Because of the low rice tariff (35 percent) imposed last year, farmers are suffering very much today. If this tariff continues this year as announced by some government officials, President Duterte should know that consumers will suffer tomorrow.
The information in the table (above right) is from the Philippine Statistics Authority ( PSA). Since the PSA does not provide wet palay prices, the P3 average difference between wet and dry prices provided by the Department of Agriculture in 2019 was used.
Using a production cost of P12 per kilo for an average 4 tons per hectare, farmers who sell dry palay decreased their per hectare incomes by 50 percent from P31,240 to P 15,480. However, since the great majority of farmers get the wet palay price because they do not have drying facilities, their incomes decreased by 81 percent from P19,240 to P3,560.
No wonder. Mr. Duterte said on two separate occasions that he would ban rice importation. This is because the imported rice has become very cheap at a tariff of 35 percent and has forced the farmers to cut their farm gate prices significantly. Both Mr. Duterte announcements were not implemented because our laws and the World Trade Organization (WTO) agreements do not allow this.
Unfortunately, the President may not have been informed that there is a way to achieve practically the same objective of being fair. This is to equate the trade protection where the imported rice price is made equal to the domestic rice price, favoring neither the importer nor the farmer. This should be done by following our law and WTO through temporary additional safeguard duties. These should soon be removed when government support mechanisms are in place. If other countries do this, why not us? Because farmers are not treated well, unlike cement manufacturers who recently got safeguard measures.
As long as these measures are not given, many rice farmers will refuse continuing losses and stop planting altogether. We will then have to import more rice. That is when consumers will suffer, because of higher prices.
We used to rely primarily on Vietnam and Thailand for cheaper rice imports. But these will no longer arrive at low prices, if they arrive at all. Mr. Duterte and the government must address this inconvenient truth. Our consumers will likely have insufficient imported rice at prices higher than our own.
Consider this. VietnamnetGlobal reports: “The volume of Vietnam rice in 2020 will be around 41.5 million tons, down 67 percent year on year.” That is 2.8 million tons less, but we usually need to import at least 1.5 million tons. This year, with less Filipino farmers planting because of the low 35 percent tariff , we will need many more imports to feed our people. Vietnam will no longer be a convenient import source.
The Thailand situation is even worse. On Nov. 8, 2019, the Bangkok Post reported: “Alternating drought conditions and flooding in northeastern Thailand are expected to cut paddy production by 488,000 tons.” On Jan. 13 the Asia News Network stated: “ The off-season rice production would be nearly half damaged, or will yield only 3.5 million tons to 4 million tons of paddy, from the usual 8 million tons—a 50 percent decrease.”
So we better produce more, not less, rice; stop the unfair suffering of our farmers today; and prevent the hardship of our consumers tomorrow because of inadequate rice at high prices. For the sake of our farmers and consumers, Mr. Duterte and our government should immediately implement the safeguard of additional duties. It is then that our farmers can plant again with reasonable returns. This is even recommended by our law and WTO. So what is holding us back? Unfortunately, I believe it is a lack of understanding of our dire situation.