DTI says rice price cap may be lifted in 2 weeks

By Luisa Maria Jacinta C. Jocson, Reporter

THE GOVERNMENT may lift the price ceiling on rice in two weeks when the local harvest starts and more imports arrive, Trade Secretary Alfredo E. Pascual said on Monday.

“Within September, we are looking at 2 million metric tons of harvest and some entry of imported rice. So maybe within two weeks we should be able to see whether we can lift the price cap,” he said in an interview with ANC on Monday.

The government has been implementing a nationwide rice price cap since Sept. 5 to address a spike in prices of the national staple amid reports of hoarding and price manipulation by cartels.

The ceiling has been set at P41 per kilo for regular milled rice and P45 per kilo for well-milled rice.

Mr. Pascual told reporters that the price ceiling is needed to prevent a spike in retail prices of rice.

“In the next two or one and a half months, because we already started harvesting, we are looking towards a total harvest of 5 million metric tons and that is from our local farmers,” he said on the sidelines of the Asian Regional Conference in Support of Accelerated Life Sciences Innovation on Monday.

The Department of Trade and Industry (DTI) chief said around 90% of retailers in public markets have complied with the price ceiling.

“Our people actually gave warnings to retailers selling over the price ceiling. But what is important is that we have the supply and that the majority of the (retailers) are compliant,” he added.

Meanwhile, President Ferdinand R. Marcos, Jr. said that there is a need to ramp up rice production to bring down prices.

“We have had to control the prices of rice because the markets are very volatile, so we are trying to stabilize it here,” he said during a speech at the Mariano Marcos State University in Ilocos Norte on Monday.

“So, it’s correct that we have to increase our production. But we have to make sure that the increase in production redounds to the benefit of the farmer.”

Finance Secretary Benjamin E. Diokno reiterated that the economic team is in “full support” of the price cap on rice.

“We agree with the President that implementing a price cap on rice is the most prudent course of action at the moment to achieve two critical objectives: stabilizing rice prices and extending immediate support to our fellow countrymen,” he said in a statement.

This comes after Mr. Diokno told reporters on Friday the economic team were “surprised” about the announcement of the price cap, as they were in Japan at that time.

ZERO TARIFF POLICY
Meanwhile, analysts said the government should lift the price cap on rice instead of implementing a zero-tariff policy on rice imports.

“The zero tariff of course will bring down the price of rice, but supply shortage, especially in the aftermath of Indian rice export ban, and increasing local demand will still exert upward pressure on prices,” Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said via Facebook Messenger chat.

“But if the market price still exceeds the price ceiling, despite the zero tariff, don’t expect the exports to come in. So, remove the price ceiling. The price ceiling is not working, based on the stories of rice sellers. It will only exacerbate the shortage. The sooner it is removed, the better,” he added.

The Department of Finance (DoF) has proposed to temporarily slash the 35% rice import tariff rate to 0% or maximum of 10% to “arrest the surge in rice prices.”

Earlier, the Foundation of Economic Freedom (FEF) submitted a petition to the Tariff Commission to reduce the tariff rate on rice to 10%.

Former Agriculture Undersecretary Fermin D. Adriano said that the zero-tariff rate should be implemented until “rice prices stabilize near (to) what they used to cost during normal periods.”

However, Raul Q. Montemayor, national manager for the Federation of Free Farmers, said that the tariff cut will not benefit poor consumers, as most rice imports are premium grade.

“And there is no guarantee that importers and traders will pass on any tariff savings since they know that well-off consumers can afford to pay higher prices,” he said in a Viber message.

Mr. Montemayor said that reducing the tariff to 10% could result in a tariff loss of P9 per kilogram, which translates to a “potential decline in palay (unmilled rice) prices of P6 per kilogram.”

Meanwhile, the temporary reduction in tariff rates and toll fees could lower retail prices and alleviate inflationary pressures, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message.

“This, however, may have an impact on domestic producers. This could be more market oriented and introduce less distortion to the market for food,” he added.

Apart from the tariff cut, the DoF is asking toll road operators to temporarily exempt trucks transporting agricultural goods from paying the recently adjusted toll fees.

“I support DoF’s position on exempting trucks from further toll fee increases so that operators will not raise delivery cost, which ultimately consumers pay through high food prices,” Mr. Adriano said.

Ateneo de Manila University economics professor Leonardo A. Lanzona, however, said that it is “unfair” to only exempt trucks, which favors large traders over smaller ones.

“Furthermore, it would not be fair to ordinary road users engaged in other forms of businesses. Worse, it does not really solve the problem of hoarding and smuggling, and may in fact reinforce it,” he added.

Mr. Montemayor also said that the exemption will not “significantly reduce rice prices or ensure the efficient transportation of rice.”

“The recent toll fee increase for large trucks is only P98 per passage. These trucks carry around 25,000 kilos of rice, so the savings amount to only P0.004 per kilogram,” he added.

The DoF’s proposal also includes encouraging the timely importation of rice by the private sector and fully implementing the super green lane.

“Giving them access to a super green lane will only encourage importers to undervalue their shipments and escape detection,” Mr. Montemayor added. — with Justine Irish D. Tabile