Global rice prices are down and tariffs on rice imports were cut from 35 to 15 percent beginning in July last year through Executive Order 62. The objective was to bring rice retail prices down to P42 to P46.
Yet seven months since the tariff cuts came into force, rice retail prices have stubbornly resisted being pulled down. Department of Agriculture officials said the impact of the tariff cuts would be felt beginning in January this year, after rice traders have unloaded stocks they bought under the original 35 percent tariff.
This week the National Food Authority will begin selling rice at P33 a kilo to local government units and government corporations. The LGUs can then sell the rice to the public at P35 per kilo. The sale of aging NFA rice has been allowed with the declaration of a national food security emergency.
The NFA has said that at P33 a kilo, the government loses from P12 to P15 per kilo. If the NFA unloads 150,000 metric tons or 150 million kilos of its buffer stock over the next six months as planned, that’s a total loss of about P2.25 billion.
Because the NFA rice is heavily subsidized, consumers will actually be bearing part of the burden of the artificial price reduction. That subsidy for low-priced rice comes from government revenues, including those automatically paid in value-added and excise taxes on basic commodities such as fuel and water by even the most impoverished person in this country.
Aside from trying to bring down the retail prices of rice, officials said the sale of the subsidized rice is also meant to free up space in NFA warehouses for the upcoming domestic rice harvest.
What people are waiting for is the delivery of the promise to reduce the number of middlemen in the rice supply chain, and to come down hard on hoarders and traders engaged in cartel-type operations. The lack of action in these areas is reinforcing suspicions that the people involved are untouchable politicians and other influential persons or groups.
At the same time, the government will have to show greater effort in boosting domestic rice production, which is the best way to stabilize the supply and prices of the nation’s staple for the long term.