Finance Secretary Ralph Recto assured substantial funding for Filipino farmers as he stressed rice importations and their low tariff as only short-term measures.

“We are not relying on importing rice. Part of our Philippine Development Plan is to increase rice productivity. We will continue to make those investments with our farmers,” Recto over the weekend.

Local farmers have expressed concern they might not be able to sustain their production due to steeper competition with imported rice amid the implementation of a lower tariff.

Last week, the National Economic and Development Authority (NEDA) approved the rice tariff reduction to 15 percent from 35 percent under the Comprehensive Tariff Program for 2024-2028.

NEDA Secretary Arsenio Balisacan said the goal is to lower rice prices to P29 per kilo for poor households as the commodity’s supply in the local market increases with more and cheaper imported rice.

While rice imports flow into the country, Recto said the government will be increasing support to local farmers through the national budget and the Rice Tariffication Law (RTL).

“I expect another increase in the budget for agriculture in 2025,” he said. “They can also suggest another P15 billion because in the RTL they were getting more or less P20 billion in the beginning and more or less P30 billion last year.”

Under the RTL, the government will provide rice farmers a total of P10 billion annually from its Rice Competitiveness Enhancement Fund for the acquisition of machinery, farming inputs, and credit. The fund is sourced from import tariffs on rice.

Multiple benefits

Recto said he had talked with farmers and is waiting for detailed insights from them. “I think we’re already discussing how we can increase productivity. What are their inputs? How should we spend the budget? I told them why don’t you get back to us on your suggestions there.”

As the lower rice tariff decreases overall inflation, Recto said interest rates of banks could also fall and allow extra spending on other goods and services among households.

Economists project a 1.8 percentage point reduction in overall inflation. “Once we’re able to reduce inflation, hopefully we can reduce interest rates and that can create more growth,” Recto said.

The Bangko Sentral ng Pilipinas maintains its policy rate at 6.5 percent or an increase of 450 basis points since May 2022 to stabilize inflation within 2 to 4 percent.

Inflation rose again to 3.9 percent in May from 3.8 percent in April as transport, restaurant and accommodation prices increased, according to the Philippine Statistics Authority.

Rice prices declined to 23 percent last month from 23.9 percent in April.