Price manipulation seen as ‘pitfall’ under new rice regime

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rice farmers

THE removal of the National Food Authority’s (NFA) ability to intervene in the rice market may encourage further cartelization in the industry to manipulate prices of the key staple, a former Agriculture Secretary said.

“The pitfall (of rice tariffication) is that it removes the government’s ability to intervene to stabilize prices. Either the price of rice is too low (to be attractive to farmers) or the scenario could also be cartelizing to raise (retail) prices,” former Secretary William D. Dar said in a phone interview on Monday.

Mr. Dar is currently the president of the Inang Lupa Movement, Inc and previously a director-general of the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT).

Mr. Dar, however, said that the public’s best hope with the Rice Tariffication Law’s passage is the minimum P10-billion annual allocation to a Rice Competitiveness Enhancement Fund (RCEF), which will be given for six years and which he described as of great help to farmers.

“It is now a law, so let’s make the best out of it. P10 billion is a welcome development to make Filipino farmers very productive, competitive, and I hope by the end of the six-year period, they can compete with other farmers globally,” Mr. Dar said.

Mr. Dar noted that on the other hand, the fund could come under the control of corrupt government officials.

“We should be very vigilant, and hope that the government will be very transparent in implementing the P10 billion a year competitiveness enhancement fund. The pitfall of that is if it is corrupted,” Mr. Dar said.

The law’s passage is expected to diminish the area devoted to rice production, pushing farmers to climb the value chain to higher-value crops, Mr. Dar said.

“Your area for rice production will be decreased, but the other side is that the farmers can be given the right training (to go into) high-value agriculture. The rice production areas that are not suitable for rice are better converted to fruit and vegetable farms that can grow in two to three months, such as watermelon,” Mr. Dar said.

“These are mostly rented upland areas. Those are not suitable for rice production,” Mr. Dar added.

Asked when the impact of the law might be felt, Mr. Dar said, “There will be an initial reading by the end of this year.”

Late Sunday, Agriculture Secretary Emmanuel F. Piñol said that the rice tariffication law is expected to initially depress prices for palay, or unmilled rice, but the market will adjust.

“Initially, there will be a drop in the buying price of palay but the farmers are expected to adjust by increasing productivity with funds coming from tariffication,” Mr. Piñol said in a social media post.

“Properly used, the RCEF could actually increase the productivity of Filipino rice farmers because farm mechanization alone will increase production efficiency and reduce post-harvest losses estimated at 16% of total production,” Mr. Piñol said.

The P10 billion is to be allocated as follows: P5 billion for farm mechanization, P3 billion for high-yielding seed, P1 billion for farm credit and P1 billion for technical skills training.

“The P3 billion intended for high-yielding seed developed by IRRI and PhilRice is also expected to increase average farm yields by at least two metric tons in (each of the) one million hectares (to be planted to hybrid) in the first year of implementation,” according to Mr. Piñol.

“The P1-billion credit facility will also allow farmers to buy fertilizer and farm inputs thus increasing their productivity while the P1 billion for technical skills training is expected to improve their farming technology,” Mr. Piñol added.

Mr. Piñol said that he has reservations about the removal of the NFA’s importation role but remains optimistic about the future of the agriculture sector.

“I have always been an optimist and I look at the advantages which Philippine agriculture could get from these twin measures (removal of quantitative restrictions and rice tariffication) rather than cry over spilled milk. Of course, I have to admit that I had my reservations on the provisions of the law which takes out the regulatory powers of the NFA but these are now settled with the signing of the bill into law,” Mr. Piñol said.

The Department of Finance (DoF) said on Monday that the rice tariffication will be implemented starting March 3, also noting that the NFA Council approved a motion instructing the NFA to submit a restructuring plan within 30 days instead of the initial proposal of 180 days.

“Our objective in liberalizing rice imports is to bring down the cost of the staple. Our (cost) is 50% higher than the others including Singapore which does not produce rice. Will it take us 180 days to effect a reduction in the cost of living of the people?” Finance Secretary Carlos G. Dominguez III said in a statement. — Reicelene Joy N. Ignacio