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THE
Department of Finance (DOF) has ruled out any tariff
rate cut on rice imports, but a parallel plan to
increase the subsidy on the staple is in the works.
The
magnitude of the subsidy has not been revealed, but
Finance Secretary Margarito Teves said Agriculture
Secretary Arthur Yap is being consulted on measures that
the DOF may take to help ease reported rice- supply
restrictions.
In
separate developments, three senators proposed a range
of options, both short- and medium-term, to ease supply,
stabilize prices and sustain rice production.
Senate
Minority Leader Aquilino Pimentel Jr. sought a review of
the rice-procurement policy in light of the tight supply
and soaring prices of the staple in the world market. He
cited reports that from $295 per metric ton (MT) last
year, the price of rice has shot up more than $500 per
MT this year.
Economic
affairs committee chairman Loren Legarda urged the use
of two multibillion-peso agricultural funds to help
farmers boost production. And the chairman of the trade
and commerce panel, Sen. Mar Roxas II, recommended the
immediate release of local government unit (LGU)
calamity funds to help provide farmers with seeds,
fertilizers and pesticides in order to ensure enough
rice supply in the next harvest.
Both
Teves and Yap have stressed the continued adequacy of
rice supply in the country no matter that private
interests have benefited from perceptions of an
allegedly tight supply of the commodity.
“We will
increase the tax-expenditure subsidy on rice in
consultation with Agriculture Secretary Arthur Yap. This
is in lieu of a tariff rate cut,” Teves said just before
the nation went on an extended Lenten holiday.
There is
an ongoing discussion as to whether or not private
importers may also be given the privilege to import rice
at a reduced rate, he quickly added.
Teves
said rice importers now pay a 50-percent tariff for the
commodity for which the National Food Authority (NFA)
has built a 55-day buffer stock equal to 1.8 million MT.
The
estimated rice inventory encompasses government,
commercial and even household stock of the commodity,
according to
Yap.
This was
on top of an estimated 7.2 million metric tons (MMT)
seen harvested in granaries across the country between
April and May this year, Yap added.
The
expected dry crop harvest in the first half this year
should hit 7 MMT versus only 6.7 MMT last year, he said.
In
pushing a review of the rice procurement policy,
Pimentel warned that the government stands to lose a lot
of money from the transaction because it has to sell the
imported rice to consumers at subsidized and low prices
despite the expensive import cost of the commodity.
Teves,
meanwhile, said the temporary tax-expenditure subsidy on
rice should help the government balance the year’s
budget again, something that Fred Neumann, economist at
HSBC, strongly doubted would happen this year.
Under
the plan, the Bureau of Customs will draw from the
tax-expenditure fund the equivalent tariff that the NFA
should normally have paid in cash.
The NFA,
along with 13 other monitored government-owned
corporations, normally incurs a deficit as its sells
fairly expensive imported rice at a discount to help
stabilize not just the supply of the staple but also its
price.
Teves
said he also urged the Land Bank of the Philippines to
increase its lending allocation for the NFA this year to
help ease the situation.
Relatedly, Pimentel asked the NFA to buy more
locally-produced rice instead of relying on imports, as
he lamented that the Philippines remained heavily
dependent on rice imports to make up for deficiency in
local palay production.
This
year alone, the government is importing 2.1 MMT of rice
from Thailand, Vietnam and other countries, Pimentel
said, noting that the Department of Agriculture targets
rice production to reach 17.33 MMT, equivalent to a
national sufficiency level of 92 percent.
He
thinks the NFA should beef up its rice stockpile by
giving priority to the procurement of rice from local
farmers, instead of relying too much on imports, saying
local farmers are always complaining they were being
ignored by the NFA in its rice procurement in favor of
imports that only benefit the farmers from
rice-exporting neighboring countries. “The authorities
find it more convenient to buy rice from other
countries. Is it because they stand to gain a lot of
money from this scheme?” he asked.
Pimentel
noted that the magnitude of the problem was clearly
shown in the diversion of 120,000 metric tons of NFA
rice to grains cartels in Northern Mindanao.
Sen.
Loren Legarda also warned that an impending rice crisis
would be “politically explosive” and urged the
government to boldly push new strategies for the country
to become self-sufficient in the staple in 24 to 36
months.
Legarda
noted that rice prices soared to a new 34-year high.
Ironically, the fresh surge was set off by the
Philippines, which on March 18 awarded a tender for rice
at $708 per metric ton (about P30 per kilo), up nearly
50 percent from the price it paid in late January.
She
proposed that over the next 24 to 36 months, the
government should use two multibillion-peso funds
entirely, if not almost exclusively, for projects to
immediately advance rice production. She was referring
to the Agriculture and Fisheries Modernization Program,
which has an annual allotment of P17 billion, and the
Agricultural Competitiveness Enhancement Fund, which had
a cash balance of P6 billion as of December 2007.
“These
funds can be tapped to enable rice farmers to achieve
greater productivity via exceptionally potent seeds,
greatly improved irrigation, or with adequate
water-impounding structures and other drought-mitigating
measures,” Legarda said. “The funds can also be used to
build up postharvest facilities, so as to curb extensive
losses due to inefficient rice processing, particularly
in the drying, milling and storage stages,” she added.
This
developed as Sen. Mar Sen. rebuked Malacańang officials
over the weekend for belittling the scope of the
worsening rice crisis. “Mrs. President, be a force for
good by getting real. The government is in denial. We
have a food crisis. Economics 101 says prices will rise
if supply is tight. We have reached P24 to P26 a kilo of
regular rice from P20 to P22. This is because of tight
supply.”
“While
declaring that we have no rice shortage, President
Arroyo said prices would increase. How can this be? If
there is no shortage, why will prices go up? Is it now
the policy of government to make retail prices go up? Is
the government now admitting that there is hoarding and
manipulation and that it is helpless?” he asked. |
