Last year, the Philippines imported 2.98 million tons of rice — 40 percent, or 1.2 million tons, arrived during the wet (main) harvest season, the Federation of Free Farmers (FFF) said. In 1995, the Philippines acceded to the WTO on the basis of the revision of the QR and the reduction of tariff protection. However, rice has been exempted from customs duties. The Philippines has opened imports of rice under a minimum volume of entry () corresponding to quantitative restrictions (QR). The Philippines QR regime has been mandated for conversion to customs protection. The country received special treatment for rice until 2005, which was then extended until 2012. The Philippines has been requesting QR extensions for rice since 1995. Finally, the Philippines received an exemption to maintain QR until June 30, 2017. « It is imperative that the government be able to withdraw its rice sector from free trade agreements and repeal laws like the RTA, which `views rice and agriculture as yet another for-profit commodity`. Since the 1980s, there has been a consensus that restrictive and pension-oriented trade and regulatory policies have hampered the Philippine rice sector.
Filipino consumers paid more for a kilogram of rice than any of their ASEAN neighbors, but Filipino farmers remained the poorest sector in the country. International donors, multilateral organizations and local leaders have made various efforts to reform the sector, but none have yielded excellent results. In 2019, restrictions on rice imports were lifted when President Rodrigo Duterte passed Republic Law No. 11203 or the Rice Pricing Act, a law that paved the way for more imported rice to reach the Philippines. Based on DA data, more than one million rice farmers have received more than 8.6 million bags of certified inbred rice seed since the introduction of the RCEF, enabling more than 830,000 hectares of Palay farms to produce more rice than before. The Philippines became self-sufficient in rice in the 1970s and was an exporter of rice to neighboring countries such as Indonesia, China and Myanmar. However, with rapid population growth and limited land resources to meet all rice needs, the country has slowly transformed into a net importer of rice. The Philippines is the world`s second largest importer of rice after China (Simeon, 2019). In 2017, the country imports rice mainly from Vietnam (52%) and Thailand (29%) (Santiago, 2019). One of the proposals was to restore the NFA`s exclusive authority over the importation of rice and the regulation of the entry of imported rice into the domestic market, which the RTA removed. NMFS and Arise, groups that envision sustainable, resilient and self-reliant communities, said that three years after the law was passed, « our domestic market is now flooded with imported rice. » Vidal, who is already 60, is part of the Provincial Farmers` Action Council, which decided to ask Duterte to raise the Palay price from 19 to 22 pesos through the NFA. The recently passed Rice Price Act, passed by Congress in November 2018, will remove the authority of the National Food Authority (NFA) to import and distribute cheaper rice.
With Senator Cynthia Villar as lead author, the bill was prepared jointly by the Agriculture and Food, Ways and Finance committees. It replaces Senate Bills No. 1476, 1689, 1839, taking into account Senate Motions Nos. 143, 146 and House Bill No. 7735, with Senators Ralph Recto, Leila De Lima, Joel Villanueva, Risa Hontiveros, Grace Poe, Sherwin Gatchalian and Cynthia Villar as authors. They said food crises, resulting in rising food costs, rising prices of agricultural needs and massive loss of income for liberalized farmers, continue to worsen. When the ACR was signed, the NFA`s role was reduced to a roll that contains 15 to 30 days` buffer supply of Palay rice from local producers. It is for emergencies, such as disasters. In the past, the high price of rice, the staple food of Filipinos, was inflationary when quotas controlled its import. But RTL has apparently put an end to this.
The Philippines` accession to the WTO, which lasted 24 years, was aimed at countering the effects of the expected influx of cheap rice imports. The country has apparently expanded protections primarily to protect local rice farmers from increasing competition from imported rice. Another reason the Philippines has lobbied for a two-year extension of the restriction is to achieve rice self-sufficiency by 2020. However, as the QR for rice is maintained, consumers will continue to bear the burden of overpriced rice, with poorer households bearing the burden. According to the 2012 Family Income and Expenditure Survey, the richest 20% of households spend only 3% of their expenditure on rice, while the poorest income groups tend to spend a larger proportion on rice (PIDS, 2012). NMFS and Arise also stated that although 3.5 million farmers have lost their income due to Palay, the RTA has allowed large rice traders and importers to increase their profits at the expense of farmers and consumers who have suffered the effects of high rice prices during the pandemic. Should Congress decide to amend the RTA, NMFS and Arise said the NFA`s authority to issue permits and licenses and to monitor and monitor the domestic rice market should be « restored. » He pointed out that the Rice Pricing Law has sown the seeds of many problems such as hunger and debt, while retail prices remain high for poor consumers. One of the promises of the RTA is the availability of cheap rice on the domestic market, but this has not happened.
Instead, rice prices remained high between 39 and 50 pesos per kilo, recording a minimal drop of about 1.50 pesos per kilo compared to the 2018-2019 price. She said that for every peso spent by a rice farmer on one hectare, profits increased from 73 centavos to 53 centavos in the dry season in 2019, from 63 centavos to 36 centavos during the rainy season and from 73 to 47 centavos on average. FFF pointed out that prices in the first three years of the ACR « were on average practically in line with 2016 and 2017 prices ». In March 2019, the Philippine government enacted a law called the Rice Pricing Act (RTL). It dramatically changed the political landscape in the rice sector and sparked heated debates about how it would affect food security and poverty. This study examines the effects of this reform on well-being in different types of households. We use IRRI`s global rice model to simulate the effects of the reform on domestic prices (Baliã© and Valera, 2020) and the Family Income and Expenditure Survey (FIES) to examine the impact of these price changes on welfare. Our results show that RTL lowers consumer and producer prices for rice, which affects households on the production and consumption side. Since a large majority of households are net buyers of rice and policy reform is driving down rice prices, most households benefit from the reform.
Overall, the impact of the reform on poverty is beneficial. The poorest quintiles are positively affected, while the richest quintiles are not affected or slightly worse off. The poorest regions also benefit the most spatially. However, rice farmers, who are net sellers, are negatively affected. The government should try to mitigate the negative impact on uncompetitive rice farmers. Investing in public goods and services is a promising option to facilitate the emergence of agricultural and non-agricultural enterprises as more profitable alternatives to rice production. For Montemayor, Palay`s prices have fallen due to excessive rice imports: « The 9 billion pesos for farmers is very low compared to the 60 billion pesos that farmers lose every year. » « Without its former function of stabilizing rice prices, the NFA would no longer be able to sell rice at 27 pesos per kilo. Therefore, it would not be surprising, to say the least, if RTA did not benefit the poor and Filipino rice consumers in general, » said NMFS and Arise. Danilo Ramos, president of the KMP, said the law « endangers the welfare of producers and consumers and undermines the livelihoods of millions of rice farmers. » For Montemayor, « a bountiful harvest is meaningless for farmers if it leads to low prices for their crop. » He said that because of the surplus, « traders will tend to reduce producer prices. » Millions of Filipinos now benefit from lower rice prices – a boon especially for the poor. Philippine agriculture can now focus on the challenge of becoming globally competitive.
After decades of protectionist policies, the rice industry can now focus on increasing productivity, improving crop yields and reducing costs. « Our economic managers are intellectually dishonest in limiting their comparison to prices in 2018, knowing that prices were exceptionally high at the time due to the rice crisis, » FFF said. Figure 1: Rice inflation versus headline inflation. The graph shows that rice`s contribution to inflation fell below zero after RTL`s launch. Although rice inflation has increased during the Covid-19 pandemic, it remains below zero. (Source: VRE analysis of PSA data) According to data from PSA and FFF, the Philippines imported 2.01 million tons of rice in 2018, 3 million tons in 2019, 2.23 million tons in 2020 and 2.98 million tons in 2021.