A study published recently by the Organisation for Economic Co-operation and Development (OECD) warned that Filipino farmers face the prospect of losing as much as $4 billion (or P200 billion) in income with the scrapping of tariff in Asean. The study, titled “Market implications of the integration scenario of Southeast Asian rice markets,” looked at the outcomes of rice trade within the Asean region by 2025. Authors Gen Furuhashi and Hubertus Gay found that under a zero-tariff regime, rice farmers in the Philippines would incur production losses of at least $2 billion. Under a fully integrated market (zero-tariff plus removal of non-tariff measures), farmers stand to lose $3.966 billion.
The projection was based on the assumption that the free flow of goods within Asean would result in cheaper food and encourage traders to buy more from neighboring Southeast Asian countries. Filipino consumers, particularly the poor, would benefit immensely from this, as rice would become more affordable. This is because the poor set aside as much as 50 percent of their income for food, according to the Philippine Statistics Authority, so cheaper rice would mean more money to spend for other basic needs.
However, some 2.4 million farmers who are directly dependent on income from rice also face the possibility of losing their livelihood. The government has expressed this apprehension in 2012, when Manila urged the World Trade Organization (WTO) to extend the waiver for the special treatment for rice. Sans a solid plan to help them compete with farmers in neighboring Southeast Asian countries, the displacement of rice farmers could increase poverty incidence in the Philippines.
Preparations to enable rice farmers to compete should have been in place as soon as the Philippines joined the WTO in 1995. Two decades after acceding to the WTO, the same ills that have plagued the rice sector—low mechanization rate, high cost of production, inability of farmers to access cheap credit—have yet to be addressed.
Agriculture Secretary Emmanuel F. Piñol has made it clear in his pronouncements that the Duterte administration is not abandoning the rice self-sufficiency bid. The government is currently crafting a road map for the rice sector after it decided to just allow the WTO waiver to expire this year. The House of Representatives will resume this month discussions on a bill that will amend a law that has enabled the Philippines to continue imposing rice-import caps. Experts said the conversion of quantitative restriction on rice into tariffs would mean more revenues for the government, as traders would be required to pay more if they want to purchase more imported rice.
We hope that the road map being crafted by the government for the rice sector will reflect the wish of the President—to protect Filipino farmers and prioritize local production. We call on the government and Congress to see to it that funds from the conversion of rice-import caps into tariffs would be used to bankroll the road map. Congress must ensure that proposals to amend Republic Act 8178 would include a provision for this purpose.
Image credits: Jimbo Albano