Farmers and Peasants Group Decry the Passing of EO 135

Published May 19, 2021

The National Movement for Food Sovereignty (NMFS) denounces the passage of Executive Order 135 which reduces the tariff on imported rice under the Most Favored Nation (MFN) rates from 40% to 35%. This means that imported rice coming from non-ASEAN countries will be imposed the same rate of 35%, inviting more rice importation from countries such as India or China. As what happened during the September harvest of 2019 when palay prices plummeted to P8/kg due to massive rice imports triggered by the Rice Trade Liberalization Law, this policy entices more rice imports that may harm further a barely surviving domestic rice sector. In 2019, rice imports rose to 2.9 million MT from 1.9 million MT in 2018. In 2020, rice imports were around 2.5 million MT.

Trinidad Domingo, a convenor of the NMFS, also a leader of women farmers’ group KABAPA, questions the need to impose the EO when the Rice Tariffication Law (RTL) is already in place.

The RTL or the RA 11203, which has been in effect for two years now, has removed all quantitative restrictions in the importation of rice and replaced it with tariffs. Any party interested to import rice can do so anytime without the limit to volume. Along with this, the regulatory function of the National Food Authority (NFA) was also removed.
“The passing of this EO is unjustifiable. What is their basis to reduce the tariffs? If their concern is inflation, we know that rice is not the main driver for the high inflation rates in the past few months. And there is ample supply, there is no urgent need to augment supply.” said Manuel Rosario, chairman of Pambansang Katipunan ng mga Samahan sa Kanayunan (PKSK) and convenor of the NMFS.
Last year, local rice production was at record high at 19.4 million MT and rice imports, on the other hand, was around 2.45 million MT. During the first quarter of 2021, rice production was around 4.63 million MT while imports was around 606 MT. The country’s rice inventory as of March 2021 is at 2.08 million MT. The Department of Agriculture (DA) even expressed that local production will likely reach 20.4 million MT for 2021.
While proponents of the Rice Trade Liberalization Law argued that freeing rice imports will lower domestic rice prices, statistics show that there has been a slight reduction of only 2.5% (both regular-milled rice and well-milled rice). Price of regular-miller rice went from PhP 37.89 in 2019 to PhP 36.93 in 2020, while well-milled rice went from PhP 42.73 in 2019 to PhP 41.67 in 2020. Such miniscule benefits could not compensate for the huge losses incurred by farmers amounting to PhP 40 billion. But again, this is the same justification that the Duterte administration would like us to believe.
If we look at rice prices in January 2021, well-milled rice prices reported at an average of P37.2/kg at wholesale and P41.05 at retail, while regular-milled rice was at an average of P33.12/kg at wholesale and P36.06/kg at retail. Sadly, consumers have not felt the price reduction effects of the RTL, and this new EO adds insult to injury. Clearly, the main benefactors of liberalized rice importation are big rice importing companies and banks.
According to the EO, the tariff reduction “took into consideration the increase in global rice prices, and the uncertainties surrounding the steady supply of rice in the country.” For Eduardo Mora, head convenor of the NMFS, this is irresponsible and is unfair to our local rice farmers. “The economic managers and the administration keep favoring importation. While addressing issues that affect consumers, the welfare and livelihood of our food producers should be at the forefront of their agenda.” he stated.
“The government should focus on how to help farmers increase their production and expand irrigated areas for rice cultivation. To maintain affordable rice prices and reduce pressure on inflation, government palay price support should be expanded, farmers should have access to post-harvest facilities such as dryers and warehouses, and consumers are ensured supply of cheap rice. However, RTL has reduced the function of NFA to mere buffer-stocking for emergency purposes, diminishing its role and intervention in rice trade and price stabilization, and practically leaving the supply of rice in the country at the hands of rice traders,” he added.
While the Rice Trade Liberalization Law provides for a Rice Competitiveness Enhancement Fund (RCEF) that will be derived from the tariffs imposed on rice imports, reduced revenues from the imposition of EO135 will be adding insult to injury. The RCEF, which is supposed to improve rice farmers’ competitiveness and income amidst liberalization of the Philippine rice trade, has done little to bail out rice farmers from bankruptcy.
The NMFS reiterates that liberalized rice importation does not spell food security for our country. On the opposite, the Rice Trade Liberalization Law has paved the way for dependence on rice imports as seen in our increasing rice imports from 2019 and now manifested by this recent executive action to further reduce import tariffs for rice coming from non-traditional sources even as farmers have vehemently protested against this law. The Duterte administration has failed the farmers by protecting their own livelihoods. It puts the interest first of traders and importers above that of the welfare of the people
We cannot rely on rice importation in the long run as it would be detrimental to our local rice industry and our own food security. We stress that we need to support our farmers first and protect our food sovereignty.