Prosperity’s high road

Instead of ending the open market in rice trading and reverting to the old system of the state-owned National Food Authority (NFA) cornering the importation of the grain, Congress is leaning towards extending the Rice Tariffication Law (RTL) but with adjustments.

The RTL was enacted five years ago with the dual objective of bringing down rice prices and raising the funds long needed to uplift the condition of farmers through mechanization.

Before that, the NFA had been coopted by a cartel that dictated importation policies and thus made the agency a tool to cement the mafia’s hold on the lucrative grains trade.

The Philippines is the world’s biggest importer of rice, which makes it a significant market and the bellwether for prices.

Whatever price the mafia dictated through the NFA was followed globally.

The cartel’s hold on the market was broken with the RTL, which relegated the NFA to building up buffer stocks for distribution during calamities.

But again, through the vast influence of the cartel, the market was manipulated to create the impression that the RTL was a failure and the NFA would have to regain its importation function.

The RTL reformed the industry. Through the use of tariffs, rice importation became a business decision, which relied on market demand. The law also generated revenues that the government was able to use for development projects.

The law also fulfilled the country’s 1995 commitment to the World Trade Organization (WTO) to replace all quantitative restrictions on commodity imports with tariffs. Rice was the last agricultural commodity to transition to tariffs.

In 2005, the Philippines sought an extension of the quantitative restrictions on rice until 2012. After it lapsed, the Philippines again petitioned the WTO for a waiver to extend, which was granted until 30 June 2017.

While the government needs to intervene in the market, it should not be the syndicate-infested NFA that should do it.

Instead, a new trading body handled by professionals should be created while the NFA will retain its current role of ensuring that the country is well-stocked with grain.

Agriculture Secretary Francisco Tiu Laurel Jr. believes the RTL has been serving its purpose of supporting farmers, increasing their productivity and incomes, even as competition arising from freer importation stands to benefit consumers.

Under the law, the Rice Competitiveness Enhancement Fund has provided aid to hundreds of thousands of farmers. The benefits of the law include financial assistance, better seeds, technical services, and training for farmers.

Farm machinery and equipment were also given out in the five years that the law has been in place.

Laurel said that changes to the RTL would allow the country to mitigate the effects of climate change.

He said extending the RTL and increasing the Rice Fund will enhance farmers’ productivity and competitiveness through greater mechanization, wider use of better technology and inputs, including seeds and fertilizer, and an expanded network of postharvest facilities like dryers, mills, silos and warehouses.

He said modifications will strengthen the law and preserve its gains.

The amendments should include allowing the government to again import grains but only under the Department of Agriculture, similar to the regulation of sugar imports.

Proceeds from the tariffs exceeding P15 billion would be distributed to various programs aimed at financial assistance, crop diversification, water impounding, watershed rehabilitation and development, and solar power irrigation programs.

Under the proposed changes, the Rice Fund will be extended until 2030.

Laurel described the RTL as a progressive law that has been pivotal to the reforms being undertaken in the farming sector.

Developing the agriculture industry is an imperative for inclusive progress. It is a laggard sector in terms of output while employing 25 percent of Filipino workers — which is an equation that invites poverty.