Someone’s gotta give

The Rice Tariffication Law of 2019, which replaced quantitative restrictions on rice importations with a tariff system, may have brought more harm than good.

A paper prepared by the Congressional Policy and Budget Research Department (CPBRD) of the House of Representatives showed that at the onset of the RTL implementation, retail prices for all types of rice gradually declined from 2018 to 2021. In 2021, regular-milled rice was cheaper by P5.09 per kilo compared to the 2018 level. During the same period, the prices of well-milled and special rice were also lower by P4.05 per kg and P1.87 per kg respectively.

However, in 2022, retail prices started to increase, and the following year, prices were already higher than the 2018 level except for regular-milled rice which is still cheaper by 57 centavos per kilo. The law aimed to lower the prices of rice and improve farm productivity by benefitting both end-users and farmers.

In terms of the farmgate price of palay, the paper showed that in 2018, farmers can sell their produce at P24.36 per kilo for fancy palay and P20.06/kg for other varieties, the most profitable for farmers since 2010. However, in 2019, farmgate prices went down by P3.13/kg for fancy palay and P3.11/kg for other varieties. Farmgate prices slowly picked up until 2023 but still lower compared to 2018 prices, it said.

As to rice inflation rate, according to the CPBRD study, the price of rice has remained relatively stable in 2020-2022 but it started to climb in August 2023, spiking by 24.4 percent in March 2024, which the Philippine Statistics Authority (PSA) said is the highest in 15 years. This also marked the 7th consecutive month of two-digit rice inflation that began in September last year.

The study noted that the impact of higher prices is even greater for the bottom 30 percent households as rice accounts for 17.9 percent of their consumption basket compared to 8.9 percent for all income households. In March of this year, rice inflation was recorded at 27.4 percent from only 2.6 percent in March 2023.

Meanwhile, the paper cited data from the PSA which showed that the share of imports in the total supply of rice in the country has generally been increasing over time.

At the start of the RTL implementation in 2019, the share of imported rice to total supply reached 20.2 percent which is higher than the 2018 level of 13.8 percent and the highest since 2010, it pointed out. In 2020, the share of imported rice went down to 15 percent but gradually increased, peaking at 23 percent of total supply in 2022.

In so far as rice stock inventory is concerned, the paper noted that the RTL was enacted in 2019 to address the surging inflation of rice prices during the last quarter of 2018 after the rice stocks of the National Food Authority (NFA) ran out. With the effectivity of the law, rice stocks posted the highest inventory for most of 2019, peaking with a year-end inventory of 3.1 million metric tons thereby ensuring that there would be enough rice supply all year round.

But four years after the RTL started, rice stocks recorded the lowest inventory for month of 2023. Rice inventory stood at 1.9 million metric tons in December of 2023, the lowest year-end stock both pre- and post-RTL implementation, it said.

On a positive note, one of the main objectives of the RTL is to improve the productivity and income of rice farmers. In 2019, the national average yield improved to 4.05 tons per hectare compared to the 2018 level of 3.97 tons per hectare. By 2023, farmers were already producing an average of 4.17 tons per hectare of rice, the highest since the law was implemented. During the same period, both irrigated and non-irrigated areas recorded yield production of 4.51 tons per hectare and 3.34 tons per hectare, respectively, the paper revealed.

The same study showed that in terms of palay production cost, in 2018 before the RTL was implemented, the cost of producing palay was P46,694 per hectare with a gross return of P79,670 per hectare or a profit of P32,976 per hectare for rice farmers. In 2019, profit went down to only P22,242 per hectare with production cost and gross return declining by 0.8 percent and 13.9 percent, respectively.

In 2021, the cost of production reached a high of P49,920 per hectare with a gross return of only P69,600 per hectare and a profit of P19,680 per hectare, way lower than the pre -RTL level, it added.

Just recently, President Marcos, renewed his call for Congress to pass an amendment to Republic Act 11203 or the RTL, which seeks to restore the price stabilization and supply regulation functions of the NFA. According to the President, he would certify the bill as urgent to bring down rice prices which currently stand at P50 to P60 per kilo.

The RTL amendment is expected to bring down the price of rice by P10 to P15 per kilo.

Improving palay prices and rice farmers’ incomes and improving farm productivity and lowering production cost, while at the same time, making sure that consumers have access to affordable rice is difficult to achieve. Someone’s got to give. Government should focus on reducing if not removing the layers of middlemen who while performing an important task of bringing farmers’ produce to the market are getting bulk of the profits.

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