Finance wants rice tariffs cut to 0-10%


THE Finance department will seek the temporary reduction of rice import tariffs to either zero or 10 percent at most, among other measures, to address rising prices of the staple.

“We need to adopt a comprehensive approach to help ensure that rice supply remains sufficient at reduced prices,” Finance Secretary Benjamin Diokno told reporters last Friday.

In a fact sheet, the department said it was “proposing to reduce the 35 percent rice import tariff rates, both Asean (Association of Southeast Asian Nations) and MFN (most favored nation) rates, temporarily to 0 percent or maximum of 10 percent to arrest the surge in rice prices.”

The government last week capped domestic rice prices for an indefinite period, which Diokno indicated would be temporary given possible supply shortages.

“Price controls, when carefully calibrated and closely implemented, are effective in the near term, the Finance chief said.

“However, the government recognizes that it also has adverse effects if allowed to linger for a longer period.”

He acknowledged criticism that price caps would discourage farmers from planting and importers from shipping in the grain, indicating that the limits would only stay in effect until upcoming harvests came in.

“The reduction of tariffs is forward-looking because the price of rice is going up globally,” Diokno added.

Executive Order 39, signed by President Marcos Jr. on August 31, mandated price ceilings of P41 per kilo for regular milled rice and P45 per kilo for well-milled rice.

Prices in Metro Manila markets prior to the issuance of the order were said to be P42-55 for regular milled rice and P48-56 for well-milled rice.

After inflation came in at a higher-than-expected 5.3 percent in August, with rice inflation alone rising to 8.7 percent from 4.2 percent in July, Socioeconomic Planning Secretary Arsenio Balisacan proposed “a temporary and calibrated reduction in [rice] tariffs.”

Import duties on the staple, along with pork, corn and coal, were temporarily reduced last year as inflation surged in the wake of Russia’s invasion of Ukraine. An extension was ordered before 2022 ended.

The reduced 35-percent tariff on rice is scheduled to expire at the end of this year.

The Federation of Free Farmers (FFF) quickly rejected Balisacan’s proposal, claiming that tariff cuts would cause palay prices to drop by P6 per kilo and reduce farmer incomes by up to P120 billion per year.

“Moreover, government’s foregone tariff revenues could reach P12 billion a year, based on current declared values of imports and assuming 3 million tons of imported rice,” FFF national manager Raul Montemayor said last week.

Importers, he further claimed, have long been paying a net 10-percent tariff by undervaluing shipment values.

“Gains from [current rice] tariff reduction are simply being captured by importers and traders, with minimal benefit to consumers, and at the expense of farmers,” Montemayor continued.

Along with the reduction in rice tariffs, the Finance department wants the private sector to ramp up rice imports, fully implement the use of “Super Green Lanes” at the Bureau of Customs to facilitate shipments, and provide temporary exemptions from higher toll fees for trucks that transport agricultural products.

Cases of hoarding, smuggling, and economic sabotage will be pursued if needed, rice prices will be strictly monitored, and the public will be encouraged to report violations of the price ceilings.

Programs to safeguard farmers from the impact of the price cap, targeted subsidies for small traders and rice retailers, and support for low-income households will also be implemented, the Finance department said.

It also reiterated a push to use satellite-based technology and data analytics to get a better picture of the situation for rice and other key crops.

“To help guide policy decisions, it is important to have timely, granular, and accurate information on the status of the rice industry,” Diokno said.

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