more years before the QR on rice is removed to give farmers more time to adjust to an expected influx of imports under an open market setup.

State planning agency National Economic and Development Authority earlier disclosed the decision of the majority of the country’s economic managers to remove the quota on rice importation, as the government moves to lower the prices of the staple food.

Economic managers were proposing amendments to the decade-old Republic Act No. 8178 or the Agricultural Tariffication Act of 1996, which had put the rice import quota in place.

In 2014, the World Trade Organization (WTO) allowed the Philippines to extend its QR on rice until June 30, 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.

Since the government imposes a quota on rice imports, domestic prices are vulnerable to shocks arising from meager supply.

The QR puts the burden of rice supply and demand to the government, whereas the market forces are being limited by the quota system.

Pundits say importation should be done by the private sector in order to allow market forces to determine prices.

The extended QR slaps a 35-percent duty on imported rice under a minimum access volume (MAV) of 805,200 metric tons. Importation outside of the MAV limit are slapped 50 percent.

The Philippines’ most favored nation rate—the additional tariff imposed when imported outside of Asean—on the commodity remains at about 40 percent.