MANILA will maximize nontariff measures (NTM) to limit rice imports and disallow “dummy” cooperatives from participating in rice trade, instead of an outright suspension of shipments, the Department of Agriculture (DA) said on Thursday.
Agriculture Secretary William D. Dar said the government will only tighten the guidelines for importing rice. Dar said this was one of the directives given by President Duterte to him during their meeting last November 20 to thresh out the Chief Executive’s pronouncement of suspending rice imports during harvest.
The meeting was also attended by Executive Secretary Salvador Medialdea and Finance Secretary Carlos G. Dominguez III.
Dar said the Bureau of Plant Industry, an attached agency of the DA, will continue to process sanitary and phytosanitary import clearances (SPSIC), but the agency will evaluate applications using more stringent guidelines.
Aside from this, the DA chief said the President has also ordered the increase in the National Food Authority’s (NFA) buffer stock volume to 30 days, from 15 days, and to extend the unconditional cash transfers for farmers to 2020.
Tougher rules
Dar said rice traders will now have to show proof that their shipments comply with the government’s more stringent measures covering heavy metal content, pesticide residue, filth contaminants and microbial presence.
He said the government will also deploy teams that will inspect shipments at the country of origin “to ensure rice quality and safety for consumers and at the same time prevent the spread of crop pests and diseases [in the country].”
In a news briefing on Thursday, Dar told reporters, “We will see to it that [import] rules are tight during the main harvest season. We have all the facts so we will be strict in implementing these rules.”
The BusinessMirror earlier reported that the stringent food safety measures are aimed at limiting rice imports.
Rice traders and importers would have to secure an SPSIC first from the BPI so they can bring the staple from other countries into the Philippines. This requirement was mandated by the rice trade liberalization law.
“All rice importers will have to comply with the guidelines as required in securing the SPSIC,” said Dar.
Probe under way
The DA chief also directed the BPI to investigate importers and traders who have not used their SPSICs despite securing the document. Some traders were issued SPSIC as early as March, when the law took effect.
The BPI reported that only about two-thirds of some 3,000 SPSIC issued to importers have been used to date, which means there are some 1,000 unused SPSICs covering 1 million metric tons of rice.
Latest BPI data showed that as of October 31, 2,105 SPSICs have been used to import 1.693 MMT of rice from India, Italy, Myanmar, Pakistan, Spain, Thailand and Vietnam.
“Using the data we have, we will continue to improve these guidelines based on our experience,” said Dar.
He said the government will look into the possibility of imposing a validity period on issued SPSICs, which do not have an expiration date.
Removing dummies
Dar also revealed that the stringent SPS measures will weed out farmers’ cooperatives and groups that are being used as dummies of unscrupulous businessmen.
The DA chief cited the BusinessMirror’s stories about “dummy” cooperatives edging out legitimate traders in rice imports as among the reasons for their decision to go after these groups (See “Farmer groups ‘top rice importers’—are they?” in the BusinessMirror, November 21, 2019, and “Pre- and post-rice trade liberalization law, big traders gaming farmer groups,” in the BusinessMirror, October 31, 2019).
He said the DA is in “constant” communication with concerned agencies, such as the Cooperatives Development Authority (CDA), Bureau of Customs and the Philippine Competition Commission (PCC).
Dar said the DA is now in the process of “appreciating” the data provided by the CDA regarding the financial capacities of cooperatives that are registered with the BPI.
“That is what’s happening right now, [cooperatives] are being used. That’s why we want to make the rules stringent because they are just being used,” he said.
Dar said the government will not hesitate to open the warehouses or even file charges against the importers, including cooperatives, if the results of the PCC’s current probe on rice industry players will find that they served as dummies.
While he encourages all farmers’ associations, cooperatives and groups to venture into agribusiness, including rice importation, Dar stressed they must follow the law.
Dar had issued a memorandum order that required traders to ship their consignments to the Philippines within a prescribed period of time.
The same order “strengthened” registration procedures for interested rice importers by requiring them to submit documents proving their financial and logistical capacity to import rice, such as annual income tax return with audited financial statement for the last three years.
Dar’s tack backed
The Federation of Free Farmers (FFF) welcomed Dar’s pronouncements and has thrown its support behind the DA’s move to weed out farmers’ cooperatives and groups acting as dummies.
“We have expressed our concern in the past about the use of small farmers’ cooperatives and organizations as virtual dummies of large financiers and importers who are apparently submitting fictitious financial records and evidence of warehouses to secure import clearances from the BPI,” the FFF said.
However, FFF noted that the use of SPS will only bring temporary relief against the influx of rice imports, as importers would eventually find a way to comply with the food safety measures.
Also, FFF said the use of NTMs could open the DA to lawsuits from importers and even from the country’s rice trade partners at the World Trade Organization.
“We, therefore, maintain that the best way to control the surge in imports is through the imposition of general safeguard duties on imports. The legal and factual basis for doing this now is readily available,” it added.