Effects of Rice Import Dependence on Agriculture in The Philippines

Abstract

Rice importation has been the short and immediate solution of the government to the rising gap between supply and demand caused by problems of production, and increasing population that consumes rice as a staple food. Republic act 11203 or also known as Rice Tariffication Law which liberalizes the Importation, Exportation and Trading of Rice lifted the Quantity restriction set on imported goods and was replaced by tariffs committed by the Philippines under the Uruguay round of the World Trade Organization. But instead of liberalizing, it led to a more import dependent system that gives the government a false sense of food security. This study will show the effects of such setup in the rice production, its producers and to the economy of the Philippines as a whole affecting its standing in the Global Stratification.

Introduction

The Philippines is known to be one of the top importers of rice in the international market. Through history and culture, rice has been staple food to every household in the country. The importance of rice to the Filipino community led its place in the products to be secured to ensure food security to be managed by the National Food Authority as it was mandated. Years of consumption, population arises and costly and labour-intensive propagation of palay as its base plant along with the climate condition and geographical setup of the Philippines prone to natural calamities gave the government a resolve to formulate a recently apparent rice import dependent system to ensure its continuous supply availability with stable price.

Main Claims

The rice import dependence that was enabled by the laws enacted from the government and was utilized by the National Food Authority along with the Department of Agriculture and Department of Trade and Industry to ensure food security by buffer stock and for stabilization of price. The laws has enabled fluctuation price of rice due to transportation cost caused by importing of rice.

The National Food Authority opting to rice import dependence gives false food security that is dependent to foreign suppliers, not only does it discourage rice farmers to plant such produce for domestic use due to diminishing value of palay because of its foreign competitors that even if were given tariff can still dominate the market. The fact that the country often experiences natural calamity lowers survival rate of such crops hinders its profitable returns, which affects not only the agricultural industry specifically rice production and the farmers, but also the economy through trade deficit.

National Food Authority and Department of Agriculture that should focus on establishing food security independence has been experiencing a false security of supply due with dependence to rice import which is reliant to an external factor. This led to agricultural problem such as producing surplus of other crops that affects its prices in the market to arise that led the farmers to divert their production to export-base products, which can be limited and regulated by their standards, to such volume and tariffed in other countries. On the other hand, having shortage on rice production, the staple food in the country.

Definition of Terms

1. Food security: is the marginal balance stock of food to be maintained by the National Food Authority in cases of emergency to be used as buffer stock to avoid shortage on the market
2. Buffer stock: is the amount of food products kept by the National Food Authority to be used to circulate in the market.
3. Diminishing value: is the depreciation of actual price of a good from the base of production due to certain factors.
4. Palay: is a base product which rice is the byproduct.
5. Tariff: is the tax implied to the goods imported from another country instead of restrictive quotas as defined in the R.A no. 11203
6. Quantitative restriction: are measures such as quotas, bans, and licensing requirements imposed by the government to limit the volume of particular commodity that enters the country
7. Trade deficit: is the difference between the import and export which is deterrent to the importing country.

Methodology

This study used the literature search and case method which combination shows in-depth understanding of the issue along with its implication in the situation. It will both provide information from other works and also application for situational samples.

Findings

The National Food authority which was mandated to ensure national food security and stabilize supply and prices of staple cereals both in the farm and consumer levels. Given such role played part in the IRR of the R.A 11203 in order to liberalize the trade of Rice which backfired to the local rice industry that instead of giving it an equal fight to the foreign competitors gave the opportunity for the government to cut cost and ask for a cheaper price of palay which is leading the local industry to its demise.

Analysis

The rationale of rice tariffication was to give incentive to the farmers planting rice while giving them the advantage over the importers. But with improper implementation of the IRR of the R.A 11203 such as the government will be the one to decide to what the funds from the rice tariffication was to be allotted defeats its main purpose to help farmers who are responsible to the production of rice locally to support the rising demand domestically.

It was mentioned that even if there was a greater production of rice this year there will still be greater importation of rice to ensure food security and there is no more quantitative restriction to hold the importation of rice only tariff and ASEAN countries supplying will gain advantage over the others. Overwhelming importation of rice which will flood the market may cause its price to drastically fall causing the government to cut cost even more and ask for a cheaper price from the local farmers whom are already living below their means for them to have capital to circulate use for another plantation process for the next harvest season and also making both ends meet from its losses. If this continues, it might eradicate the local rice industry which might make the predicament permanent instead of a short-term solution to long term problem.

Conclusion

A better implementation of the IRR of the R.A 11203 and giving priority to the main role of the National Food Authority, to development of the local rice industry instead of giving a short term solution to a long term and progressing problem of food supply stability will give the country its well deserved independence in terms of food production for its population.

The government should formulate a better incentive program to encourage more farmers to choose rice for production to stabilize the country’s food supply along with a better support during calamities instead of loan which built up from frequent natural disasters as hindrance to production given with the country’s geographical location.

An Amendment to set a minimum price to which reflects elaborate and appropriate costing of palay should be applied. Not only will it help the farmers to regain their profit but also to protect the local industry.

References

1. Performance of Philippine Agriculture January to March 2019 (2019). Published in world wide web thru link: https://psa.gov.ph/system/files/PAR_January%20to%20March%202019.pdf
2. Rice Tariffication Law(2019). Published in world wide web thru link: https://www.officialgazette.gov.ph › 20190214-RA-11203-RRD
3. Simeon, Louise Maureen (2019) Philippines to import more rice despite higher production. Published in world wide web thru link: https://www.philstar.com/business/2019/05/13/1917282/philippines-import-more-rice-despite-higher-production#jrOZjhfYsjcivddb.99
4. Briones, Roehlano M. (2019) Competition in the Rice Industry: An Issues Paper. Published in world wide web thru link: https://phcc.gov.ph/wp-content/uploads/2019/03/Issues-Paper-Rice-030819-cover-1.pdf
5. Customs Memorandum Circular No.135-2019 (2019) Implementing Rules and Regulation of R.A 11203. Published in world wide web thru link: http://customs.gov.ph/wp-content/uploads/2019/06/CMC-135-2019 Implementing_Rules_and_Regulation_of_RA_11203.pdf
6. List of Importers of Rice (2018). Published in world wide web thru link: https://www.trademap.org/Country_SelProduct.aspx?nvpm=1
7. Farmer’s Guide Map (2017). Published in world wide web thru link: https//rfo3.da.gov.ph/farmers-guide-map/
8. Proceedings of the Policy Seminar on Philippine Rice Trade Policy and Rice Security: Future Directions (2012). Published in world wide web thru link: https://www.philrice.gov.ph/wp-content/uploads/2014/09/Proceedings_TradeLibSeminar_2015.pdf
9. Dawe, David C.: Moya, Piedad F. and Casiwan, Cheryll B. (2004) Why Does the Philippines Import Rice?”: Meeting the challenge of trade liberalization. Published in world wide web thru link: http://books.irri.org/9712202097_content.pdf
10. Ùruguay Round of the World Trade Organization (1995). Published in world wide web thru link: (https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact5_e.htm