Sep 112016

MANILA, Philippines – Farmers are expected to diversify their crops and explore other “strategic” products that may be exported and give them better incomes once restrictions on rice imports are lifted next year.

“What we want, really, is to have a very strategic trade policy with respect to rice and be more strategic also with respect to agriculture,” said Rosemarie Edillon, deputy director-general at the National Economic and Development Authority (NEDA).

“There (are) still a number of farms in the Philippines that can compete with world prices given more competitive conditions. But for some of them, they really have to diversify outside of rice,” she said in a recent interview.

Quantitative restrictions on grain importation will expire next year and will not be renewed by the Duterte administration which wanted market forces to dictate rice prices.

The restrictions were protecting local farmers from foreign rice imports by imposing a high 35-percent tariff rate after reaching a particular shipment ceiling.

Earlier, NEDA director-general Ernesto Pernia said not only will QR not be re-imposed, but that the government will exit rice import business through the National Food Authority (NFA).

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Under the plan still being drafted, Edillon said a specific tariff rate will be imposed on private sector importation.

While there is nothing confirmed yet, she said the present 35-percent rate applicable under the free trade agreement of the Association of Southeast Asian Nations could be explored.

“In the past, we have been artificially protecting our producers and there has not been much pressure to put the land into more strategic use,” she said on the sidelines of the Philippine Investment Forum last week.

Anyway, NFA will continue to maintain buffer stock in order to ensure enough rice supply to support prices, especially during times of natural calamities.

“In cases when there is a calamity, you need to provide relief goods and that would be the function of the NFA…,” she said.

The NEDA official also does not see this as causing supply glut as market forces will dictate demand. “You can only stock up rice for a short period of time otherwise it rots,” she said.

“Just like other commodities, it’s market forces that will dictate,” Edillon said. 

She added she sees increased rice supply lowering rice prices and over-all inflation, explaining that high grain prices had tamed the effect of poverty eradication measures during the previous administration.

Rice inflation slightly increased to 0.5 percent in August from zero percent in the previous month, according to latest census data.

“You just let the private sector (import) however they see fit. If they think the domestic supply is way too low when they import, they just have to pay the tariff,” Edillon said.

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