CITY OF MALOLOS — The Federation of Free Farmers (FFF) rejected the proposals to reduce tariffs on imported rice in response to escalating prices of the commodity.

In a statement sent to Central Luzon mediamen, FFF said the proposals were made by the National Economic and Development Authority (NEDA) and some big business groups.

The farmer group cited that a recently floated recommendation would decrease the current 35 percent tariff to 10 percent supposedly to allow cheaper imported rice to augment local stocks.

Raul Montemayor, FFF national manager, warned that the suggested cut could cause palay prices to drop by P6.00 per kilo.

He pointed out that farmers’ income losses could reach P120 billion in one year and debunked a claim that these would be offset by the P10 billion allotment for the Rice Competitiveness Enhancement Fund (RCEF) under R.A. No. 11203 (Rice Tariffication Law).

Moreover, government’s foregone tariff revenues could reach Php12 billion a year, based on current declared values of imports and assuming 3 million tons of imported rice, Montemayor said.

He explained that rice importers have been undervaluing their shipment values by an average of 22 percent in order to lower their tariff liabilities.

In June 2023, for example, the average declared landed cost of rice with five percent brokens was only P22.00 per kilo compared to the P29.00 per kilo reference price of the Bureau of Customs, Montemayor noted.

He pointed out that, “In effect, importers have already been paying a net tariff of almost 10 percent all along because of this practice of undervaluation.”

Montemayor further expressed doubts that a tariff reduction would result in cheaper prices for consumers. He said that retail prices continued to increase even after the government slashed tariffs on rice from non-ASEAN countries from 50% to 35% starting in 2021.

“Gains from tariff reduction are simply being captured by importers and traders, with minimal benefit to consumers, and at the expense of farmers. Besides, importers are bringing in mostly premium grade rice which provide better profit margins, and not the regular milled rice that the poor usually buy.”, Montemayor said.

Instead of heeding tariff reduction proposals, President Marcos, Jr. should hold its proponents to account for the damage they have inflicted on small farmers and the agriculture sector resulting from their past flawed prescriptions, Montemayor said.

He also recalled the repeated assurances from the Executive Branch that tariffs on sensitive agricultural products like rice would not be diminished under the Regional Comprehensive Economic Partnership (RCEP) trade agreement, which the Senate ratified last February 2023.