Removing quantity restrictions on rice imports could slash price by P7, DOF says
The Department of Finance said that removing quantitative restrictions on rice imports could result in lower prices and lift hundreds of thousands from the poverty trap. File
MANILA, Philippines — Removing quantitative restrictions on rice imports in favor of tariffs could slash the prices of the country's staple food by as much as P7 and lift hundreds of thousands of Filipinos from poverty, according to the Department of Finance.
Finance Undersecretary Gil Beltran said in an economic bulletin on rice sector reform that a 35-percent import tariff on rice, instead of restricting the volume of rice imported into the country, would encourage the private sector to bring more amounts of the grain into the local market, resulting in more affordable prices.
A reduction in the price of rice would, in turn, benefit a majority of poor households which spent at least 20 percent of their budget for the staple grain, the Finance department said, citing data provided by the National Economic and Development Authority. Rice is also a major driver of inflation, according to Beltran, the Finance department's chief economist.
READ: Phl rice import dependence down to 5%
Quantitative restrictions allow the country to limit the volume of rice imports with a tariff of 35 percent. Imports outside the designated volume would result in a higher tariff rate.
Beltran said that at an expected import rate of 35 percent the government would generate P27.3 billion which it could use to fund social protection programs such as cash transfers to poor families and palay (unhusked rice) productivity programs.
These cash transfers, Beltran said, could cut poverty incidence by as much as three percent and lift 730,000 people from the poverty trap.
“The tariff revenues that will be generated from rice imports can augment the funds used for the government's social welfare programs for the poor (e.g., Conditional Cash Transfer) and rice productivity programs that will enhance efficiency. Tariff revenue is estimated at P27.3 billion annually from 2017 to 2023,” Beltran said.
READ: NFA wants more bidders for for 250,000 MT rice imports
According to Finance Secretary Carlos Dominguez III, one of the key objectives of President Rodrigo Duterte is to transform the country into an upper middle-income economy and cut poverty rate from 21.6 percent to 14 percent by 2022.
Beltran said that the national government could reallocate funds intended for import subsidies to investments in public goods and services that could directly benefit farmers and reduce production and marketing costs such as farm-to-market roads, irrigation and storage facilities.
Lifting quantitative restrictions would also lead to a reorganization of the National Food Authority, which received P187 billion in subsidies for its imports from 2005 to 2015, an average of P19 billion per year.
“The NFA can now reorganize and limit its function on proprietary activities, in particular buffer stocking for food security and calamities, and local procurement. Note that in its present state, the NFA loses about P11 billion annually, even after operating subsidy of P5 billion average per year, from 2005 to 2015 and has an accumulated debt of P155.84 billion as of end of September 2016,” Beltran said.
“Given that import quotas will be eliminated, the private sector is encouraged to increase importations, thereby reducing import requirements of the NFA and its financial burden to the government,” he added.
- Latest
- Trending
