Rice tariffication bill to dampen agri investments, threaten food security amid climate change

Rice tariffication bill to dampen agri investments, threaten food security amid climate change

Feb. 12, 2019

Rice Tariffication Senate Bill 1998 will dampen investments in agriculture and threaten food security amid imminent climate change, private sector group Philippine Chamber of Agriculture & Food Inc. (PCAFI) said.

SB 1998 will send a strong signal that investments are discouraged in the farm sector and imports are welcome. It is abandoning the welfare and livelihood of Filipino farmers.

“Since rice is the most political of commodities, if the government will be seen as having abandoned the rice farmers to the ravages of unfair trade so that consumers can savor the magic of the market, then investments in the sector will shrink,” said PCAFI, led by Danilo V. Fausto, president.

“Why produce when the signal from the government is to import? How the rice farmers will be treated will determine how the rest of the sectors will be so treated.”

However, a more threatening impact of SB 1998 is the food security threat as world supply of rice in the market is vulnerable to shrinkage due to the imminent climate change.

In January 2010, an issue paper of 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.”

An additional crucial problem in the search for success in agriculture is the utterly useless and misleading ideological debate about liberalization and protectionism.

This has bogged down the sector since our accession to the World Trade Organization (WTO) in 1995.

The dominant framework has been, of course, liberalization as it has been held in almost sacred regard in the corridors of government power and the halls of the academe.

There was this notion that 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.

Protectionism, on the other hand, only held nominal sway in the rice sector because of the much-undermined Quantitative Restriction (QR).

We need to be free of this debate that will bring us nowhere.  The pragmatic approach is to look to those who have succeeded.

On December 20, 2018, the United States 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.

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.

China, like the United States, also did not allow itself to fall prey to any ideological approach.

Ramgopal Agarwala, 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 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.

Of course, the Rice Tariffication bill provides for an apparent automatic appropriation for 5 years in the amount of PhP10 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 P 17 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, the 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?

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. End (Growth Publishing for PCAFI)

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