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BSP sees no inflation impact from halt to rice importation

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REUTERS

SUSPENSION of rice importation amid the ongoing harvest, as ordered by President Rodrigo R. Duterte, should have no impact on inflation, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Wednesday.

“It will not [affect inflation]. Walang (There will be no) impact sa (on) inflation,” Mr. Diokno told reporters at the BSP headquarters in Manila City.

Mr. Duterte said in a late-night press conference on Tuesday that he had ordered the suspension of rice importation as farmers reeled from falling prices.

He clarified, however, that the suspension was only for the duration of the current harvest season that runs from late September to mid-December.

Mr. Duterte was to meet Agriculture Secretary William D. Dar on Wednesday to discuss specifics of his order.

Republic Act No. 11203 — which liberalized importation of the staple after it was enacted on Feb. 19 and came into effect early the following month — resulted in an estimated P8 per kilogram (/kg) drop in retail prices of the staple, as intended.




Average farmgate prices, however, have fallen by 16.26% to 17.17/kg as of September from P20.51/kg in 2018’s comparable nine months, according to the Philippine Statistics Authority.

A surge in prices of rice, which accounts for 9.6% of the theoretical basket of goods widely used by households that is the basis for computing year-on-year price changes, due to delayed importation caused headline inflation to hit successive multi-year peaks last year. Inflation has been on a general downtrend this year, falling back into the BSP’s 2-4% target range for 2019 at 2.6% in the 10 months to October after clocking in at a decade-high 5.2% in 2018.

On the flip side, however, farmers have been reeling from smaller incomes since the government was not able to adequately implement safeguards that came with RA 11203.

Di naman nakaka-apekto kasi marami namang mga imports na darating pa lang e. Tapos ang concern nga is harvest season so baka lalong bumaba ang presyo. So temporary lang naman ’yun (It won’t affect inflation because there are still a lot of imports that have yet to arrive. Also, the concern is that it’s harvest season so prices might continue to go down. This is temporary),” Mr. Diokno explained.

For one farmers group, however, safeguard measures have more legal basis under RA 11203, which is otherwise silent on suspension of rice importation.

Matagal na naming pinu-push ’yung (We have been pushing for the implementation of) general safeguard duties, kasi pag na-impose nga sana iyon (because if the higher rates were imposed), it becomes more expensive for importers to bring in more rice,” Federation of Free Farmers Chairman Leonardo Q. Montemayor said by phone.

Ang isang problema dito (One problem) is how will the suspension of importation be carried out kasi under the law, free importation na,” he added.

“You cannot just say bawal na yung (say stop) importation. It’s against the law,” he said.

The Philippine Chamber of Agriculture and Food, Inc. said imports could resume in January or February next year “to ensure that imports will not coincide with harvest by dry season in March-April 2020.”

Besides allowing a special safeguard duty to protect rice farmers sudden or extreme price fluctuations, RA 11203 also allows the president to increase, reduce, revise or adjust import duty rates when Congress is not in session.

If there is an expected shortage, or any event that may require intervention from the government, he is also authorized “for a limited period and/or a specified volume, to allow the importation at a lower applied tariff rate to address the situation.”

Mr. Duterte on Tuesday night also said he has ordered the National Food Authority (NFA) to purchase all of farmers’ rice.

“NFA must procure them without condition and regardless of moisture content; especially in areas devastated by typhoons, monsoon floods and earthquakes — at P19/kg, just so our farmers will have something for their families this coming festive season,” Samahang Industriya ng Agrikultura Chairman Rosendo O. So said in a statement. — Vincent Mariel P. Galang with LWTN

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