DTI rejects safeguard tariffs on imported rice, warns of faster inflation

Bruce Rodriguez, ABS-CBN News

Posted at Oct 23 2019 07:51 PM

MANILA - The Department of Trade and Industry dismissed calls to raise the tariffs on imported rice via safeguard duties saying this will lead to faster inflation. 

Farmers' groups and agriculture advocates have been calling for the imposition of safeguard duties on rice to protect local farmers amid an influx of cheap imports. 

Trade Secretary Ramon Lopez, however, said calls to raise tariffs on rice will push up rice prices and accelerate inflation. 

"Kailangan pag-aralan mabuti yan, kasi alam n'yo yung safeguard duties sigurado may impact yan dun sa sa presyuhan, sa inflation," Lopez said. 

(That needs to be studied carefully because safeguard duties will surely have an impact on prices, on inflation.)

Under the Safeguard Measures Act, the government can impose general safeguard duties on rice imports, apart from regular tariffs if imports harm local farmers. 

Last week however, Agriculture Secretary William Dar said the government was shelving plans to impose safeguard duties and would instead give affected rice farmers a one-time P5,000 cash gift.

Dar said economic managers were worried over the inflationary impact of higher duties on rice. 

Inflation averaged 2.8 percent in the first 9 months of 2019 after slipping to 0.9 percent in September.

Several farmers groups meanwhile rejected the government's claims, saying higher tariffs on rice would have minimal effect on inflation. 

Alyansa Agrikultura chairman Ernesto Ordoñez said based on their study, the government can impose safeguard duties rice imports of up to 86 percent to protect local farmers, without pushing up prices. 

He asserted this would only increase inflation by less than one percentage point and a worst-case scenario of 2 percentage points.

Ordoñez also challenged the government to back up its claims that higher tariffs will stoke inflation.

"They're saying we don't want high inflation. What we're saying is that the government didn't even finish its findings. They should at least finish the findings," Ordoñez said. 

The group said farmers are also amenable to a 70 percent tariff.

"Our prediction is this will save our farmers who are suffering," Ordoñez said.

A report from the Philippine Statistics Authority showed that farmgate prices of palay or wet unmilled rice averaged P15.56 per kilo on the first week of October, down from P21.86 per kilo during the same period last year.

Earlier this year, some farmers also complained that palay prices had gone down to as low as P7 a kilo, which was well below its production cost of around P12 a kilo. 

Farmers blamed this on the Rice Tariffication law which was enacted in February 2019. 

It removed the quantitative restrictions on the import of the staple grains replacing it with a 35 percent tariff.

Dar will meet with other economic managers on Thursday to discuss measures to help farmers affected by the flood of cheap imports.