60-day pause of rice imports

Earlier this week, President Marcos “ordered a 60-day suspension of all rice importation starting September 1 to shield local farmers from falling palay prices during the ongoing harvest season.” Forthwith, apprehensions of possible hike in inflation rose. Sec. Balisacan of the Department of Economy, Planning and Development (DepDev), however, allayed these fears citing “sufficient domestic supply, declining global prices and a strong harvest outlook.”

This is a positive development. To recall, over a year ago, to augment rice supply and prevent prices from skyrocketing, DepDev (then, NEDA) approved the comprehensive tariff program for 2024 to 2028. It included, among others, a reduction of rice import duty from 35 percent to 15 percent. Obviously, this directive alone, not only stabilized the supply of rice but significantly lower inflation.

Moreover, this move reinforced Administrative Order 20 which directed the Department of Agriculture (DA) “to remove non-tariff barriers to bring down rising domestic prices of agricultural products.” For clarity, non-tariff barriers include, among others, quotas, embargoes, sanctions and levies. The reason could be political or economic. A sanction or trade embargo is a political strategy. On the other hand, if a country imposes quotas or levies on imports of products or produce to protect their own manufacturers or producers, that is an economic strategy.

In trying to understand its use as an economic strategy, we need not go that far. Protecting our farmers or fisherfolks from the influx of imported rice, fish and other agriculture products that our country produces is a typical example of its use as an economic strategy. We can’t afford to see them (farmers and fisherfolks) lose their livelihood and render their laborers jobless. Obviously, the entire agriculture sector will suffer. Thus, resulting to economic losses.

So that, when a government removes such protection, there must be some compelling reasons. In us, faulted on the drought, inflation (due to food supply shortage) has been made the underlying reason for it. As usual, importation is the first option, the immediate default. 

Thus, Pres. Marcos then said, that “It is imperative to further streamline administrative procedures to foster transparency and predictability of policies on the importation of agricultural products in order to help ensure food security, maintain sufficient supply of agricultural goods in the domestic market, and improve local production.”

Specifically, among others, the President “ordered the DA to simplify procedures and requirements in licensing importers, minimize the processing time of application for importation, and exempt licensed trades from submission of registration requirements in coordination with other agencies such as the Department of Trade and Industry and the Department of Finance.”  To also “facilitate the importation of certain agricultural products beyond the authorized Minimum Access Volume and reduce or remove administrative fees” and “ease the process of issuing Sanitary and Phytosanitary Import Clearance and find ways to improve logistics, transport, distribution and storage of imported agricultural products.” Likewise, the Bureau of Customs (BoC) was “directed to prioritize the unloading and releasing of imported agricultural products.”

Again, to reemphasize, this move will make sure that the supply of rice and other agricultural produce will be sufficient for our needs. 

Also, lest we forget, we established the Rice Competitiveness Enhancement Fund (RCEF) during Pres. Duterte’s term. It is “intended to improve the productivity and competitiveness of local rice farmers and increase their income through the provision of farm machinery and equipment, rice seed development, propagation, and promotion, expanded rice credit assistance, and rice extension services.” Markedly, Republic Act No. 11203 or the Rice Tariffication Law replaced the quantitative restrictions on imported rice with tariff of 35 percent and established the Rice Competitiveness Enhancement Fund (RCEF) funded by the tariff revenues. With RCEF, there is emphasis in providing machineries and farm inputs to farmers.  Supposedly, a long-term solution to our food shortages.

Now, it can be told that the tariff reduction (though contradicting RA no. 11203) was appropriate as it helped us weather the effects in times of shortages. On the other hand, that willingness to suspend it in times of abundance gives us the opportunity to hit the right balance.  That of making sure that our own farmers can till their lands profitably.

Indeed, today, it seems that RCEF is working and that we are on the road to self-sufficiency. This 60-day rice imports suspension validates that.