Former DA chief asks Aquino to review rice importation

Former Agriculture Secretary Leonardo Montemayor is urging the Aquino Administration to investigate the tariff-free importation of 200,000 metric tons of rice this year will result in a revenue loss of around P1.6 billion and further push palay prices lower. Montemayor, chairman of the farmers party-list group ABA (Alyansang Bayanihan ng mga Magsasaka, Manggagawang-Bukid at Mangingisda) said, “This transaction authorized by the National Food Authority (NFA) Council violates the legally required 40-50 percent tariff on rice imports by the private sector." Montemayor said the tariff-free importation of rice could further aggravate the NFA's financial standing . Ten Manila-based and eight Cebu-based traders who received the contract of 125,000 and 75,000 tons respectively, were required to pay an “equalization fee" of P2 per kilo, instead of paying the tariff. Of this amount, P1.50 would be returned before Aug. 15 to those who shipped in the rice. The shipment was consigned to the NFA for a zero-tariff subsidy. However, the imports were withdrawn directly by the quota holders when the rice arrived in the country. According to Montemayor, the imported rice cost $350 to $400 per ton, or P19 to P21 per kilo landed in Manila. Thus, the P2 equalization fee is about 10 percent of the landed cost, much lower than the tariff of 40 percent to 50 percent. With the rebate, the fee further dropped to only 2.5 percent. “Philippine government and various stakeholders had fought hard to retain the quantitative restriction for rice in the World Trade Organization, and the rice tariff protection under the Association of South-East Asian Nations-Common Effective Preferential Tariff. The executive branch effectively and illegally has given away this protection by allowing the duty-free imports of rice," Montemayor said. He said that imported rice is reportedly being sold for as low as P1,200 per 50 kilogram sack, or P24 per kilo. Traders who bought palay from farmers at relatively high prices during the past harvest season were stuck with expensive inventories as they could not compete with the price of imported rice. In most cases, they are being forced to sell their stocks at a loss. “The looming danger is that traders will try to recoup their losses in the coming harvest season by buying low from farmers. The NFA will find it hard to support palay prices, since its bodegas will still be full to the brim, and even its cash is tied up in its inventories," said Montemayor. —VVP/VS, GMANews.TV