Consumer group hits rice tariffication law, fears market failure

MANILA, Philippines – A consumer group has claimed that the Rice Liberalization Law has brought more problems than solutions that may eventually lead to a market failure.

According to Samahan at Ugnayan ng mga Konsyumer para sa Ikauunlad ng Bayan (SUKI), the law did not significantly reduce rice prices and worse, the country is flooded with substandard grains.

“Six months after the Rice Liberalization Law was signed, we note that rice prices have barely lowered, while affordable rice is of poor quality. Official reports say the price of rice has gone down by Php2 due to rice importation. This is most welcome,” SUKI said in a statement.

“But in many retail outlets, we have observed that prices still linger at Php42-PhP50/kilo which is still expensive for many low-income consumers. Some of our members experienced buying rice at Php32-Php35 per kilo but discovered that either these are of very low quality or go stale easily,” it added.

Aside from this, the group claims that the law has made the situation worse for local rice farmers, who have been disadvantaged by the low prices of imported rice — even if their products are of a higher quality.

“We also dread the fact that what should be our source of cheap, better-quality rice, which is our local produce, is threatened due to government’s rice import liberalization policy,” SUKI lamented.

“According to the Philippine Statistics Authority (PSA), farm gate palay prices have fallen by as much as 20% from P22 per kilo in mid-August 2018 to P17 per kilo by mid-August this year as traders opt to buy imported rice.  Farmers from Isabela, Tarlac, Nueva Ecija, Laguna, Sorsogon and Bukidnon claimed that farm gate palay prices have fallen to as low as Php7 per kilo.” The group added.

All of these, SUKI explained, can result to a market failure.

President Rodrigo Duterte last February signed into the bill into law, which opens the country to unimpeded importation of rice, to stabilize increasing rice prices in 2018 and the early part of the year.

It was also seen as an answer to the impending rice shortage after some of the National Food Authority (NFA) rice were found to be infested with weevils or bukbok.

READ: Rice tariffication signed into law 

Critics of the administration, however, have warned that the law, authored by Senator Cynthia Villar, will only reduce the farm gate prices of palay.

And just this Tuesday, PSA reported that rice output slid because of the steady fall in prices as traders prefer the much cheaper imported rice.

READ: Makabayan bloc asks Duterte to suspend rice tarrification law 

READ: Rice farm output continues slide 

“High retail prices despite bodegas brimming with imported rice, and local farmers hit by plunging farmgate prices, are all tell-tale signs of a market failure caused in great part by the Rice Liberalization Law,” SUKI said.

“Left unchecked and uncorrected, this market failure might very well lead to another rice shortage. Once the deluge of cheap imports kill the local rice industry, we will be at the mercy of traders sourcing rice from a very narrow global market,” they added.

The bigger problem though, according to SUKI, is total inadequacy of rice supply.

“With the NFA practically abolished, what is there to stop these traders from abusing their market power? Worse, what if the global market players jack up prices or restrict supply? Where do we source our rice if the local rice industry is already dead?” the group asked.

“The rice liberalization law is posing a serious threat on Filipinos’ right to food. Our greatest fear is that one day, there will no longer be enough rice to lay on the table,” SUKI claimed. /gsg