Revenues collected from rice imported by the Philippines after the quantitative restriction (QR) on rice is scrapped should also be allocated to programs that encourage farmers to plant other crops, according to experts.
Virginia Polytechnic Institute and State University senior research fellow Caesar Cororaton said the Department of Agriculture (DA) should provide assistance to rice farmers who will shift to other crops as this would help boost the farm sector’s productivity.
“That’s actually good, if they [rice farmers] move out of rice production and then use the money, amounting to some P24 billion, to train those who are willing to shift to other crops, which are more profitable,” Cororaton told the BusinessMirror on the sidelines of a forum on Philippine rice policy held recently at the De La Salle University in Manila.
In their paper, titled Poverty and Distributional Impact of Alternative Policies in the Philippines, Cororaton and De La Salle University School of Economics associate professor Krista Danielle Yu said the removal of the QR on rice would cut land use for palay production by at least 10.02 percent.
They suggested that the government put in place a post-QR regime scheme wherein rice tariffs will be gradually reduced to 25 percent in 10 years. The revenues from rice imports should be given as cash transfer to poor families.
“The amount of money to be plowed back [to farmers] is more than enough to support their displacement and would result in improvements,” he said.
Under their suggested post-QR regime scheme, land use for palay production would decline by only 1.5 percent. Cororaton said the 1.5-percent decrease in palay land use, however, would result in higher land utilization for other high-value crops.
For instance, land use for corn production would increase by 1.83 percent, while land use for coconut and sugar production would expand by 1.41 percent and 1.43 percent, respectively. They also noted that there would be a 2.02-percent hike in the production of other crops.
Cororaton said the DA’s rice-self sufficiency program is no longer viable as it would cause the local rice to become more expensive.
“It’s better if you just import rice and, at the same time, use the money [tariff revenue] to assist farmers. I think that’s the best solution that I can think of,” he said.
Under their suggested post-QR scheme, Cororaton said the income of households, particularly the poorest 10 percent of the country, would increase due to rice prices. Also, the income of the 10 percent poorest households in the country would increase by at least 23.8 percent.
Corotaton said this would result in a 9.12-percent decline in the country’s poverty incidence and a 26.77-percent cut in poverty severity, or the degree of inequality among the poor.
“The results indicate that the control on rice imports is highly regressive because it increases the domestic price of rice and puts significant burden on poor households,” their paper read.
“Retaining the protection on domestic palay production through tariffication and earmarking the revenue generated as cash transfer to poor households will reduce poverty considerably by 4 million in 10 years,” they added.
The Philippine waiver on the special treatment on rice, which was approved by the World Trade Organization’s (WTO) Council for Trade in Goods, has allowed Manila to implement the QR until this year.
Upon the expiration of the waiver, and no later than June 30, Manila’s importation of rice shall be subject to ordinary customs duties in accordance with the WTO’s Agreement on Agriculture.
Last year Agriculture Secretary Emmanuel F. Piñol warned that the lifting of the QR on rice would discourage farmers from planting the staple.
Dr. Rene E. Ofreneo, former labor undersecretary and dean of the University of the Philippines School of Labor and Industrial Relations, echoed Piñol’s sentiments, saying the entry of imported cheap rice in the country would force rice farmers to shift to other crops.
“The effect would not be immediate, but, the way I see it, there will be continuing labor erosion. You can imagine the displacement in the farming population. There would be a need for adjustment,” Ofreneo told the BusinessMirror.
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