The National Food Authority (NFA) will continue to operate even with the rice tariffication law in place, but it needs to strengthen its logistics capacity, ensuring that the government has enough buffer stocks of this staple grain with nationwide reach at all times, according to the Department of Finance (DOF).

Finance Assistant Secretary Antonio Joselito Lambino II said that starting March 5 when Republic Act (RA) No. 11203 or the Rice Tariffication Act took effect, the NFA’s import licensing and other regulatory functions ceased, although the crucial role of emergency buffer stocking remains and has been emphasized.

Under the law imposing tariffs on rice imports in lieu of quantitative restrictions, private traders would now be allowed to import rice so long as they comply with basic requirements set by the Department of Agriculture’s Bureau of Plant Industry (BPI) for food safety and protection of our farming areas, Lambino said at a recent media forum in Quezon City.

Lambino said the NFA’s task of regulating the rice sector was removed owing to the agency’s “inefficiencies” resulting from a controlled import system, and which left the agency saddled in debt amounting to about P145 billion.

Domestic rice prices also continue to be high compared to other countries in the region despite the NFA’s regulatory role, with farmers not benefiting as much as other players in the industry under the previous quantitative restriction regime, Lambino said.

But under RA 11203, he explained at the media forum that farmers would get to benefit directly from the import tariffs through the new Rice Competitiveness Enhancement Fund (RCEF), which would have an assured annual allocation of P10 billion, regardless of the amount generated from import tax collections.

As an advanced complimentary measure to the RCEF, the government has already released P5 billion in December 2018 to assist farmers in becoming globally competitive as the country shifts to a rice-tariffied system.

A large number of smallholder farmers also get to benefit from lower rice prices because they are also net consumers of the staple, Lambino said.

“We will have dedicated resources for the modernization and increased productivity of rice farming in the country,” Lambino said during the forum. “Under the previous non-tariffied regime, the difference between the farmgate price and retail price—the farmgate price is less than P20 per kilo, and retail is more than P40. The difference in the price does not go to the farmer, but to other players in the rice industry.”

Under the new tarrified setup, the taxes collected from private traders importing rice would be 100-percent earmarked for the programs under the RCEF meant to benefit rice farmers, Lambino said.

With the rice tariffication law in place, imports from ASEAN countries will be charged a tariff of 35 percent of its value, while imports from non-ASEAN countries within the minimum access volume (MAV) initially set at 350,000 metric tons (MT) will be taxed 40 percent. A tariff of 180 percent will be collected for imports above the MAV from non-ASEAN countries.

On top of paying tariffs, rice importers will be required to secure sanitary and phytosanitary import clearances (SPSIC) from the BPI, which assumed the food safety regulation function of the NFA under the rice tariffication law. This requirement will ensure that rice imports are free from pests and diseases that could affect public health and local farm production, he said.

Lambino said that aside from lowering rice prices and providing direct assistance to farmers, the law will also be an effective deterrent to smuggling because rice imports would now be liberalized.

“The tariffication law is the most important weapon against smuggling. The incentive to smuggle would almost be nil because anyone can now import rice so long as they comply with the requirements,” Lambino said.

He said that with imports now hewing closer to prices in the global or regional markets, traders would be discouraged from smuggling or even hoarding their stocks. “Who would be encouraged to hold on to their stocks when there is enough supply in the market and anyone can import if the supply declines?” he stressed.

Lambino said that as earlier projected by economic managers, liberalizing rice imports would further lower inflation by 0.5 to 0.7 percentage point this year, ensuring that the rate remains within the Bangko Sentral ng Pilipinas (BSP)’s 2 to 4 percent target for 2019.

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