DA chief: Rice importation will continue

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MANILA, Philippines — After days of confusion triggered by President Duterte’s order to stop rice importation, Agriculture Secretary William Dar made it clear yesterday that importation of the staple will continue in line with the Rice Tariffication law.

Instead of banning importation, Dar said the government will impose stricter measures to temper the influx of the commodity from abroad under a liberalized rice regime.

At a briefing, Dar said the Philippines will proceed with the Rice Tariffication law which allows the unlimited entry of imported rice.

Duterte declared a ban on rice importation on Wednesday, purportedly to help local farmers complaining of plunging palay prices as a result of the Rice Tariffication law.

Dar, Executive Secretary Salvador Medialdea and Finance Secretary Carlos Dominguez III met with Duterte Wednesday night to clarify his pronouncements.

“He (Duterte) said the country’s rice industry will continue to thrive with the implementation of the programs under the Rice Competitiveness Enhancement Fund,” Dar said.

“He said that the Rice Tariffication law will be pursued to provide affordable and quality rice to all Filipinos,” Dar added.

In a matter of days, the government has issued conflicting statements on whether or not to suspend rice importation amid falling prices of palay.

Stopping imports is against the Rice Tariffication law as doing so would mean imposing quantitative restrictions on the commodity.

As a solution, the Department of Agriculture (DA) said it will instead impose stricter measures in the issuance of sanitary and phytosanitary import clearance (SPSIC) – a move initiated weeks ago even before Duterte started issuing conflicting statements.

“The President is really looking at all angles and this is the directive. We will be strict in giving SPSIC, especially during the main harvest season,” Dar said.

“Let us give the law a chance to work. Initially, there will be winners and losers. But we will not stop it, we are implementing the law properly,” he added.

For instance, the agency will conduct pre-inspection at the point of origin of imported rice stock to ensure quality and safety for consumers and at the same time protect the spread of crop pests and diseases.

However, the Federation of Free Farmers (FFF) maintained SPSIC regulations are intended to protect local crops from contamination from foreign pests and diseases and to ensure that the food imported is safe to eat.

It is not intended as a trade barrier, or a tool to control imports, although it may have that effect, FFF said.

“SPSIC regulations must be science-based and they must be applied uniformly and regularly.  We cannot tighten SPSIC regulations during harvest time and then loosen them during the off season,” FFF national manager Raul Montemayor told The STAR.

“At most therefore, the stricter application of SPSIC measures and tighter implementation in the issuance of SPSIC will provide only temporary relief against the uncontrolled inflow of imports,” he added.

FFF maintained that the best way to control the surge in imports is through the imposition of general safeguard duties on imports.

“The legal and factual basis for doing this now is readily available, but it seems that the economic managers are dead set on not allowing this and Dar is deferring to them,” Montemayor said.

“In effect, the DA is prescribing the wrong medicine. It may have some temporary effect, but it will not cure the root cause of the problem,” he added.

Meanwhile, Dar said Duterte also ordered the National Food Authority (NFA) to increase the country’s emergency buffer stock from 15 to 30 days by buying more palay from farmers.

The NFA will accelerate the turnover of its inventory by buying more palay and selling more regular milled rice, at an average of 20,000 50-kilogram bags or more of rice per day.

At a daily national rice requirement of 32,000 metric tons, a 15-day rice buffer stock would be equivalent to 480,000 MT of rice, or about 740,000 MT of palay.

At P19 per kilo buying price of NFA, the agency will need P14 billion. If the buffer stock is increased to 30 days, funding requirement will be P28 billion. As of now, NFA’s procurement budget is only P7 billion.

“Even assuming NFA secures enough funding, it will not be able to accommodate enough palay because of limited warehouse space. Because it lacks driers, it can normally accept only clean and dry palay at 14 percent moisture content delivered to their buying station, thereby disqualifying most farmers who cannot comply,” Montemayor said.

“If NFA buys palay at P19 per kilo and sells subsidized rice at P25 per kilo, it will lose around P10 per kilo of rice. If they sell 1,000 MT per day, daily losses will amount to P10 million. In one year, losses will amount to P3.6 billion,” he added.

FFF maintained that the directive for NFA to buy more palay and sell more rice runs counter to the provision of the Rice Tariffication law which mandates NFA to limit its role to buffer stocking and to release rice only in the event of calamities and emergencies.

Price manipulation

Dominguez, meanwhile, has called on the Philippine Competition Commission (PCC) to probe the possible manipulation of rice prices.

In an interview in New Clark City, Tarlac, Dominguez welcomed Dar’s announcement that rice importation will continue.

According to the finance chief, what the President is concerned about is the welfare of rice farmers.

“There are problems on both sides and we will address them within the law,” Dominguez said.

In line with this, he said the Department of Finance (DOF) has asked the Department of Trade and Industry (DTI) and the PCC to look into possible rice hoarding amid the flood of imported rice resulting from the Rice Tariffication law.

Dominguez agreed with the assessment of Finance Undersecretary Karl Kendrick Chua that there may be a problem in the “middle supply chain,” resulting in the wide discrepancy between the farmgate price of palay and the retail price of regular milled rice.

“If you look at the numbers, it looks like the raw material is dropping but the final material is not. So something must be going on. The trend should be the same, the rate of drop should be the same,” he said. “But it seems it’s not being reflected so somebody must be intervening in the market.”

In addition, Dominguez said the DOF and the DA are taking steps to hasten the release of funds to help farmers affected by the liberalization of rice imports.

For one, he said the DA already has a list of the farmers who are entitled to receive assistance from the government. 

The secretary said rice tariff collections in excess of the P10 billion required under the Rice Competitiveness Enhancement Fund (RCEF) will be allocated as additional support for affected farmers.

“The P10 billion is already fixed. The excess will be part of the P6 billion that will be allocated for farmers for two years,” he added.

Republic Act 11203 or the Rice Liberalization Act opened up the importation of rice in the country by imposing tariffs in lieu of quantitative restrictions.

According to the DOF, additional government revenues from the implementation of the law have reached P11.4 billion as of Oct. 31, providing an excess of P1.4 billion so far.

House leaders pitch in

Leaders of the House of Representatives, for their part, vowed to speed up approval of two measures to help rice farmers affected by falling prices of their produce.

They made the promise yesterday, a day after President Duterte urged Congress to allocate funds for palay procurement.

Deputy Speaker Luis Raymund Villafuerte called for prompt approval of a joint resolution seeking to allow the use of up to P9.9 billion for palay buying and of another proposal to allocate excess rice import tariff collections for financial aid to farmers.

“Both chambers of Congress can do their part in helping President Duterte provide succor to small farmers affected by approving these measures as soon as possible,” he said.

He said P9.9 billion is the balance for this year of rice subsidy funds for beneficiaries of the Pantawid Pamilyang Pilipino Program or 4Ps, and for soldiers, policemen and other uniformed personnel.

The joint resolution authorizes its transfer to the NFA, which would use it to buy palay from farmers, mill it and distribute it as rice to 4Ps’ beneficiaries and uniformed personnel at 20 kilos a month up to the end of this year, he said.

He added that as rice import tariff revenues, there is an estimated excess of P3 billion up to December, which could be used as subsidy to rice farmers.

Majority Leader Martin Romualdez said he and his Senate counterpart Juan Miguel Zubiri have agreed to replace the joint resolution on palay buying with a bill to obviate any potential legal problem.

“We will have to approve the bill soonest so that the NFA could use the P9.9 billion for palay procurement,” he said.

Earlier, the House and the Senate converted into a bill a joint resolution extending the validity of certain appropriations in the 2019 budget to the end of next year.

The conversion was prompted by a ruling of the Supreme Court in the case of government nurses that a law prevails over a joint resolution. A bill is the precursor of a law, while a joint resolution, though it undergoes the same process as a bill, has the effect and force of a law.

However, in the nurses’ case, the high court ruled that they are entitled to Salary Grade 15 (P30,000), the level prescribed under the Philippine Nursing Act of 2002, though the Department of Budget and Management, obeying a joint resolution passed by Congress and signed by the President, downgraded it to Salary Grade 11 (P21,000).