Farmer groups buck lifting of QR on rice imports

Farmer-based organizations are opposing government’s plan to temporarily lift quantitative restrictions (QR) on rice imports during lean months.

As this developed, National Food Authority (NFA) Administrator Gregorio Tan Jr. said it may not be profitable for the private sector to go into rice import trading because of the current high prices of rice in the world market.

"The country does not have to abandon its rice QR in order to address supply shortages. "Even with the QR, government can still import for as long as the volume of rice that will be brought will not exceed the production shortfall. It assures farmers that the volume that will come in will not displace local production as this will only approximate the amount of the shortage," explained Omi Royandoyan, executive director of Centro Saka Inc. an affiliate of the Philippine Center for Rural Development Studies.

Royandoyan stressed the government proposal was irrational and ill-timed.

Agriculture Secretary Domingo F. Panganiban announced last week that the Philippines finally convinced India, the last holdout to the country’s bid to retain its QR on rice, to drop its opposition. Nine other countries, including China, Thailand, Canada and the United States, have previously allowed the country to extend its QR on rice for seven more years, starting 2005 when the QR lapsed. The Philippines is expected to shortly notify the World Trade Organization (WTO) of this development.

"The Philippines is coming off from sensitive talks to maintain its QR on rice. Lifting our rice QR, even temporarily, might give other countries the necessary ammunition to shoot down our bid to re-extend the import restriction for our basic staple," said Royandoyan.

He also questioned why the Bureau of Customs and the Department of Finance were the agencies being tasked to study the proposal.

"If the objective of the suspension of the rice QR is to ensure a steady supply, why did the Cabinet assign the BOC and the DOF to study the proposal when these agencies are not familiar with rice production and consumption matters? Why not tap the NFA and the Department of Agriculture?" asked Royandoyan.

NFA which is tasked to import rice yearly to makeup for the production shortfall and distributes these to vulnerable areas during the typhoon season which also coincides with the lean season – said rice import trading by the private sector is not a profitable venture.

"Lifting the QR on rice during the typhoon season is not a matter of volume limitations or restrictions, but is more a question of profitability. Right now current world market prices for rice is not attractive for the private sector," said Tan.

Tan explained that NFA’s average rice import cost without insurance has gone up since January to $289 per metric ton from $280 per MT in January. This translates to landed cost of rice at P15 to P16 per kilo without tariff and at P23-P4 per kilo after payment of duties.

"The cost of importing is almost the same as the domestic price, so there is no big incentive for the private sector to step in and increase their participation in rice import trading," noted Tan.

He added that the NFA which has so far brought in 1.62 million MT, has allowed the private sector and farmer-groups to bring in as much as 488,000 MT out of the authorized imports of 1.82 million but they were only able to absorb 8,000 MT.