British think tank: Du30 policy to halt rice imports misguided, risky

British research firm Economic Intelligence Unit (EIU) has added its voice to a barrage of criticisms from various quarters against the Duterte administration’s policy on rice, describing it as “another misguided food self-sufficiency agenda.”

The EIU, which provides forecasting and advisory services, was referring to the suspension of rice imports that President Duterte had ordered last month.

The company noted that the harmful effects of the suspension would not be felt immediately, considering expectations that this year’s rice harvest would be much better than those of previous years thanks to the end of the El Niño phenomenon as well as greater use of rice varieties engineered for higher output.

“However, the import stoppage confirms that Mr. Duterte’s administration is sticking to the Philippines’ decades-old quest to achieve rice self-sufficiency, boding ill for the promotion of crops that are far more viable economically,” the EIU said.

“The government’s goal of rice self-sufficiency runs counter to a recent OECD (Organization for Economic Cooperation and Development) report on Philippine agriculture, released on April 7, which recommends crop diversification rather than market-distorting efforts for rice self-sufficiency,” it added.

Other groups, mainly think tanks and experts from the academe, have long been criticizing the administration on the matter. They include the Foundation for Economic Freedom, the state-run Philippine Institute for Development Studies, New York-based GlobalSource Partners, Ateneo de Manila professor Cielito Habito, University of the Philippines professor Ramon L. Clarete, former UP professor Mahar Mangahas, and University of Asia and the Pacific professor Rolando Dy.

The EIU noted the timing of the import halt was “risky,” considering that the Philippines relies on at least two months of secure supply from abroad. The lean domestic production period is expected to begin in mid-June, thus could pressure available supplies.

“This means that the retail price of rice during this period will probably spike,” the company added. “As such, the Economist Intelligence Unit believes that inflation in 2017 will challenge the upper bound of the 2 percent to 4 percent target band set by Bangko Sentral ng Pilipinas for consumer price inflation.”

The EIU added that the expected benefits trumpeted by the President’s advisers would not be felt in the end, given the many layers of middlemen between farmers and consumers.

“The government’s plan to offset the stoppage with purchases of local rice at a higher cost will no doubt also result in market distortions at the expense of more appropriate crops and increase the fiscal burden,” the EIU said.

“Thus, although the administration has shown a desire to protect local farmers, the policy it has adopted so far is not sustainable and will invariably be reversed,” it added.