By Butch Fernandez & Jovee Marie N. dela Cruz
SENATE leaders are poised to mount a separate inquiry into the reported misuse by big-time traders of rice import privileges granted to farmer cooperatives, a systemic, decades-long malpractice that seemed to have expanded after passage of the rice trade liberalization law (RTL).
Asked if they see the need for
remedial legislation imposing tougher sanctions to ensure the law is not used
to further allow traders from using farmer groups as dummies, Senate President
Vicente Sotto III signaled readiness to endorse
the matter to the Committee on Agriculture and Food, chaired by Sen. Cynthia A.
Villar.
“Will tell Senator Villar to look into it,” Sotto told the BusinessMirror on Thursday.
This developed even as Sen. Francis “Kiko” Pangilinan, an avowed farmer on the side, pinned his hopes for a no-nonsense investigation on the Philippine Competition Commission (PCC), one of three agencies cited in a BusinessMirror exclusive report as inquiring into the apparent use of farmer groups as dummies.
He indicated the PCC officials may be asked to also appear at a Senate hearing to update lawmakers on their findings.
“I believe the PCC is now empowered to look into these questionable transactions and determine whether or not combinations in restraint of trade and/or competition are being committed,” Pangilinan said in a text message to BusinessMirror.
Asked if the Senate should look into the apparent misuse by big-time rice players of the import privileges of farmer cooperatives, Sen. Joel Villanueva told BusinessMirror: “We will take our cue from our Senate Agriculture committee because we are certain the body has heard of similar complaints. We could consider remedial legislation to impose penalties if the situation calls for it.”
A formal motion to trigger an inquiry in aid of crafting remedial legislation to plug loopholes in the existing rice trade law is expected to be lodged as soon as regular sessions resume on November 4.
In its banner story and accompanying “Broader Look” investigation published on Thursday (October 31), BusinessMirror, citing sources, reported that three government agencies, including the PCC, are conducting parallel inquiries into the rice importation players, in a bid to prevent unscrupulous parties from making a mockery of the RTL.
The Department of Finance, through the Bureau of Internal Revenue (BIR) and Bureau of Customs, and the Department of Agriculture are also scrutinizing the rice import players and transactions since RTL took effect on March 5 this year.
The DOF is closely monitoring revenue collections from rice-related transactions, particularly importation, to ensure rice tariffs are properly collected, especially as they are vital to bankroll government interventions under the RTL to improve local farmers’ productivity.
The PCC probe is expected to focus on possible dummy schemes involving the entrenched big-time traders that have been gaming farmer groups since before and after the rice trade liberalization regime.
The BusinessMirror and “Broader Look” team (Read “Parallel probes ongoing on rice import players” and “Pre- and post-rice trade lib law, big traders gaming farmer groups”) unearthed government documents indicating that certain farmers’ and irrigators’ associations had imported on record hundreds of millions of pesos worth of rice, even though they declared net incomes way below capacity to mount such big transactions.
Sources said the Cooperative Develop-ment Authority (CDA) had been warning the farmer cooperatives against allowing use of their papers for a “fee” by big-time traders, who reportedly pay P3 to P5 per bag of imported rice—or just an average of P100,000 for an importation that fetches hundreds of millions in revenue for the businessmen.
Meanwhile, the BIR has raided several warehouses where imported rice was stocked, but whose owners could not show any import documents.
‘Violation of RTL’
In a related development, Senator Villar’s proposal to limit rice imports to just 1 million metric tons (MMT), amid the clamor to protect local farmers from drastically depressed prices, is not feasible, according to one major farmer group.
The Federation of Free Farmers (FFF) on Thursday said that while it welcomed the suggestion to address the surge in rice imports, Villar’s suggestion is against the rice liberalization law.
FFF National Manager Raul Montemayor said Republic Act 11203 was designed to remove all forms of quantitative limits on rice imports and replace these restrictions with tariffs.
“Imposing a limit of 1 million tons is equivalent to reintroducing a quantitative restriction, which RA 11203 specifically prohibits. The only way you can change that is to repeal or amend the law, which Senator Villar has stubbornly opposed,” he added.
Villar earlier said the government could limit imports by implementing more stringent guidelines on the issuance of sanitary and phytosanitary import clearance (SPS-IC) to traders.
Montemayor also cautioned Villar against publicly suggesting that quarantine regulations be used to deliberately limit rice imports.
“So-called sanitary and phytosanitary or SPS measures on imports are allowed by WTO [World Trade Organization] rules to protect the domestic industry from pests and diseases, and consumers from unsafe goods,” he said.
“However, they must be scientifically based, and must not be applied arbitrarily as a trade barrier. Otherwise, we will open ourselves to complaints and disputes in the WTO, especially if our very own officials publicly state that these measures are intended to limit imports,” added Montemayor.
The FFF, citing data from the Bureau of Customs, said a total of 2.943 million metric tons of rice have been imported since the start of the year up to September 2019, or more than double the country’s import requirements for the year. This has caused palay prices to drop continuously and fall below P16 per kilo, the lowest level during the past eight years.
Safeguard
The FFF also reiterated its position that the imposition of safeguard measures is the most effective, WTO-compliant, and transparent way to address the surge in imports and arrest the drop in palay prices.
Under WTO rules and Republic Act 8800, the government can temporarily impose additional duties on top of regular tariffs if there is a surge in imports that harms, or threatens to harm, the local rice industry.
The DA was quoted saying it will start implementing more stringent SPS measures next week. These measures involve limits on heavy metals content and pesticide residue levels in rice to ensure that staple sold in the market, both imported and locally produced, are safe for consumption.
Agriculture Secretary William D. Dar said these food safety measures are just a reiteration of existing rules to ensure that rice sold in the market is safe for human consumption.
Moreover, Montemayor also clarified that imposing safeguard measures is not equivalent to reversing the tariffication of rice QRs.
“WTO rules on safeguard measures were precisely adopted to help countries cope with market adjustment problems when they liberalize and convert QRs for sensitive commodities into tariffs. That is why they are called trade remedy measures. They are not intended to reverse tariffication but instead complement it,” explained Montemayor.
“We already know that, at present, our rice farmers cannot compete with imports. Senator Villar has repeatedly stated that our cost of producing palay is double that of Vietnam. Our rice farmers may become competitive eventually, if we provide the right support to them. But this will take time. During the transition period, we must avail of safeguard measures if needed so that our farmers have a chance to survive and become competitive. Otherwise, if we wait for one to two years as suggested by Neda Director General [Ernesto] Pernia, it will be too late,” added Montemayor.
Also, the farmers’ group said the provision of cheap loans, cash assistance and procurement support to affected rice farmers will not be effective unless the safeguard measures are put in place at the same time.
“How can farmers pay back the loans if the price of their produce keeps falling and their losses continue to pile up? The P5,000 cash assistance is very small compared to their losses, and will just be eaten up by more losses if palay prices continue to go down,” added Montemayor.
According to Montemayor, the imposition of safeguard measures will not require a single centavo of expenditure from the government, and will, in fact, even increase the tariff collections of the BOC.
“More important, it will arrest the inflow of rice imports, lessen the glut in the market, and allow palay prices to move up. Once the situation normalizes, the government can always decide to reduce or totally remove the safeguard duties,” added Montemayor.