More safety nets in rice sector pushed

MANILA, Philippines — An economic think tank on Wednesday cautioned lawmakers that possible amendments to the rice tariffication law (RTL) should be backed by data and is in line with the policy’s objective of boosting the domestic rice industry.

The law is once again being revisited as the farmgate price of palay continues to decline amid the unimpeded arrival of imported rice in the country, worsened by the rising costs of fertilizer and oil and the destruction left by Severe Tropical Storm “Maring.”

Another factor that continues to disempower farmers is the lack of drying equipment and facilities that ultimately force farmers to sell their palay of varying quality.

As a consequence, farmers do not have the bargaining power to negotiate with traders that some palay are being sold for as low as P10 a kilogram against the prevailing production cost of P14 per kilo.

The Action for Economic Reforms (AER) in a policy paper said the RTL had the potential to become a “long-term, sustainable solution” to the challenges of producing palay at competitive rates if the government would put in place measures that could monitor and speed up the distribution of interventions under the law.

In addition to providing farmers with cash transfers, AER said the Department of Agriculture (DA) must also “enhance the timeliness, targeting, scope and effectiveness” of the rice competitiveness enhancement program (RCEP).

Some of the think tank’s key findings included the late or missed delivery of seeds, the slow rollout of mechanization, farmers’ insufficient access to financing through loans and aid, and the delayed initial roll-out and inconsistent targeting of beneficiaries due to gaps in the DA’s farmers registry.

Researchers at AER also called on lawmakers to look beyond the rice law to solve the rice industry’s woes.

For instance, Congress may use the Philippine Competition Commission to go after marketing cartels, give the National Food Authority a bigger role within the tariff regime, and transfer the National Irrigation Administration to the DA from the Office of the President to make sure that the programs of the two agencies remain in sync.

‘Not a silver bullet’

“The [RTL] is not a silver bullet. It is a disruptive yet transformative reform but it is not a ‘be-all, end-all’ solution to the age-old problems that beset the sector,” said AER.

“It [RTL] is a policy doomed to fail when policymakers turn a blind eye on the binding constraints that the RTL does not inherently address. For this, other complementary policies are urgently needed to complete the reform that RTL started. Hopefully, this will protect farmers from welfare losses while securing welfare gains for our consumers,” it added.

Farmer groups have been clamoring for lawmakers to repeal the RTL which they blame for plummeting palay prices, but AER feared this may reverse some of the gains brought by the policy, including the availability of affordable rice in the markets and the annual injection of P10 billion worth of interventions to the industry.

It is now up to the government and the key players in the industry to make sure that these advantages are being felt by farmers on the ground, as small-scale farmers continue to perceive the benefits of RTL as not being commensurate with the losses they incur from the falling prices of palay.