When government information lacks transparency, especially for 2.5 million rice farmers and the 11 million household members suffering today, a vibrant democracy is imperiled.
Other forces are using this transparency lack to threaten our freedoms. The main issue here is the transparency of the Department of Agriculture study on a possible rice tariff increase from the current rate of 35 percent. We earlier recommended a procedure advocated by international trade experts, our own laws and the World Trade Organization (WTO). It is to calculate a tariff that gives no preference to either imported or domestic product. This is done by matching the price of the landed import with that of the wholesale domestic product. When the Oct. 15 deadline came, we asked for even partial findings. We got none because the study was aborted. The reason given was the possible impact on inflation. But no calculation was done on this and no other information was given.
Shortly after this, a senior government official announced to the press that 1.8 million tons of rice had been imported as of September. By the end of the year, it was estimated to hit 2 million tons. Doing our own investigation, Bureau of Customs records showed that 2.8 million tons (not 1.8 million) arrived by September. For August and September, the monthly average was 0.28 million tons. If we use this monthly average for the next three months, the ending imports will be 3.6 million tons (not 2 million). The information given is not only not transparent, it is also misleading.
The transparency of correct information is critical here because it gives us the accurate number of rice farmers displaced by imports that now far exceed our 1.3 million-ton rice supply gap.
On inflation, rice has been reported by some sources as an overwhelming factor causing the 6.8-percent inflation in September last year. However, Philippine Statistics Authority recorded that rice accounted for only 10 percent of inflation, while transport and “electrical gas and other fuels” together accounted for 13 percent.
The 35-percent tariff is also claimed by some as the the overwhelming factor for the decline of inflation in September to 0.9 percent from 6.8 percent a year ago. Again, PSA showed that rice accounted for only 8.5 percent of this decrease, while 91.5 percent was caused by other factors.
Since there was no transparency on the government’s estimated impact of a rice tariff increase on inflation, we computed 86 percent as the tariff that equated the landed import with the wholesale domestic price. Though a 70-percent tariff favors the imported over the local product, we used it as a possible challenge for local producers to be more efficient.
The overall impact would then be anywhere from 0 to 2.1 percent, depending on how much of the increased tariff cost would be passed on to the consumers. After consultation, no nationwide cartel, free competition and the traders getting a lower but still extremely large margin, a 27-percent pass on cost was calculated. This resulted in an increase of 0.5 percent in inflation rate. Whatever rate is used, it will be well within the government’s 2-4 percent inflation target.
Last year, the farmers got an average of P18.32 a kilo for wet palay price. This has declined to P13.01 as of Oct. 21. A farmer’s income has dropped from P25,280 to only P4,000 a hectare, way below the monthly family poverty line of P10,481.
On Oct. 24, Finance Secretary Carlos Dominguez took the right approach and said: “DA is looking at the data, so we will certainly listen to them if and when they bring the proposal back.” With the support Agriculture Secretary William Dar gives to our farmers, transparency must be part of this data delivery which should be done with meaningful farmer involvement. It is only with this transparency that we can help ensure our vibrant democracy.