By Luisa Maria Jacinta C. Jocson, Reporter
THE INTER-AGENCY Committee on Inflation and Market Outlook (IAC-IMO) has recommended extending the lowered tariff rate on rice until the end of 2024, National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said.
“To address the increasing price of rice and ensure enough supply through timely and adequate importation, the IAC-IMO recommends extending the lower Most Favored Nation (MFN) tariff rate on rice until December 2024, but subject to review in July 2024,” he said in a statement on Thursday.
The interagency committee, which is chaired by the NEDA Secretary, made the recommendation during a meeting on Oct. 3.
Mr. Balisacan made the statement after data showed September inflation quickened for a second straight month to 6.1% in September, mainly due to a surge in rice and transport costs.
Rice inflation alone accelerated 17.9%, the fastest rate since March 2009, despite the imposition of a price ceiling on domestic rice in September.
Mr. Balisacan said that the committee’s proposal to extend the reduced tariff must be supported by “efforts to improve the predictability and transparency of issuing the Sanitary and Phytosanitary Import Clearance for rice and all commodities.”
“As we implement short-term measures to ease the negative effects of inflation, it is imperative that we also address our long-term food supply issues by providing support for our local farmers to boost their productivity and resilience. These include investing in irrigation, modern high-yielding varieties, pest control, and logistics,” Mr. Balisacan added.
In December last year, President Ferdinand R. Marcos, Jr. signed Executive Order (EO) No. 10, which extended the lower tariff rates on rice, pork and corn until Dec. 31, 2023.
The order retained the lower tariff rate for rice at 35% for imports within the minimum access volume (MAV) quota and those exceeding the quota.
The NEDA statement on Thursday did not mention if the IAC-IMO’s recommendation included extending the lower tariff rates on pork and corn.
Mr. Balisacan noted that if there is a need to stabilize prices, the proposal to temporarily lower tariff on rice “may be revisited.”
The NEDA and Finance department earlier proposed to temporarily reduce tariff on rice imports to address spiraling prices. However, Mr. Marcos last week rejected this proposal, stating that it was “not the right time.”
China Banking Corp. Chief Economist Domini S. Velasquez said that the proposal to extend EO No. 10 could mitigate the increase in rice prices next year.
“EO No. 10 should be taken as a stop gap and temporary measure only in light of higher prices. In the medium term, there is a need to ramp up efforts to improve the production capacity of local farmers,” she said in a Viber message.
Raul Q. Montemayor, national manager for the Federation of Free Farmers, said that the savings on the tariff reduction was not “proportionally passed on by importers to consumers.”
“Retail prices of the commodities involved, particularly pork, corn and sugar have not significantly gone down,” he said.
Mr. Montemayor also noted economic managers appear to be applying a “shotgun’ approach, not knowing who will benefit and who will be harmed.”
“Without such deliberate strategies and a factual analysis of the impact of the tariff cuts, it does not make sense to extend EO NO. 10,” he added.
In a separate statement, the Department of Finance (DoF) is also working on implementing measures that address “non-competitive market behavior, support farmers, and protect the vulnerable.”
The DoF said that the government is cracking down on smugglers, hoarders, and other anti-competitive market players.
“The government will further improve the utilization and implementation of Rice Competitiveness Enhancement Fund programs such as farm mechanization, seed development, propagation and promotion, credit assistance, and extension services to improve the productivity of rice farmers, reduce production costs, and link domestic producers to the value chain,” the DoF said.
It also cited measures such as energy and water demand management, targeted cash transfer programs, and fuel subsidy and assistance programs.