Warning: Rice Farmers face Potential Losses worth P43 Billion due to Tariff Cuts- FFF
Published on: May 31, 2024.
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The Federation of Free Farmers (FFF) has expressed concern that reducing rice tariffs could have negative consequences for farmers, resulting in a loss of P33 billion and a lack of P10 billion in funding for productivity enhancement programs. The Department of Finance argues that lowering rice tariffs from 35 percent to 17.5 percent will lead to a P5 per kilo reduction in retail rice prices. However, the FFF warns that this tariff reduction does not guarantee lower retail prices and could potentially depress palay prices by P3 per kilo. If cheap imported rice saturates the market, competing with domestically produced rice, the price of palay could drop significantly, resulting in a P33 billion loss for rice farmers who typically harvest 11 million tons of palay in the second half of the year.
Additionally, the proposed tariff cuts are expected to reduce customs revenue by P10 billion, which would have been allocated to fund productivity programs for rice farmers. The FFF estimates that, combined with the losses from reduced palay prices, farmers could potentially lose a total of P43 billion from the proposed tariff cut in 2024 alone.
Raul Montemayor, National Manager of the FFF, highlights a previous instance where rice retail prices increased after the government lowered tariffs on non-ASEAN rice imports. Importers and middlemen failed to pass on the savings from lower tariffs to consumers. Montemayor also points out that some countries took advantage of these tariff reductions by raising their prices. For example, rice from Pakistan was originally eight percent cheaper than Vietnamese rice before the tariff cuts. Now, prices are similar, and Pakistani rice may even be more expensive than Vietnamese rice.
The 2021 tariff reduction also did not effectively diversify the country’s rice sources beyond ASEAN, as non-ASEAN rice imports only accounted for four percent of the total. The FFF suggests that the government explore alternative methods to lower rice prices without causing harm to local farmers. One solution could be for the government to purchase rice and distribute it to economically disadvantaged consumers through KADIWA stores and other outlets. Meanwhile, the private sector could ensure that unsubsidized rice reaches consumers who can afford it.
Montemayor concludes by stating that tariff cuts are unnecessary since import prices are expected to decrease soon anyway, as Secretary Recto has previously mentioned.
Source: [Bilyonaryo](https://bilyonaryo.com)
