A FARMERS’ GROUP has alleged that imported rice is being undervalued to evade tariffs following the implementation of the Rice Tariffication Law early this year, possibly shortchanging a rice farmers’ fund financed by tariffs.

Republic Act 11203 or the Rice Tariffication Law took effect on March 5, allowing the free importation of rice mostly from Southeast Asian sources if shippers pay a 35% tariff based on declared value.

According to the Bureau of Customs (BoC), it has collected P5.9 billion from imports of 1.43 million metric tons (MMT) of rice since the law was implemented.

In a statement, Raul Q. Montemayor, national manager of the Federation of Free Farmers (FFF), said the system’s weak point is misdeclared import values, and provided an estimate of P4.24 billion in unpaid tariffs.

He noted that the P5.9 billion generated from 1.43 MMT worth of imports at a P52 to the dollar exchange rate suggests a landed cost of $227 per metric ton, much lower than the estimate provided by the United Nations Food and Agriculture Organization (FAO) of $391 for the 25% broken gains variety.

Mr. Montemayor said the alleged underdeclaration suggests that if all shipments were of the 25%-brokens variety, importers should have paid at least P4.24 billion more in tariffs.

The underdeclaration could be even higher if importers shipped in higher-quality rice, he said.

“In fact, reports indicate that most of the private sector imports were for 5% broken rice which commands a higher price in the market and offers a better profit margin for traders. This type of rice should have landed at $422 per ton at the lowest, instead of just $227. In this scenario, the tariff discrepancy would amount to around P5.1 billion,” he added.

The tariffs are to be set aside to finance the Rice Competitiveness Enhancement Fund (RCEF), a requirement of RA 11203. Expected to raise P10 billion a year, the tariffs will support various projects to increase farm mechanization and provide credit, seed and knowhow.

“Because of undervaluation of imports, tariff collections may not breach the P10 billion threshold, or the excess may be too small to provide any meaningful assistance to affected farmers,” he said.

Mr. Montemayor said that loss of tariff revenue could hinder the law’s intended purpose of modernizing the rice industry.

On the delayed release of RCEF funding, he said that FFF will file a case with the Ombudsman against the Department of Budget and Management (DBM) if the fund is not fully released within the year.

Mr. Montemayor said the failure to pay proper tariffs is providing unfair competition to domestic farmers, noting that $227 per MT is equivalent to P17.30 per kilo wholesale, thereby depressing the farmgate price of palay, or unmilled rice.

If forced to compete with the imported price, he said traders will need to buy palay from farmers below P10 per kilo, he said.

The average farmgate price of palay fell 0.3% week-on-week during the fourth week of June to P17.85 per kilogram (kg), the Philippine Statistics Authority (PSA) said.

Expectations of depressed domestic prices could deter farmers from expanding the area planted to rice. — Vincent Mariel P. Galang

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