DA to change benchmark for ‘flexible’ rice tariff scheme

By Vonn Andrei E. Villamiel

THE DEPARTMENT of Agriculture (DA) will replace the benchmark price used for the “flexible” rice tariff scheme to better reflect the actual prices of rice varieties that the country imports.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. told BusinessWorld that the agency will no longer use the Food and Agriculture Organization’s (FAO) free-on-board price for Vietnam 5% broken rice as the basis for tariff adjustments.

“Most of our import is not the basic Vietnam 5% broken rice. The majority of the imported rice here is the Vietnam DT8 variant, and that is what we should be monitoring and using as the basis,” he said in a Viber message.

Mr. Laurel said the price of the DT8 rice variety is $430 to $450 per metric ton, which is higher than the FAO’s $361-per-metric-ton quotation for Vietnam 5% broken rice in December.

The flexible rice tariff scheme, which began this year under Executive Order (EO) No. 105, allows import duties to rise or fall in response to global prices. Tariff adjustments are made in increments of five percentage points, with rates capped at 15% and 35%.

Under the EO’s implementing guidelines, signed by the interagency group consisting of the Economy, Agriculture, Trade, and Finance departments in December, the benchmark for tariff adjustments was originally the monthly average FAO price for Vietnam 5% broken rice.

FAO data from December showed Vietnam 5% broken rice at $361.32 per metric ton. This is within the threshold price range of $350 to $367 per metric ton, which translates into a 20% duty under the flexible tariffication formula.

The tariff adjustment for the first quarter of the year was supposed to take effect on Jan. 16, but the DA did not issue a certification, saying that actual prices of imported rice have not fallen below the $367-per-metric-ton trigger level for the duty.

The department also said the 15% tariff rate on imported rice is retained until the end of March.

Mr. Laurel did not say whether the inter-agency group would issue new guidelines or amend the existing rules to reflect the change in the benchmark.

Farmers’ groups have criticized the variable tariffication scheme as being designed to keep the tariff rate low, allowing cheaper imported rice to flood the market and depress farmgate prices.

“The starting point for any adjustment should be 35%. The current scheme only serves to maintain the 15% tariff,” Jayson H. Cainglet, executive director of the Samahang Industriya ng Agrikultura, earlier told BusinessWorld.

Farmers argue that the tariff should return to a fixed 35%, the rate originally imposed on Southeast Asian rice imports when the Rice Tariffication Law took effect in 2019.

The tariff was cut to 15% in June 2024 under EO 62 to help contain inflation. Since then, the landed cost of imported rice has fallen by as much as 40% to 50%, according to Mr. Cainglet.

He added that the low tariff rates primarily benefit importers, while rice producers bear the brunt of the policy, and consumers see little improvement in retail prices.

“We cannot accept the claim that ‘market forces’ are driving rice prices. Farmers struggle while importers receive protection, and consumers have never truly benefited. Tariff reductions and consumer interest are just pretexts for higher profits for importers,” Mr. Cainglet said.