RTL-RCEF improved productivity marginally– House think tank  

Rose de la Cruz

House think tank, Congressional Policy and Budget Research Development (CPBRD), in a study said, the compound annual growth rate (CAGR) brought about by the Rice Tariffication Law and the Rice Competitiveness Enhancement Fund was only marginal at 1.07 percent from 2019 to 2022.

This despite the allocation of funds collected through the Rice Competitiveness Enhancement Fund.

From the data of the Philippine Statistics Authority (PSA), the think tank said the CAGR during pre-RTL of irrigated palay stood at 2.37 percent, higher than the CAGR from 2019 to 2022 at 1.07 percent.

It added that while the post-RTL CAGR of 3.5 percent for rainfed farms is larger than its corresponding pre-RTL CAGR of 2.59 percent, this could be attributed to the “significant contraction and subsequent rebound in the productivity levels of rainfed farms in 2019 and 2020.”

While the period for evaluation appears to be short, it still represents multiple harvest cycles. The magnitude of the RCEF suggests that its major impacts should be, at least, observable within the first cycle after its full implementation,” the report, quoted by Business Mirror, read.

The report mentioned that rice prices remained stable possibly because of the greater inflow of imported rice, noting the tradeoff between producer and consumer interests.

It added that the value of rice imports increased from P58 billion in 2021 to P90 billion in 2023, while duties increased from P19 billion in 2021 to P30 billion in 2023. Throughout this period, the effective aggregate duty rate stayed constant at around 33 percent.

The report also highlighted that Filipino consumers are charged a hefty premium for imported rice wherein a P25 per kilogram could reach P45 after tariffs and importation costs.

This could imply that every benefit that redounds to farmers through the RTL and RCEF is paid for by consumers and a reduction in the tariff rate has the outsized potential to significantly decrease retail prices of rice products, the CPBRD explained.

“The subsidies to rice farmers will be at the expense of consumer welfare. Any effort to limit rice imports or increase tariff rates will likely adversely affect Filipino consumers,” the report read.

The think tank asked policymakers to conduct a thorough assessment of the RCEF’s usage before pushing through with its extension or expansion, noting the importance of “careful evaluation of the reasons behind the observed volatility of utilization rates and disbursement strategies.”

It also urged lawmakers to be aware of the tradeoff between consumer and producer welfare in deliberations concerning the RTL and the RCEF.

“The desire to lend support to rice farms must be carefully balanced with the interests of the consumers.”