Rice traders benefiting the most from reduced tariff

By Rose de la Cruz

The reduced import tariff on rice —  which government hoped would redound to lower retail prices —  was only benefitting rice traders.

Raul Montemayor, national manager of the Federation of Free Farmers,  claimed  importers are cornering much of the value from the lowering of tariffs with prices not falling as much as they should.

“Right now, the benefit from the lower tariffs is being captured mostly by importers, wholesalers and retailers. So no one could argue that putting the tariff back will only lessen traders’ profits,,” Montemayor was quoted by Business World.

The reduced tariffs are for review every four months..

Last June,  the government via Executive Order 62  reduced tariffs to  only 15 percent  from 35 percent until 2028 to contain inflation with the intention of passing on the tariff savings to consumers, thereby dampening growth in the Consumer Price Index, where food is the largest component. 

But this did not happen.

The arrival of rice shipments charged lower tariff coincided with easing global rice prices, which should have meant even lower prices by the start of 2025.

“Rice prices could remain lower with… world rice prices hovering around 2.5-year lows,” said RCBC chief economist  Michael L. Ricafort.

Former Agriculture Secretary William D. Dar said  rice prices could fall to between P45 and P50 per kilo “if the imports arrive on time.

Senior fellow Roehlano M. Briones of the state think tank– Philippine Institute for Development Studies– said he sees rice prices posting further declines until next year, citing the decline in world prices.”

Executive Order No. 62 took effect on July 5 and the first four-month review is still to be scheduled.

Fitch Solutions’ unit BMI said in a report that  international rice prices are expected to decline in 2025 due to the easing of India’s ban on white rice exports.

In September. India’s Directorate of Foreign Trade announced the lifting of the export ban on non-basmati white rice, citing ample inventory levels.

Last month, the Indian government also removed the minimum export price, which had been set at $490 per metric ton (MT).

BMI forecast global rice prices next year to decline to $14.2 per hundredweight (cwt) on average. Its previous forecast had been $14.85 per cwt.

The Department of Agriculture (DA) said that global rice prices have dropped to below $500 per MT from the $630 per MT reported in January.

The DA said that rice prices will remain stable with retailers expected to cut prices to P42 per kilogram.

Government price monitoring showed slight declines in the price of well-milled rice in Metro Manila markets as of Nov. 15 to P42 to P53 per kilo, against P45 to P54 a year earlier.

Regular-milled sold for between P40 and P50 per kilo, against the P33-P50 per kilo price range registered a year prior.

“Well-milled rice around P42 per kilo will provide a happy balance between our goal of ensuring our farmers get a decent return for their hard work and consumers have access to affordably priced food, especially rice,” said DA Secretary Francisco P. Tiu Laurel, Jr in a statement on Monday.

Last week, the DA said that Metro Manila retailers committed to limit their profits on regular and well milled rice to between P3 and P5 per kilo.

DA spokesman Assistant Secretary Arnel V. de Mesa told reporters that imports are expected to make up for the anticipated drop in domestic rice production.

He said “the drop in tariffs and the continued drop in prices in the international market are a big deal.” He said lower prices will likely be sustained if the price continues to decrease in the international market.”

The DA is projecting palay (unmilled rice) production to decline to 19.41 million metric tons (MMT), down 3.24 percent the previous year because of losses caused by El Niño and the typhoons in the latter part of 2024. “The projected supply gap will have to be addressed by imports,” he added.

Earlier, the US DA projected the Philippines rice importation at 5.1 MMT next year.

The Bureau of Plant Industry said as of Nov. 7 total rice imports hit 3.9 MMT.