By Chino S. Leyco

The National Economic and Development Authority (NEDA) is confident that the passage of the measure imposing tariffs on imported rice would reduce prices and improve the country’s output of this staple food.

Following the passage of the rice tariffication bill in the bicameral conference committee, Socioeconomic Secretary Ernesto M. Pernia said the legislative action is a welcome development amid skyrocketing commodity prices that drove inflation to higher levels.

Both chambers of Congress approved last week the rice tariffication bill amending Republic Act (RA) No. 8178, otherwise known as the Agricultural Tariffication Act of 1996.

Once passed into law, the new measure will replace quantitative restrictions (QR) on rice imports with tariffs and remove unnecessary government intervention in the rice market.

Pernia said that NEDA views the decision as a positive development as the economic team exhausts all efforts to tame increases in the prices of goods, particularly rice.

“With only the President’s signature before rice tariffication becomes a law, we are making a big step in the realization of our agricultural reform agenda,” Pernia said.

The NEDA chief also said the Bicam-approved bill addresses not only the tariffication of rice in compliance with the Philippines’ obligation to the World Trade Organization, but it also addresses food security by increasing the availability and accessibility of cheaper rice.

“The economic team has always been mindful that food remains to be the major contributor to inflation. Efforts to address food supply concerns, especially rice, will definitely help bring down consumer prices,” he added.

According to NEDA’s preliminary estimate, headline inflation rate would be reduced by 1 percentage point if rice prices will be reduced to the level of imported rice. Even with just a P1.00 per kilo reduction in the wholesale price of rice, headline inflation rate would also be reduced by 0.3 percentage points.

Rice tariffication also helps improve the productivity of farmers and, as a result, enables them to increase their incomes.

The bill provides for the establishment of a rice competitiveness enhancement fund (RCEF) from an annual appropriation of P10 billion for the next six years.

If the tariff revenues exceed P10 billion in any given year, the excess revenue will still be plowed back to RCEF to support rice farmers.

“The RCEF will be used to provide key interventions to support our farmers and enhance their competitiveness,” Pernia said.

A portion of the rice tariff revenues in excess of P10 billion shall also be used to provide direct financial assistance to rice farmers adversely affected by the removal of the quantitative restriction.