Philippines: FFF sees no additional benefits in extending rice tariffs

• Nov 22, 2022

MANILA, Philippines — The Federation of Free Farmers (FFF) is urging President Marcos to reject the proposal of economic managers to extend low tariffs on imported rice until next year as it is seen non-beneficial to the country with rice exporting countries cutting shipments and raising tariffs.

The proposal was to extend Executive Order 171, issued by then president Rodrigo Duterte, which lowered the tariffs on rice imported from non-ASEAN countries from 50 percent to 35 percent until year-end.

The FFF said the National Economic and Development Authority (NEDA) and the Department of Finance are reportedly backing the Foundation for Economic Freedom to extend the validity of EO 171 until Dec. 31 next year.

EO 171’s objective was to diversify the country’s sources of imported rice and stabilizing prices.

However, the farmers’ group argued that it failed to achieve this objective and benefitted only a few importers and rich consumers of rice, while depriving the government of more than half a billion pesos in tariff revenues.

Data gathered by the FFF from the Bureau of Customs (BOC) showed that, while the number of non-ASEAN exporters increased after EO 171 took effect last June, only Pakistan was able to sustain its shipments to the country.

FFF national manager Raul Montemayor said he saw no additional benefit to the country in extending EO 171, since Pakistan is poised to curtail its rice exports in the coming months following massive floods that hit its rice production areas.

Moreover, India – which is the only realistic alternative to Pakistan – imposed a 20 percent tax on its rice exports to preserve its own stocks following similar climatic disturbances.

Despite the EO, the Philippines has remained heavily dependent on ASEAN suppliers, which accounted for 94 percent of the total imports.

“Although imports from Pakistan and other countries outside ASEAN arrived at a cheaper price because of lower tariffs, ordinary consumers did not benefit because most of the imports were for premium grades of rice. If ever traders passed on any cost benefits to consumers, the beneficiaries were the rich consumers of Indian Basmati rice, Japanese stick rice, or exotic rice dishes in five-star restaurants,” Montemayor said.

Meanwhile, retail prices of rice have been stable and even showed a temporary downtrend in certain months, the FFF said.

The latest bulletin from the Philippine Statistics Authority did not mention rice as a contributor to the spike in inflation rates.

Citing BOC data, the FFF said the government had incurred over half a billion pesos in losses in potential tariff collections due to the slash in tariffs on rice imported from non-ASEAN sources.

A further analysis revealed that rice from Pakistan would have been competitive against those from Vietnam, the largest exporter to the Philippines, even if the former’s tariff had been retained at 50 percent.

“Instead of looking outside ASEAN, the Philippines should reduce its dependence on Vietnam by developing supply arrangements with other ASEAN countries like Cambodia and Myanmar.  This strategy will not require any tariff adjustment, will not incur any losses in customs duties, and will even improve our trade relationships with our ASEAN neighbors,” Montemayor said.

The FFF official also questioned the apparent ploy of the economic managers to wait for Congress to adjourn for the Christmas break and then ask the President to approve the extension of EO 171 through another Executive Order.

By law, the President can change tariffs to address urgent concerns only when Congress is not in session.

“The economic managers have perfected the habit of abusing the power that was merely delegated to the Executive by Congress. There is no rice crisis, and not a single petition has been filed in Congress to extend EO 171. Why are the economic managers pushing for its extension and bypassing Congress by waiting for it to adjourn?” Montemayor said.

Source: https://www.philstar.com/business/2022/11/22/2225456/fff-sees-no-additional-benefits-extending-rice-tariffs