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DoF says rice still effectively protected, hampering downstream sectors

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rice farmers
PHILSTAR

THE finance department said rice effectively continues to enjoy tariff protections, forcing industries that are downstream from rice, such as those that depend on it for feed, to be more efficient to compensate for increased costs.

“Rice continues to enjoy effective tariff protection not enjoyed by other sectors even with the removal of quantitative restrictions (QRs),” it said in an economic bulletin released Friday.

Effective protection rate (EPR) refers to how trade policy and tariffs affect an industry.

“Rice has a 44.4% effective protection rate which means that for every peso of value added, it is accorded a 44.4% price edge over the competing import,” the report said.

As for other agricultural products, corn has an EPR of only 5.8%. it said.

“Unfortunately, the negatively-protected downstream sectors will need to be super-efficient to survive import competition,” it said.




The report said hog farmers needs to be 13.3% more efficient than their competitors overseas while cattle farmers need to be 7.2% more efficient.

“They have no choice but to buy more expensive inputs from rice and prepared feeds,” it said.

Meanwhile, the slaughtering, meat packing, and meat preservation industries

also need to to improve their efficiency to survive global competition.

“The Department of Agriculture (DA) will need to implement rice productivity programs to enhance the sector’s competitiveness. Only when the productivity has increased can the country unwind the high protection and enable downstream industries and consumers some breathing space,” it added.

The Rice Tarrification Law, enacted in March, has removed quantitative restrictions on imported rice from Southeast Asia and imposed a 35% tariff instead. The law also allots P10 billion a year in funding from tariffs to provide seed, machinery, credit and technical assistance to farmers.

The average farmgate price of palay eased 4.4% year-on-year in the fifth week of August to P16.68 per kilogram (kg). In some areas the buying price for palay quoted by private traders has fallen to as little as P7 per kilo, with many traders preferring to source their supply from imports.

The government has resorted to increasing the support price paid to farmers by the National Food Authority (NFA), increasing the NFA’s procurement budget and roping in local governments to buy palay, or unmilled rice, diectly from farmers, because of traders’ unwillingness to pay a “fair” price..

Socioeconomic Planning Secreatry Ernesto M. Pernia said Thursday that the six-month-old law will have to “play out” first and cited the need to wait for market conditions to normalize.

“Rice tariffication is… we just need to let it play out… to normalize,” Mr. Pernia told reporters in chance remarks when asked if the law has been effective.

He also said the farmers are being supported by the P10-billion-a-year Rice Competitiveness Enhancement Fund (RCEF).

“The farmers are complaining, but they are getting subsidy. They are getting subsidy… (RCEF) is a subsidy. They don’t have to pay for that. There’s also a part loan I think. But that is something new. The earlier P10-billion allocation (RCEF) was pure subsidy,” he said.

To keep retail prices low, the NFA said last week that it plans to release 3.6 million bags of imported rice onto the market until early October while increasing its busying price for palay to P19 from P17. — Beatrice M. Laforga

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