ASEAN KEY DESTINATIONS
PHL rice farmers on the losing end under ASEAN single market
Because of high production costs and lower tarrifs, Philippine farmers and rice distributors fear losing a significant amount of business at the onset of free trade in Southeast Asia in 2015.
Under a free trade regime to be implemented by the Association of Southeast Asian Nations (ASEAN) starting next year, tariffs on rice imports are lowered to 35 percent, creating an regime of stiff competition and price pressures.
Compounding the problem is the Minimum Access Volume (MAV) scheme under the Philippines' commitment to the World Trade Organization (WTO) wherein 350,000 metric tons of rice automatically gains access to the Philippine market at lower tariff.
Legislators are now pushing for higher tarrifs before the WTO on rice imports until 2017 to enable the government to build the production capability of farmers.
Agriculture officials engaged in negotiations have expressed confidence that the Philippines would win the consensus of countries seeking market concessions in exchange for the an extension on quantitative restriction or QR.
Loopholes for smugglers
Because imports under MAV are levied a duty of 40 percent – 50 percent for out-quota imports – smugglers may use the policy as an excuse to bring the commodity into the country.
"The policy should be clarified by the government,” Dr. Fordeliza Bordey, Philippine Rice Research Institute (PhilRice) socio economic researcher, told industry officials and reporters at a forum hosted by the Philippine Agricultural Journalists in Quezon City on Friday.
She added that unregulated importation harms domestic rice prices both at the producer and consumer levels.
Stabilizing local rice prices
The NFA buys clean and dry palay at P17 per kilogram (kg), with additional incentives such as a graduated delivery fee up to a maximum of P0.50/kg, a drying incentive fee of P0.20/kg, and a Cooperative Development Incentive Fund assistance of P0.30/kg.
The agency, however, buys only 5 percent of the domestic palay produce at the support level. It turns to the foreign rice market for cheap supply for lean season buffer stocking.
Bordey explains that the NFA needs to build up its buffer stock to stabilize domestic prices.
“If supply of NFA rice is low, the private sector can hold their stocks and raise prices. If NFA stocks are high, the private sector will keep prices stable,” she said.
Permits and transparency
NFA spokesman Rex Estoperez, maintains, however, that even if the QR extension is still on appeal, import permits are required for rice imports.
“Our requirement is simple. All importations must have a permit, we coordinate with the Bureau of Customs on this,” he said during the forum.
He noted that under Republic Act 8178 – also known as An Act Replacing Quantitative Import Restrictions on Agricultural Products, Except Rice, with Tariffs, Creating The Agricultural Competitiveness Enhancement Fund, And For Other Purposes – the agency has the sole mandate to grant import permits upon assessment of the domestic supply situation.
Argee Guevarra, Sanlakas party-list legal counsel, said the NFA must be transparent in granting import permits.
He said the government must also make sure that the Agricultural Competitiveness Ehancement Fund must be used for its intended purpose.
There have been allegations of misuse of the fund which was created out of the proceeds of in-quota MAV tariffs and is intended as a credit line for projects that promote agriculture productivity and efficiency. – Rie Takumi/VS, GMA News
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