The lifting of the quantitative restriction (QR) on rice may aggravate the displacement of Filipino farmers, since they would be discouraged to plant the staple with the entry of cheaper rice, according to local experts.
Former Labor Undersecretary and dean of the University of the Philippines School of Labor and Industrial Relations Dr. Rene E. Ofreneo said the entry of imported cheap rice in the country might force rice farmers to shift to planting other crops.
“The effect would not be immediate, but, the way I see it, there will be continuing labor erosion. You can imagine the displacement in the farming population. There would be a need for adjustment,” Ofreneo told the BusinessMirror at the sidelines of a recent forum on QR on rice.
Shift
Ofreneo said even if rice farmers decide to shift to planting high-value crops (HVCs), such an alternative wouldn’t be an assurance that they would stay in the agriculture sector, as they could face problems in terms of planting technicalities.
“The shift from rice farming to HVC is not that easy. It will take time. How do you shift overnight, especially if your areas and systems are meant for planting rice [and not for other crops]?” Ofreneo said.
“You have a lot to consider as a farmer: First, the water infrastructure; second, do you own the land; third, do you have the know-how [in farming HVCs] and use of related planting technologies; fourth, do you have the capital?” Ofreneo added.
He said the government should have a comprehensive program that would help farmers in the post-QR regime should there really be an influx of imported rice in the country.
‘Slow-motion crisis’
“The agriculture [sector] has been sacrificed all along. The sector now is less than 10 percent of the gross domestic product. The intensification of displacement will be slowly felt during the post-QR regime,” he warned.
“The farmers would lose income by the time they harvest due to cheap rice. It’s a slow-motion crisis, if you look at the past 15 years, the contribution of agriculture in the economy has greatly shrunk,” Ofreneo pointed out.
The labor expert recommended that the government lay down programs that would promote and boost research and development in the farm sector, particularly cultivating good plant varieties. Ofreneo added that the government should also look at the agricultural credit woes that hurdle farmers to borrow capital from banks.
“What will happen here during the post-QR, there would be a widespread contract growing in the country, especially in Mindanao,” he said.
“What’s important here is to build up your community and have a new production culture,” he said.
Repeat of 2008 crisis
For his part, UP Los Baños Crop Science professor Dr. Teodoro Mendoza of the Integrated Rural Development Foundation, a non-governmental organization, said there is a possible repeat of the 2008 rice crisis, when rice price in the global market shot up to more than $1,000 per metric ton (MT), could happen again after the removal of QR on rice.
“It’s a very big possibility because of the decrease in our rice production and the increased volume of our imports. In 2008, when we imported so much rice amounting to more than 2 million MT, it caused an imbalance in the global price. From the usual $500 per MT, it became $1,100 per MT,” Mendoza said.
The Department of Agriculture (DA) earlier warned that the lifting of the QR on rice would discourage farmers from planting the staple and widen the country’s rice-supply shortfall in 2018.
Tight supply
Agriculture Secretary Emmanuel F. Piñol said the Philippines would also be hard-pressed to beef up its stocks by importing rice in 2018 due to the projected tightness in global rice supply. Manila imports an average of 1 MMT of rice annually to boost its stocks, especially during the lean months.
The government has abandoned plans to ask the World Trade Organization (WTO) to extend the QR on rice due to lack of time, Piñol said a recent news briefing in Malacañang.
Piñol added this was the result of the discussions in the recent Committee on Tariff and Related Matters (CTRM) meeting. The CTRM is cochaired by the secretaries of trade and socioeconomic planning.
“In the last meeting of the CTRM, the consensus was against [DA’s position]. The QR will expire and the government cannot do anything about it,” he said.
‘Saving grace’
The DA chief noted that the country’s application for the QR extension was processed over a period of two years. To date, the Philippines is the only country in the world that continues to implement rice-import caps.
Piñol said the “saving grace” for the Philippines would be Republic Act (RA) 8178, or the Agricultural Tariffication Act of 1996, which has not yet been amended by Congress. RA 8178 needs to be amended to allow the Philippines to replace the QR—a nontariff barrier—with a specific duty.
According to the WTO General Council Ruling in 2014, the Philippines should subject rice imports to ordinary customs duties right after the waiver for special treatment for rice, which allowed the country to continue its QR on rice, expires on June 30 this year.
Earlier, the National Economic and Development Authority (Neda) said it is no longer possible to amend RA 8178 before June 30. Neda Assistant Secretary Mercedita A. Sombilla said the agency has already prepared a draft bill, but it has yet to be subjected to consultations.
Earlier, an official of the Neda told the BusinessMirror that the agency would recommend to the President a tariff ranging from 40 percent to 50 percent once the country converts the rice-import quota into tariffs.
The QR, a nontariff barrier, has allowed Manila to limit the volume of imported rice that will enter the Philippine market. Under the QR scheme, rice imports within the minimum access volume (MAV) of 805,200 MT per year are slapped with a lower tariff of 40 percent, while imports in excess of the MAV are slapped a higher tariff of 50 percent.
The Neda and some economists have pushed for the removal of the rice QR to make the staple more affordable to the poor.
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