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Rice tariff reduction loss seen hitting P43B

31 May 2024

THE government should abandon a plan to lower tariffs on rice imports as it will cost farmers billions of pesos in losses, an agricultural association said.

The Federation of Free Farmers (FFF) claimed that P43 billion would be the cost for this year alone as imports flood the market, adding that rice prices may not go down significantly enough to justify the lower duty.

Earlier this week, Finance Secretary Ralph Recto said that rice tariffs — currently temporarily lowered to 35 percent by virtue of a presidential order — could be cut further to bring down prices of the staple and reduce inflation.

On Wednesday, Finance Undersecretary Domini Velasquez said a 15- to 20-percent rate was being studied, while Agriculture Assistant Secretary Arnel de Mesa said the current rate could be halved to 17.5 percent.

Velasquez said the revenue loss for the government would be less than P10 billion and that "the loss ... doesn't really matter if we can reduce prices by P4 to P5."

FFF National Manager Raul Montemayor, however, claimed that the reduction would only be P3 per kilo.

"Any new tariff reduction will be useless if our foreign suppliers jack up their prices, especially since they know that we have no choice but to buy their rice," he added.

The FFF also said that "assuming an additional two million tons of rice imports during the second semester, the DoF (Department of Finance) tariff proposal would mean foregone customs revenues of P10 billion that are legally earmarked for rice farmers' productivity programs."

It added that previous tariff adjustments did not result in lower prices.

"When the government reduced tariffs on non-Asean rice imports from 50 percent to 35 percent starting in May 2021, rice retail prices actually rose, instead of going down," Montemayor claimed.

"Savings from lower tariffs were simply pocketed by importers and middlemen, and were not passed on to consumers."

Source : manilatimes