Philippines : Lowering rice tariffs called a temporary inflation fix
Analysts suggest improving rice industry productivity to stabilize prices in the Philippines, rather than relying on temporary tariff reductions. As of November 14, rice imports reached 4.06 million metric tons, exceeding last year’s total. Despite lower import tariffs, domestic rice prices remain high. Traders are buying palay at low prices, while retail costs vary between P42 and P53 per kilogram.
THE GOVERNMENT needs to improve the rice industry’s productivity to effectively address the issue of volatile rice prices, analysts said, adding that reducing import tariffs is only a temporary solution.
“The longer-term solution would be to strengthen the rice industry to stabilize prices and contribute to food security,” University of Asia and the Pacific (UA&P) Center for Food and Agribusiness Executive Director Marie Annette Galvez-Dacul said via Viber.
Ms. Dacul added that lowering tariffs on imported rice will only drive rice prices down temporarily.
“There is a need to balance supporting consumers with lower prices and protecting farmers,” she said.
As of Nov. 14, Philippine rice imports have amounted to 4.06 million metric tons (MMT), surpassing the 3.61 MMT reported for the full year of 2023, the Bureau of Plant Industry reported.
Rice imports are expected to top out at 4.5 MMT this year due to the lower tariffs, and with domestic production diminished by typhoons, according to the Department of Agriculture (DA).
In plenary debate late Monday, Senator Cynthia A. Villar said that the National Economic and Development Authority is proposing to retain the lowered tariffs on rice imports due to the depreciation of the peso.
In June, the government lowered rice import tariffs through Executive Order (EO) No. 62 to 15% from 35% until 2028, citing the need to tame rice prices. The EO is subject to review every four months.
“Many factors can influence rice prices — weather and climate, domestic rice production, consumer demand, government policies, input costs, global rice market, geopolitical factors and among others,” UA&P’s Ms. Dacul said.
Federation of Free Farmers National Manager Raul Q. Montemayor said via Viber that traders have started buying palay (unmilled rice) from farmers at “relatively low prices” of between P17 to P20 per kilogram for clean and dry grain. The National Food Authority’s buying range is P23-P25, depending on quality and location.
Mr. Montemayor added that the low prices paid by traders is to “hedge against the possibility that importers, traders, or retailers are eventually forced to lower their prices.”
He said that prices for imported rice have declined, noting that average cost of 5% broken variety from Vietnam fell to $529 per MT, compared to $637 per MT in January. Vietnamese rice accounts for about 76% of Philippine rice imports.
“This should be retailed for around P43-45 per kilo. But prices remain relatively high… so a lot will depend on how government controls profiteering,” Mr. Montemayor added.
According to DA price monitors, as of Nov. 19 one kilogram of well-milled rice fetched P42-P53 per kilo in Metro Manila markets, against P33 to P55 per kilo a year earlier.
Regular-milled rice sold for between P40 and P48 per kilo, compared to P33-P53 a year prior.
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Source Link : Business World
