Understanding the Rice Tarrification Law

Being a member of the World Trade Organization (WTO), the Philippines needs to comply with diminishing trade barriers, but the country was given an exemption.

The exemption grants the country the right to have quotas on rice imports only. It started in 1995 and ended after we passed the rice tarrification law (RTL). It is meant to give protection to our farmers and to improve their skills to be competitive.

However, as time goes, we became an import dependent and export oriented country. We relied on the imposed quotas and have not taken advantage of improving our farmers own productivity.

There are a lot of failed agricultural modernization programs due to poor institutions, weak policies, and corruption. These barriers give our farmers a hard time growing and this made our agricultural sector stagnant.

Vietnam and Thailand outlast our country when it comes to productivity. Mismanagement on imports is evident as we had shortages but we also had surplus in supply of rice in the past few years.

The ultimate effect of this is not only financially, but it deteriorated our farmers well-being. We lost the years that’s given to us by the WTO to make our farmers at par with our regional neighbors.

Tarrification is still a form of protection. RTL imposed a tariff of 35% of declared value that increased the price of imports. The money they will generate is designed to help the farmers.

The law has a safety net also of 10B pesos allocated to directly help the farmers in the form of seeds, technical assistance, machineries, and credit. However, the farmers still experience a hard time adjusting, given that imports of rice significantly increased, the market value fallen greatly.

This made the price of palay very low. Farm-gate prices reached below cost-levels that gives our farmers little to nothing income. Even if there’s a 10B pesos RCEF, if it’s not felt by our farmers, it’s still not effective.

Several administrations already led the country but our agricultural sector remained stagnant. There’s no real reform to distribute lands to our local farmers.

Our local farmers’ battle cry is to raise palay prices and make it competitive. According to the Philippine Statistics Authority, a farmer needs 12 pesos to harvest 1 kilo of palay, and then its market price is 17 pesos.

However, in Central Luzon, capitalists tend to bargain it to 7 to 8 pesos per kilo but this price can’t even make our farmers to break even. RTL is also a big factor. It lifts quotas on rice imports, now, imported rice from Southeast Asian countries flooded our market, giving local produce low demand which results in lower prices.

What’s the reason the Philippines has the richest families in the Forbes list but a lot of Filipinos living in rural areas are poor? There’s wide monopoly of land in the Philippines. Farmers still don’t have their own land to till. The promise of land distribution from past and present administrations is still not happening.

Another group that’s affected by RTL is the National Food Authority itself because the law disregards the agency’s purpose, their workers are worried of lay off when the time comes that the agency is dissolved.

It’s true that we live in the irony of being an agricultural country yet we have struggling farmers. If only we get to use our country’s natural wealth, we develop and benefit from it, those resources would be more than enough to aid our current population.

We need a genuine agrarian reform and not just trade liberalization. We have to use and develop our own, not depending too much from others.

* Edward James Ente is a graduate of Political Science major in International Relations from the Polytechnic University of the Philippines. He was a delegate to the BOAO Forum for Asia Youth Summit in 2018.