Legal regime for rice sector, special safeguards duty, pushed as import suspension is “illegal”

The private sector has stood pat in its support for a “legal” regime in rice sector via issuance of special safeguard duty (SSG) on imports despite import suspension’s temporary relief from influx of imported rice.

   The Philippine Chamber of Agriculture and Food Inc (PCAFI) asserted the SSG measure, with the benefit of being sanctioned by Republic Act 11203, the Rice Tarrification Act, still needs to be implemented by January or February 2020.

   This is to ensure imports will not coincide with harvest by dry season  in March to April 2020, the peak harvest of the 2-season crop.  It will help support farmgate price of palay (unhusked rice) to at least P17 per kilo.

   “It takes 30 to 60 days to implement the law.  So it should be issued January-February.  A suspension is against the prevailing law on ‘no QR’ (quantative restriction),” said PCAFI President Danilo V. Fausto,” a dairy entrepreneur who also plants rice.

   As the SSG is ideally issued just for that dry harvest window, the SSG may also be immediately lifted once harvest is finished.

   The benefit of SSG, aside from being sanctioned by section 10 of RA 11203, is it automatically puts a cap on imports as price of imported rice becomes at parity with local prices, making Filipino farmers’ rice competitive.

   PCAFI has maintained the needed duty on imported rice is 70%. At rice’s world market price of $360 per metric ton, imported rice’s landed cost stands at P17 per kilo which makes it hit a P32-P34 per kilo retail price, just matching domestic produce, when added with 70% duty and traders’ margin.

   With imported price just matching domestic rice produce, traders will opt to rather defer importation as imports lose price advantage of the locals.

   While worried about its inflationary effect, PCAFI brushed aside such fear of inflation amid SSG implementation.

   Even if domestic rice price inches up a little due to a little higher rice price for consumers, inflation may just hit just 1.3%.  This is much within government’s targeted 2-4% limit.  Yet this will do a huge help of rescue for Filipino farmers, said Fausto.

   Section 10 of RA 11203 states  “In order to protect the Philippine rice industry from sudden or extreme price fluctuations, a special safeguard duty on rice shall be imposed in accordance with R.A. No. 8800, otherwise known as the ‘Safeguard Measures Act’ and its implementing rules and regulations.” (Melody Mendoza Aguiba)

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