By Luisa Maria Jacinta C. Jocson, Reporter

THE President’s rejection of the proposal to reduce tariffs on rice imports will help stabilize prices, as supply receives a boost from domestic farmers, who get to bring in their harvest without disruption from cheap imports, analysts said.

Raul Q. Montemayor, chairman of the Federation of Free Farmers, said the organization supports the Palace’s decision not to lower tariffs.

“Harvests are already starting, there will be no supply problem until the end of the year, and because of increased supply, prices will naturally go down and stabilize,” he said in a Viber message.

“But at some point next year, we will still have to import because our total annual output is enough for only about 80% of our annual (demand),” he added.

President Ferdinand R. Marcos, Jr. last week rejected a proposal from the economic team to cut the tariff on imported rice to as low as 0% from 35%.

Samahang Industriya ng Agrikultura (SINAG) last week expressed its support for the Palace’s decision, calling it a “significant milestone for the agriculture sector.”

SINAG Executive Director Jayson H. Cainglet said that issues driving up rice prices include distribution gaps and hoarding and profiteering.

“Even if the executive order on tariff reduction was signed, it would not have solved these problems,” he said in a Viber message.

“We have no rice shortage, we are safe beyond the first quarter of next year. (There is) no basis for tariff reduction,” he added.

Philippine Chamber of Commerce and Industry President George T. Barcelon said that the rejection likely means that Mr. Marcos prefers sticking to the temporary price cap.

“This would allow the economics of supply and demand to play out… What’s important is for the government to be vigilant regarding hoarders and price manipulators. Policies to maintain price stability in the food commodities are fundamental to containing inflation to help low-income earners,” he said in a Viber message.

By executive order, rice retail prices were capped at P45 a kilo for well-milled rice and P41 for regular-milled rice, starting Sept. 5.

To address spiraling prices, Mr. Montemayor said that the government should still manage imports to prevent depressing the price of palay (unmilled rice) and disincentivizing farmers.

“Otherwise, we will end up becoming even more reliant on imports at a time when international prices are rising, and countries are restricting their exports.”

“We can resolve hoarding, profiteering and smuggling — if we can finally convict those involved. We have zero convictions despite all the raids, padlocking, seizures. That’s why these people remain emboldened,” he said.

“The problem is the distribution gaps; especially the market abuse of a few importer-traders and those involved in profiteering. The government must finally sustain support and subsidies to increase our rice yield,” he added.

If cost of production can be reduced to P10-12 per kilogram and farmgate prices are at P18-20 per kilogram, then well-milled rice prices could fall to as little as P36-38 per kilogram, Mr. Cainglet said.

On the other hand, Foundation for Economic Freedom President Calixto V. Chikiamco said that complying with the rice caps would have helped if the tariff cut was approved.

“The recent rejection is disappointing… In fact, the rice price cap would be rendered unnecessary as traders would be able to offer regular rice at P41 per kilo and well-milled rice at P45 per kilo without the 35% tariff,” he said.

Mr. Chikiamco said higher prices may likely lead to an imbalance of supply and demand. He also noted that the only way to stabilize prices is to “flood the market with rice.

“However, the National Food Authority can no longer import rice.  It has also not built enough reserves,” he said.

“Without sufficient reserves, especially during the lean season from late December to March, any disruption from adverse weather conditions can cause a further imbalance in supply and demand and cause prices to skyrocket.  By that time, the government may be helpless to do anything about it,” he added.

The US Department of Agriculture (USDA) last month downgraded its forecast for Philippine rice production due to crop damage caused by typhoons.

Milled rice production is estimated to slip to 12.55 million metric tons (MT) for the market year 2023-2024, lower than its previous forecast of 12.6 million MT.

Rice imports are also expected to decrease to 3.5 million MT, down from the USDA’s earlier estimate of 3.8 million MT.