THE Federation of Free Farmers (FFF) on Sunday said the imposition of safeguard duties on rice imports could have been a “more cost-effective approach” for the government in helping farmers incur lesser losses instead of a direct cash assistance.
The group made the statement after senators approved last week a resolution that would allow the use of all tariffs—in excess of P10 billion from rice imports—as cash assistance to help farmers cope with the impact of declining palay prices and the Covid-19 pandemic.
“The government allowed unlimited rice imports, resulting in low palay prices. Now it will spend P3 billion to partially offset farmers’ losses,” FFF said.
“If it had instead imposed additional duties on imports, palay prices would not have dropped too much, there would have been no need for cash aid to farmers and the government might have even earned extra revenues from the safeguard duties,” FFF added.
The use of the safeguard measures was considered by the Department of Agriculture (DA) last year in light of the sudden influx of rice imports following the enactment of Republic Act 11203 which liberalized the rice industry, allowing easier importation of the staple.
However, the safeguards investigation was terminated on the grounds that using such trade remedy has “potential inflationary effects,” and giving cash assistance to affected farmers was more apt last year.
“Safeguard duties will not be inflationary as claimed by the DA, because they will be applied only when there is already a proven oversupply in the market. They can removed once the situation stabilizes,” FFF said.
During the hearing on October 16, the agriculture committee approved Senate Joint Resolution 12, introduced by Sen. Cynthia A. Villar, to use all tariffs in excess of the P10 billion collected from rice imports collected in 2019 and 2020 as direct cash assistance to farmers tilling 1 hectare and below.
Villar said the cash assistance would benefit at least 600,000 rice farmers. Dar said about 1.1 million rice farmers are planting on 1 hectare and less.
Customs collection
Based on Customs preliminary report, the total rice tariff collected from rice imports this year has reached P13.681 billion as of end-September, Villar said. Excess tariffs collected last year reached P2.1 billion.
This means that at least P5.781 billion would be given as cash assistance to the target rice farmers next year. The DA earlier planned to use the P2.1-billion excess rice tariffs from last year to bankroll its crop diversification and expanded crop insurance programs for rice farmers.
The FFF said the proposed cash assistance is measly compared to the losses incurred by rice farmers in the ongoing cropping season which has averaged at P10,000 per hectare.
“The subsidy would fall to about P2,700 if the actual number of qualified farmers is raised to 1.1 million, as reportedly claimed by DA,” it said, adding that the proposal is also “unfair” to affected rice farmers tilling larger areas.
Instead of cash aid, the FFF proposed that existing funds from the Rice Competitiveness Enhancement Fund (RCEF) and extra tariff collections could be refocused to address current problems of the farmers.
“The P5-billion annual fund for mechanization is not moving well, and it might be more practical at this time to preserve job opportunities for farm laborers instead of displacing them with machines,” the group said.
“Moreover, the P1-billion budget for extension and training could be realigned, considering that farmers cannot attend training activities due to Covid-related restrictions. The P1 billion for credit could be better used for interest rate subsidies or loan programs, instead of direct loans which will benefit only 20,000 farmers,” it added.