Rice farmers’ income down 10% due to TRAIN law

The government’s rice research agency blamed the 10-percent drop in the income of rice farmers, especially those dependent on motorized pumps for irrigation, on higher fuel prices due to the administration’s tax package.

Since the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law, the Philippine Rice Research Institute (PhilRice) said that fuel cost, which accounts for 30 percent of a farmer’s total production cost, had risen by P2,014 per hectare (ha) due to higher petroleum prices.

“TRAIN increases the production cost of pump-dependent farmers by 50 centavos for every kilogram (kg) of palay produced, which diminishes their income by 10 percent,” the agency said.

“[This] situation shows that TRAIN could either make our pump-dependent farmers even less competitive due to increased production cost or deprive them of a higher income,” it added.

For this year, rates for diesel and gasoline have risen by P2.50 and P7 a liter, respectively. The increase is expected to escalate further to P4.50 and P9 in 2019, and P6 and P10 in 2020, following the tax reform’s subsequent implementation.

Before the implementation of the TRAIN law, data from PhilRice showed rice farmers’ fuel cost was at an average of P13,862 per ha. Now, it has reached P15,876.

In turn, average prices of gasoline and diesel in major rice-producing provinces in the country like Cagayan, Pangasinan, Isabela, Nueva Ecija and Iloilo have shot up from P44 and P34 a liter in December 2017 to P48 and P39 in February this year, data from the Department of Energy showed.

Farmers depend highly on fuel to operate their motorized pumps to irrigate lands before they can proceed to planting.

To offset the losses incurred by rice farmers from higher fuel prices, PhilRice said they must produce an additional yield of 105 kg per ha, but this feat comes with additional cost.