Experts offer solutions to RP's rice problem

The government should consider removing quantitative restrictions on rice and do away with state monopoly over imports so it can collect more taxes that it can give away to the poor, an economist said on Monday. "[The government] can allow large wholesalers of rice to bid for the right to import rice based on the projected shortage of supply," University of the Philippines economist and former Budget Secretary Benjamin Diokno said. This, he said, would end the National Food Authority's (NFA) monopoly on rice imports and allow the government to collect more taxes. The state can then dole outs the funds so the poor can buy food. But Rolando Dy, executive director of the Center for Food and Agribusiness of the University of Asia and the Pacific (UA&P), said removing the quantitative restrictions on rice is a "sensitive matter." A quantitative restriction is explicit limit or quota on the physical amount of commodities that may be imported or exported during a specific period, usually measured by volume but sometimes by value. "The price of rice will not go down to previous levels. Also, water will be a 21st century crisis. There is a need for the Philippines to start developing other carbohydrate sources such cassava, banana, camote (yam) and corn particularly in the uplands," said Dy, who favors phasing in lower tariff on rice under the World Trade Organization (WTO). "With rice imports at $500 per ton, a 20-30 percent tariff is adequate to protect local farmers," he said. Dy said the government could also consider seasonal tariffs — lowering the tariff during the lean months for palay or unhusked rice and increasing it in the middle of the harvest season. "Removing the quantitative restriction on rice would have been ideal if all aggregate domestic measures of support are in place to enhance global competitiveness," said Leonardo Gonzalez, president of the STRIVE Foundation. "Unfortunately, these domestic measures are lacking, therefore the only semblance of trade protection is the quantitative restriction," he pointed out. He said the government should consider increasing domestic support for the rice sector while the country is in the middle of transition to a liberalized rice trade. The government is now evaluating the possibility of whether to petition the WTO to extend the quantitative restriction on rice, which will expire in 2012. The scheme has allowed the Philippines to limit the volume of rice that can be imported by the government every year at a lower tariff of 40 percent, preventing a possible influx of cheap rice imports. All other rice importation comes in at 50 percent tariff. NPA, GMANews.TV