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Experts say rice tariffication OK but tradeoffs inevitable

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Tarra Quismundo, ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="https://sa.kapamilya.com/absnews/abscbnnews/media/2018/tvpatrol/02/01/rice.jpg"/></figure></div>SINGAPORE - The Philippines’ plan to impose rice tariffs and lift import quotas require a delicate balance, as liberalizing rice importation may address inflation in the short term but endanger the livelihood of local farmers and later drive up prices, international experts said here. In separate interviews, agricultural economists Jean Balié and Ashok Gulati gave parallel views on the Philippine government’s move to implement rice tariffication after doing away with quantitative restrictions, citing its immediate impact and risks in the long run. Balié, head of the International Rice Research Institute’s (IRRI) Agri-food Policy Platform, said rice tariffication is a “good idea” but has to be gradually implemented to prepare farmers for such reform. “Allowing more imports will bring the price [of rice] down. Therefore, consumers will purchase rice at a much lower price. And that will bring inflation down. So, in the short run, it’s good. But at the same time in the medium, long run, you will have effects about the supply side, how many farmers are we going to keep in business,” he told ABS-CBN News on the sidelines of the 5th International Rice Congress here Tuesday. “The tariff should be set at a sufficiently low level to allow for imports to come and compete with domestic production. So that farmers will be incentivized to actually invest in farming and to be competitive, to transform the sector,” he said. Gulati, former chair of India’s Commission for Agriculture Costs and Prices, said opening the Philippine market to more rice imports by lifting current quotas may readily address inflation, but that the positive impact may be short-lived. He said tariffs have to be at lower levels to avoid further raising prices. “If inflation is a concern and if you can get from outside some quantities which are cheaper, it can bring it down. Raising the tariff will raise the inflation even more,” he said in a separate interview Monday. He said it is up to policy-makers to make the delicate balance between the interests of consumers and producers. “That’s always a tradeoff between the consumer and the producer. [The] producer always wants a higher price and [the] consumer always wants a lower price. So how do you balance, and that’s the balance of the political masters, how to balance interests between producers and consumers,” he said. Balié also pointed out such price dilemma: “Should I favor consumers? If I bring the price down, it’s good for the consumer, bad for the producer. If I let the price increase, it’s good for the producer because he’s selling at a high price, but it’s bad for the consumer.”“It’s not easy to be in government because you really need to pilot the economy. I think we need to acknowledge that,” he added. <div>RICE TARIFFICATION AND INFLATION</div>President Rodrigo Duterte earlier this month certified the rice tariffication bill as urgent in a bid to arrest the increase in rice prices, a key driver of inflation. This as inflation reached new highs this year, largely felt in higher food and gas prices. <ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/09/05/18/inflation-zooms-to-64-percent-in-august-fastest-in-nearly-10-years">Inflation zooms past forecasts as underemployment rises</a></li></ul>Consumer prices <a href="https://news.abs-cbn.com/business/10/05/18/inflation-at-67-percent-in-september">rose to 6.7 percent</a> last month, slightly below forecasts, and the country’s economic managers cited signs that inflation was starting to ease. A Standard Chartered Bank economist, meanwhile, <a href="https://news.abs-cbn.com/business/09/25/18/inflation-to-quicken-further-in-december-standard-chartered-economist">forecast</a> that inflation may hit at least 7 percent in December given the impact of recent typhoons on food supply.In a letter to the Senate, Duterte said lifting the long-standing import quota and instead imposing tariffs on rice imports would “address the urgent need to improve availability of rice in the country, prevent artificial rice shortage, reduce the prices of rice in the market, and curtail the prevalence of corruption and cartel domination in the rice industry.” <ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/news/10/10/18/duterte-certifies-rice-tariffication-bill-as-urgent">Duterte certifies rice tariffication bill as urgent</a></li></ul>The country’s quantitative restrictions on rice imports have been in place since 1996, part of a preferential trade deal the Philippines received from the World Trade Organization upon membership in 1995, to protect local farmers from foreign competition. <div>PREPARING LOCAL FARMERS </div>In removing such restriction, the government must prepare local rice producers so that they could either compete with rice imports or move to other crops, if not transition to another industry altogether, said Balié.“You don’t reform the sector for free. There is a cost,” he said. “We need to go for policy reforms, we need to gradually increase the level of the competitiveness of the sector, but gradually, and make sure that we have a kind of very clear scenario in mind and help the farmers to adjust,” he said. He cited the need “to anticipate and prepare” local rice farmers to the impact of tariffication on their livelihood, as it is inevitable that “a number of farmers will have to exit the sector.” “Give options for those who cannot survive,” Balié said. “Be transparent, be clear about what you say, be participatory, make sure you involve the rural sector, and monitor what you do, the progress you’re making towards your objectives,” he said. <ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/video/business/08/08/18/dissecting-data-how-rice-tariffication-more-rice-imports-affect-prices">Dissecting Data: How rice tariffication, more rice imports affect prices</a></li></ul>

The Philippines’ plan to impose rice tariffs and lift import quotas require a delicate balance, as liberalizing rice importation may address inflation in the short term but endanger the livelihood of local farmers and later drive up prices, international experts said here.

The Philippines’ plan to impose rice tariffs and lift import quotas require a delicate balance, as liberalizing rice importation may address inflation in the short term but endanger the livelihood of local farmers and later drive up prices, international experts said here.

Experts say rice tariffication OK but tradeoffs inevitable

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Experts say rice tariffication OK but tradeoffs inevitable

Tarra Quismundo,

ABS-CBN News

Published Oct 16, 2018 04:05 PM PHT

Read More:

rice tariffication

rice

IRRI

quantitative restriction

import quota

Jean Balié

Ashok Gulati

International Rice Congress

WTO

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