PCAFI opposes rice import liberalization bill

Danilo V. Fausto PCAFI President

Private farm group PCAFI vehemently opposes rice import liberalization bill, presses Duterte for Filipino Farmers First policy to support local farmers
February 11, 2019

Private farm group PCAFI has vehemently opposed rice import liberalization bill SB 1998 and urged Duterte Administration to pour full subsidy in a “ Filipino Farmers First” polivy rather than supporting foreign farmers.
The Philippine Chamber of Agriculture & Food Inc (PCAFI) opposed Senate Bill (SB) 1998 as it presses government to adopt a Filipino Farmers First rice policy.
PCAFI said the Duterte Administration should zero in on a policy adopted by the United States and China pouring significant subsidy for the farm sector.
“On Dec. 20, 2018, the US passed another Farm Bill into law granting subsidies to both producers and consumers in the amount of US$867 billion in the next 5 years. It must be noted that these are federal subsidies and do not include those granted at the State level,” said PCAFI.
Allowing imports to flood the Philippines’ rice market is not a “magic wand” that will push just push down rice prices in the interest of consumers.
It will have tremendously numerous adverse repercussions and will abandon Filipino rice farmers. Investments in rice farming will collapse.
“How the rice farmers are treated will determine how the rest of the sectors will be treated,”said PCAFI led by Danilo V. Fausto, president.
“Since rice is most political of commodities, if the government will be seen as having abandoned trice farmers to the ravages of unfair trade so that consumers can savor the magic of the market, then investments in the sector will shrink. Why produce when the signal from the government is to import?” PCAFI said.
SB 1998 may threaten food security. The imminent climate change can unexpectedly shrink global rice supply anytime.
The United States Council on Agricultural Science and Technology (USCAST) stated “Globally, agriculture faces unprecedented challenges such as increases in the demand for livestock-based foods in Asia, climate change that threatens to decrease production capacity in many places around the world, and increasing demand due to continuing rapid population growth in some poor countries,” said PCAFI.
The rice import liberalization is proposed under SB 1998 led by Senator Cynthia Villar which replaces quantitative restriction on rice with tariffs.
Providing subsidies to farmers has been the success track of countries – US and China– that have become leaders in agriculture, said PCAFI led by Danilo V. Fausto, president.
“Subsidies in one form or another have been the template for other countries with successful agricultural sectors. Strangely, since 1995, our policymakers and some of those in the academe have been silent regarding the issue of subsidies despite the fact it was the main reason why the DOHA Development Round of the WTO was torpedoed by developed countries.”
“If we are to win the struggle for the future of agriculture, a more pragmatic approach as practiced by countries like the US and China should be the way forward.”
In the first place, Filipino farmers never really enjoyed increased income from the liberalization ideologies of World Trade Organization advocates as some Filipino economists have imbibed.
“They (farmers) haven’t even savored (the magic wand of liberalization) with the 1995 shock liberalization).”
Debating on liberalization and protectionism is useless and misleading. This has bogged down the sector since our accession to the World Trade Organization (WTO) in 1995, according to PCAFI.
The proposal for farm liberalization has subjected Filipino farmers to abuse.
“The dominant framework has been liberalization as it has been held in almost sacred regard in the corridors of government power and the halls of the academe. There’s a notion the magic of the market will force Philippine Agriculture to become competitive. As such, it bears much of the responsibility for the current sad state of neglect and abuse of the sector.”
Even the QR policy, which imposes a maximum volume per crop year that may be imported by the National Food Authority, is a weak policy that will not optimize opportunities for Filipino farmers nor boost food production.
“Protectionism, on the other hand, only held nominal sway in the rice sector because of the much-undermined QR. We need to be free of this debate that will bring us nowhere.”
China, like the United States, also did not allow itself to fall prey to any ideological approach.
RamgopalAgarwala, who for three years was chief of the Economics Unit in the Beijing Office of the World Bank, stated in his 2002 article “The Rise of China: How to Make it an Opportunity and not a Threat” that among the key elements of the reform process in China was avoiding shock therapies and adopting a gradualist approach and making careful sequencing of reforms in the light of ground realities.”
Agarwala also took note that “China took the general insights on reform from its own experience as well as that of other countries and then determined what would work given the current conditions at the time of reforms.
The Rice Tariffication bill provides for an apparent automatic appropriation for 5 years in the amount of P10 billion.
In addition, all rice tariffs collected will go to a Rice Competitiveness Enhancement Fund (RCEF). These are supposedly the safety nets.
Experience, however, teaches that even safety nets provided for by Law can be undermined by ideology and poor governance.
The Agriculture and Fisheries Modernization Act of 1997 (RA 8435) also provided for an automatic appropriation of P17 billion annually for six years on top of the regular Department of Agriculture budget but it never happened.
The 1995 Tariffication Act (RA 8178) established an Agricultural Competitiveness Enhancement Fund (ACEF). The source of the fund was the tariffs collected from imports under the Minimum-Access-Volume (MAV) we have committed to the WTO.
Unfortunately, ACEF is more known for corruption than enhancing agricultural competitiveness. These safety nets seemed to be more for show because up to now the government has no trade data system to determine if an importation is in accordance with the rules of the WTO in terms of valuation and trade remedies, if any.
“As such, do we not owe the rice sector a more gradual approach and a modicum of sequencing in implementing tariffication? Do we not owe the consumers a viable rice sector that would provide balance to imports which also vulnerable to climate change and avoid a repeat or worse of the Rice Crisis of 2008?” End (Growth Publishing for PCAFI)

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