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Philippines – Think tank: Limit on rice imports more damaging to local farmers

MANILA, Philippines — President Duterte’s latest pronouncement to limit rice imports during harvest season is actually more disastrous to local farmers, according to a think tank.

Research and advocacy group Action for Economic Reforms (AER) said the policy pronouncement of curbing rice imports would erode the gains from the Rice Tariffication Law.

Duterte earlier said his administration would help local farmers by stopping importation during harvest season and by buying local produce.

“This will not stabilize rice prices. History has shown that it is the manipulation of import controls that has created volatile and high prices for the overwhelming majority of Filipinos,” AER said.

“Farmers will enjoy higher prices in the short-term, but this will aggravate their long-standing problem of inefficiency and low productivity,” it noted.

If government really wants to help local farmers, the intervention should be creating the conditions for them to increase their productivity to make them competitive, which in turn will increase their income.

“President Duterte wants to help farmers, but his idea of helping farmers—by restricting imports during harvest season—makes them dependent on a short-sighted policy, which will not transform their conditions,” AER said.

“Worse, it comes at the expense of hurting the Filipino consumers, including many farmers themselves because they are net consumers themselves,” it said.

AER said even if import restriction would artificially boost palay prices, this has not improved the lives of farmers during the decades that quantitative restrictions existed.

“The import surge that we witnessed last year was part of a process of seeking a new normal. Now we see the imports stabilizing. Importers and buyers and consumers have now adjusted to a new equilibrium,” it said.

“President Duterte got it right when he proposed rice procurement, but to combine this with import restriction will be a disaster,” AER said.

Under the Rice Tariffication Law, quantitative restrictions on rice importation are lifted and private traders are allowed to import the commodity from countries of their choice.

The Rice Tariffication Law replaced the government’s quantitative restrictions on importation of the staple with a 35 percent tariff.

The measure also created the Rice Competitiveness Enhancement Fund or a special rice buffer fund, with an initial P10-billion annual fund to ensure the competitiveness of rice production.

Source: https://www.philstar.com/business/2020/01/15/1984824/think-tank-limit-rice-imports-more-damaging-local-farmers