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FLEA MARKET OF IDEAS

Fiddling with farmers’ lives

/ 05:04 AM February 25, 2019

The old law that regulated the rice industry failed because of the twin problems of smuggling and the criminal schemes of rice syndicates. The new law called the Rice Tariffication Act does not provide solutions to these two problems. The new law is therefore bound to fail.

I’m keenly interested in the rice industry because I was raised by a family dependent on farming in the rice-producing province of Isabela. Every time I go home, I hear unending complaints of hardship from my father, uncles and childhood friends who are rice farmers.

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President Duterte signed the Rice Tariffication Act passed by Congress recently. Prior to this new law, rice imports were allowed subject to quantity limitations. Imports were allowed to prevent a supply shortage which could cause high prices that harm consumers. The quantity limitation was meant to prevent a supply surplus, which could trigger low prices that harm farmers.

Under the new law, quantity restrictions were removed and unlimited rice importation is now allowed. In lieu of volume limits, a 35-percent tax will be imposed on rice imports from members of the Association of Southeast Asian Nations (Asean) and 50 percent from non-Asean countries.

The new policy of unlimited rice importation is the government’s solution to the need of consumers for prices to be low. On the other hand, the imposition of tax on rice imports is intended to benefit farmers: first, to ensure that we will not be swamped with very cheap imported rice that will drive our farmers to bankruptcy; and second, the revenues collected will be used to help farmers with various forms of assistance.

To be fair with the government, the crafting of a new rice policy is tricky because it requires a delicate balancing of the conflicting interests of consumers who will suffer if prices are high and farmers who will suffer if prices are low.

However, the problem with the new law is that it prescribes a solution based on the assumption that our rice problem is entirely due to the market forces of supply and demand. The reality however is that the effect of market forces is eclipsed by the distortions caused by smuggling and the criminal machinations of rice cartels.

The manufactured distortions in the rice industry are the reasons why our farmers are poor despite a yearly supply shortage, our consumers suffer from high prices despite rice imports allowed by government, and our government is inutile despite the immense powers possessed by its National Food Authority.

It is highly irresponsible for the government to hastily make a complete about-face from import controls to unlimited importation. It amounts to fiddling with the lives of rice farmers.

At the very least, the massive shift in policy should have been preceded by years of sustained efforts on these: a massive crackdown on rice cartels, and; sustained support to farmers with low interest credit, access to agricultural technologies, postharvest facilities, expansion of irrigation systems and support on farm inputs.

The President disclosed last year that the government knows the members of rice syndicates and their protectors. He warned them to “stop messing with the people” or he will use the “full force of the state” against them.

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But it has all been bark with no bite. Not a single cartel member has been arrested and prosecuted despite the fact that the economic sabotage they commit is far more damaging than the crimes committed by drug users killed under the drug war.

If rice cartels and smuggling syndicates were able to circumvent quantity restrictions, it will be an easier feat for them to evade import taxes. Their apparatuses and connections that enable them to commit market manipulations remain intact. And there’s nothing in the new law that is aimed at thwarting their evil deeds.

Our rice farmers have seen a succession of ruling administrations that have implemented support for them that are insufficient, politics-driven, graft-ridden, lip service in nature, or inaccessible because of complicated rules.

I dread the louder howls of anger the next time I visit my province.

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TAGS: Flea Market of Ideas, rice farmers, rice industry, rice tariffication
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