SPEECH OF SECRETARY RAMON M. LOPEZ
11TH WORLD RICE CONFERENCE: PHILIPPINE SESSION
13 November 2019, Makati Shangri-La Hotel, Makati City
As delivered
RICE TARIFFICATION AS PRO-FILIPINO:
PRO-CONSUMER AND PRO-FARMER
Ladies and gentlemen, good morning!
In today’s session of the World Rice Conference I want to discuss about the Rice Tariffication Law (RTL) is pro-Filipino—that is, pro-consumer and at the same time, pro-farmer.
Rice tariffication has been very instrumental in reforming the long-protected rice industry. It was issued to address the strong inflationary pressures of last year specifically, resulting from the perceived shortage and controlled supply of rice in the market. From an average of 5.2% last year, the overall inflation rate has gone down to only 2.6% YOY average in January-October 2019. From a high of 6.7% inflation rate in October 2018, it’s now down to 0.8% as of October 2019. Rice, which has a relatively large weight in the Consumer Price Index (CPI) at 9.6%, recorded a negative inflation rate of -2.1% YOY in January-October of this year. In the retail markets, prices of rice have decreased from the levels of Php50 per kilo and up, to now Php38 per kilo and below and I am speaking for well-milled rice.
It cannot be understated that rice remains the staple food of Filipinos. In fact, the Philippines ranks one of the world’s largest rice consumers with our daily national rice consumption amounting to 32,593 MT per day, regardless of our country’s economic situation. That’s why it is important to always have stability in the price of rice. We are confident that rice tariffication holds the key to ensure the security of rice supply in our country. Given the open system, there is a minimum chance for the commodity to be controlled by few vested interest groups.
Rice Security is more important than rice self-sufficiency. But this doesn’t mean that we will not strive to excel in rice production efficiencies and productivity to make our rice farmers globally competitive.
RTL will try to develop our rice self-sufficiency, thanks to the Rice Competitiveness Enhancement Fund (RCEF) that can improve the industry’s competitiveness and support to our farmers.
It can be recalled that last year our country suffered from high inflation mainly brought about by the high prices of rice. The Department of Trade and Industry (DTI), with the help of other government agencies, rolled out initiatives to temporarily address rising inflation and protect our people’s rice supply.
Among our major programs was the Presyong Resonable Dapat (PRD) program. In english, it is equivalent to something like it should be right prices for Filipinos. We worked closely with the Department of Agriculture (DA) to increase the accessibility and availability of rice in the market. We figured out that to immediately bring cheaper rice directly to the consumers, we have to allow retailers to import rice with the condition that they sell the rice directly to the consumers at PHP39 per kilo and below, given that the price range at that time were at Php50 and above. The PRD program in effect was a success and I consider it also as a preview to the current Rice Tariffication Law as it now allowed any sector to import rice. The PRD covered 521 supermarkets nationwide of major retail chains such as SM, Puregold, Robinsons, Waltermart, Shopwise, Wellcome, and Gaisano to provide consumers access to cheaper imported rice. You might wonder why we focus on these large major retailers the intention was to make the program implementable immediately nationwide. And this is where we can also accurately monitor the selling of the retailers to ensure that they are following the price range of PHP39 and below.
To ensure the rice supply and price stability, DTI—as chair of the National Price Coordinating Council (NPCC) and through Memorandum Order (MO) No. 26-28 issued by Malacañang—also assisted DA in monitoring rice prices and supply in the market. Since July 2018, DTI has been implementing monitoring operations of agriculture products in wet markets across Metro Manila.
DTI, DA, NFA, and the Sugar Regulatory Administration (SRA) also issued a Joint Memorandum Circular (JMC) on the setting of moving Suggested Retail Prices (SRPs) for chicken, pork, rice, and sugar last year.
The implementation of the RTL this year saw the streamlining of import processes, even as it increased accessibility and availability of rice in the local market, and lessened channels from rice field to the market.
More importantly, the RTL was crafted to protect local farmers by balancing the playing field.
That is why the RTL can be considered as both pro-consumer and pro-farmer. It is pro-consumer because over 100M Filipino consumers, including majority of the rice farmers, are net consumers of rice. They will benefit from the lower rice prices due to liberalization, which the Bangko Sentral ng Pilipinas (BSP) and the National Economic Development Authority (NEDA) estimate will drop to Php32 to Php37 per kilo depending on the world market price.
It is pro-farmer because as consumers, they will have access to cheap, affordable, and high-quality rice. Around 1.1M of 2.9M rice farmers and farm workers are smallholders, planting less than one hectare. Most of them are also net consumers of rice. While they may gain during harvest, they buy expensive rice during the rest of the year. Moreover, an estimated 4.5M non-rice farmers and farm workers will benefit from the lower price of rice. As well of course the rest of the 108 million Filipinos.
Our rice farmers will also receive support from the Php10B Rice Competitiveness Enhancement Fund that will be explained further by the following speakers. RCEF will improve the farmers’ productivity and competitiveness. This fund will be used for their farm mechanization, development and distribution of high-quality inbred seeds, credit assistance, and training and extension services. This, in turn, will lead to greater efficiency, lower production costs, and improve their competitiveness.
With the implementation of the RTL, DTI is continuing its efforts to ensure rice supply and price stability while also working towards ensuring that our farmers are well taken cared of.
Aside from our agri-business programs, DTI is working with DA to introduce a new business model that will allow farmers to sell directly to retailers. We have contracted the retailers from our side and now working with the DA so that the farmers can link with participating millers that can offer a fix milling rate, and then distribute their rice to retailers. This would lead to an increase in their profits, reduce traders in between, and ensure low rice prices for consumers.
There are also current efforts as discussed earlier for LGUs to also be the buyer of palay and rice for direct selling and distribution to their constituents.
Further, we are assisting DA and NFA in determining the distribution sites and channels of imported rice. We are now pre-screening applications of retailers as well as the big food chains so that we can start importing their balance requirements of rice. These programs are being done through our Philippine International Trading Corp. (PITC).
Lastly, we are coordinating with Local Government Units (LGUs) for the issuance of a local Executive Order (EO). This EO would reactivate the Local Price Coordinating Council (LPCC) and revoke business permits of rice retailers who refuse to sell cheaper regular-milled and well-milled rice.
To conclude, DTI is committed to achieving food security to provide our people with greater accessibility and availability of rice at relatively lower prices. But we also want to protect our farmers. The RTL will help us in this regard as it eases the undersupply in rice while also developing our rice industry.
That’s why rice tariffication can be considered truly pro-Filipino as it protects both our consumers and farmers at the same time. Moreover, we are confident that rice tariffication will lead to a better quality of life for our people through inclusive growth and shared prosperity, as promised by the President Duterte in his Tapang at Malasakit advocacy.
RTL is pro-Filipino. Ito ay para sa bayan. This is for the Filipino.
Thank you and mabuhay tayong lahat.