The Action for Economic Reforms (AER), an organization engaged in research and advocacy, said restricting rice imports during harvest season will erode the economic benefits from the rice trade liberalization (RTL) law and may even result in unstable prices in the market.
The AER issued the statement on Tuesday, few days after President Duterte promised to farmers that he will not allow rice imports during or near harvest season to avert decline in palay (unhusked rice) farm-gate prices.
“This policy pronouncement of curbing rice imports will erode the gains from the rice tariffication law. This will not stabilize rice prices,” it said.
“History has shown that it is the manipulation of import controls that has created volatile and high prices for the overwhelming majority of Filipinos. Farmers will enjoy higher prices in the short term, but this will aggravate their long-standing problem of inefficiency and low productivity,” the group added.
The AER proposed that the government should create the correct “conditions” for rice farmers to increase their productivity and become competitive against foreign producers.
“To rely on import control will not solve the problem of weak productivity,” AER said.
“President Duterte wants to help farmers, but his idea of helping farmers—by restricting imports during harvest season—makes them dependent on a short sighted policy, which will not transform their conditions. Worse, it comes at the expense of hurting the Filipino consumers, including many farmers themselves [because they are net consumers themselves],” it added.
The AER argued that import restriction have always resulted in “price volatility,” which it said “negatively” affects “the overwhelming majority of the people.”
“Even if import restriction would artificially boost palay prices, we have seen that this has not improved the lives of our farmers during the decades that quantitative restrictions existed. Attendant to this is the corruption and damage to institutions that import control brings,” AER added.
AER explained that the surge in rice imports last year was part and parcel of the industry’s transition to a liberalized trade regime.
Furthermore, the group said importers are now adjusting to the new regime and soon enough would reach a new equilibrium with total imports stabilizing.
“If we want to improve the farmers’ well-being, let us help them improve their productivity, precisely what the law intends to do,” it said.
“Resorting to import restriction even if confined to the harvest season will not enable farmers to achieve increased productivity as the restriction only breed complacency. President Duterte got it right when he proposed rice procurement, but to combine this with import restriction will be a disaster,” it added.
The Department of Agriculture (DA) earlier said the country’s total rice imports last year reached 3 million metric tons (MMT) following the enactment of the RTL law, which eased the requirements for importing rice.
The surge in imports last year resulted in the decline of the country’s rice self-sufficiency rate, or adequacy level, to its lowest in 10 years to 85 percent, according to the DA.
Despite this, President Duterte personally appealed to farmers to give the RTL a chance, citing its long-term economic benefits. The law took effect on March 5, 2019.
The Philippines started and ended the previous decade as the world’s top rice importer, with the country formally overtaking China as the top buyer of the staple last year, based on data from the United States Department of Agriculture (USDA).
Data from the USDA showed that the Philippines’s rice imports in 2019 rose to an all-time high of 3.2 million metric tons, making the country the top buyer of imported rice last year.