THE contribution of rice to the country’s inflation levels rose 10 times to one percentage point, while other food items were also major drivers to inflation this year, the Department of Finance (DOF) has said.
Data from the Philippine Statistics Authority (PSA) showed rice was the No. 1 contributor to inflation in September 2018, while food items in the consumption basket like fish, meat and vegetables accounted for more than half of the inflation rate in the same month.
The DOF, in its presentation during a recent Cabinet meeting, bared that in contrast, the contribution of nonfood items—such as electricity, gas and other fuels—slowed down since July this year.
“Rice tariffication and reforms in food policy are needed to address the repeated rice-supply problems,” Finance Secretary Carlos G. Dominguez III said.
The DOF said the rice tariffication bill, once passed into law, is expected to liberalize the importation of rice in the country.
The measure is also seen to help lower rice prices, while providing enough support for local farmers who will be affected by the influx of cheaper rice imports.
President Duterte this week certified as urgent the rice tariffication bill, with his economic managers estimating that liberalizing rice imports will lower the retail price of rice by P2 to P7 per kilo, and reduce inflation rate by 0.4 percentage point.
“Food inflation is the main driver of inflation, especially in recent months. The DA [Department of Agriculture], which is the key to bringing down food prices, has been empowered under several presidential directives to put in place measures to increase food supply and bring down food prices,” said Finance Assistant Secretary Antonio Joselito G. Lambino II in a Malacañang news briefing on Wednesday.
These presidential directives include Administrative Order (AO) 13, which removed administrative restrictions on the importation of agricultural products.
The President also issued Memorandum Order (MO) 26, directing the DA and the Department of Trade and Industry (DTI) to implement measures to reduce the gap between the farm gate and retail prices of agricultural products.
Under MO 27, the DA, the Department of the Interior and Local Government (DILG), Philippine National Police (PNP) and the Metropolitan Manila Development Authority (MMDA) are ordered to “adopt measures to ensure the efficient and seamless delivery” of imported agricultural and fishery products from ports to markets; while MO 28 directed the National Food Authority to immediately release existing rice stocks in its warehouses.
Over the medium term, Lambino said the country needs to increase agricultural productivity to stabilize food prices by individualizing the agrarian reform collective titles to improve property rights and incentivize farm production; as well as improving efficiency by reallocating the budget from favoring certain crops and production inputs to more broad-based farm infrastructure, research and development, and support services.