The government should lift the rice import ban and maintain the tariffs at 15 percent, as raising them would stoke inflation and hurt consumers, according to the Foundation for Economic Freedom (FEF).
In a position paper, FEF said the current rice import ban and the proposed reversal of rice tariff rate to 35 percent represent a ‘significant setback’ to economic liberalization, consumer welfare and overall national competitiveness.
‘FEF believes that a liberalized trade, guided by market signals, is the most effective way to ensure food security and affordable prices for Filipino consumers,’ it said.
The two-month import ban is an obvious ‘failure,’ according to FEF, as farm gate palay prices remain from a low of P8 to P14 per kilo-below the production cost of P14.53 in 2024, as revealed by the Philippine Statistics Authority.
FEF said that with the temporary ban proving ineffective, the proposed alternative is to increase the current tariff on rice from 15 percent to 35 percent. ‘Once this is enforced, we expect that the country’s overall inflation will again increase.’
‘Inflation is a scourge of the poorest of the poor Filipinos as an increase in food prices will hurt them most due to limited and alternative income sources,’ FEF said.
The bottom 30 percent of households spend half of their income on food and mostly on rice. While more than 110 million Filipinos eat rice every day, only about 2.2 million farmers grow palay, supporting roughly 6.5 million household members.
‘Raising rice tariff to 35 percent will only benefit less than 5 percent of the total population while penalizing 95 percent of the Filipino rice consumers,’ FEF said.
Instead of extending the rice import ban and raising the tariffs, FEF said the Department of Agriculture (DA) should improve the productivity and competitiveness of the local rice industry.
This is through investments in public goods services, such as research and development, irrigation, infrastructure and extension services.
‘Increasing the productivity and competitiveness of our rice industry is the ultimate protection against the entry of rice imports to the country,’ FEF noted.
Direct cash assistance must also be provided to farmers instead of defending the floor price for their palay, which is ‘more costly and inefficient,’ according to FEF.
Furthermore, FEF stated that the goals for maintaining rice buffer stocks should be separated and assigned to the proper institutions to achieve them.
Emergency supply and affordable rice for the poor should be handled by the Department of Social Welfare and Development with support from the National Food Authority, while price stabilization should be left mainly to the private sector with limited state intervention.
The DA, meanwhile, should focus on supporting farmers’ incomes through direct cash assistance during steep declines in palay prices.
‘By adopting these recommendations, the Philippines can ensure a stable and affordable rice supply while fostering a more competitive and prosperous agricultural sector,’ FEF said.