AMID the continous decline in the price of unhusked rice produced by local farmers, the Bangko Sentral ng Pilipinas (BSP) maintained that the government did the right thing in easing the restrictions on imports via the rice trade liberalization law.
BSP Governor Benjamin E. Diokno told reporters on the sidelines of The Asset Forum in Bonifacio Global City on Tuesday that the Philippines is not competitive in rice production.
Diokno said rice is two to three times more expensive to produce in the Philippines and this places the farmers and consumers at a disadvantage.
“So choose [between] 105 million Filipinos versus 1.25 million farmers. Who will benefit? In fact some of the farmers are consumers, right? So [the choice is a] no-brainer,” Diokno said. “[Easing import restrictions] still makes a lot of sense because of the law of comparative advantage.”
The BSP chief also said Republic Act (RA) 11203, or the rice trade liberalization law, needed to be passed since it has been “languishing in Congress for 50 years.”
He said a policy that removed the import restrictions on rice will serve the “greater good.”
When it comes to giving farmers cash or rice subsidy, Diokno said the choice was another “no-brainer” as farmers would rather receive cash.
Cash, he said, is a better transfer because it will allow households to adjust their spending according to their needs.
“Cash is better than in kind. If you want to help somebody, it’s better to give them cash,” Diokno said.
Last week, the Philippine Statistics Authority (PSA) disclosed that the average farm-gate price of dry unhusked rice sank to a new seven-year low in the second week of September.
Preliminary figures released by the PSA showed that average palay prices plunged 30.08 percent to P16.18 per kilogram, from the P23.14 per kg recorded in the same period of last year.
The latest average dry palay quotation is the lowest since the fifth week of March 2013, when dry palay farm-gate price averaged P16.15 per kg.
Farm-gate prices fell after RA 11203 took effect on March 5. Experts, such as University of Asia and the Pacific Center for Food and Agribusiness Executive Director Rolando T. Dy, said the influx of imports caused the rice glut and resulted in lower quotations from traders.
Image credits: Bernard Testa