After last year’s temporary rise in retail prices of rice and inflation peaking at 5-6%, we have gone down to about 2.7%.
We have lower rice prices to account for this, since it appears that on average, we are seeing a slight reduction in retail prices in many areas.
Since this and other food items account for more than half of the spending of majority of Filipinos, the lower expenditure for this item is reflected in lower inflation.
Republic Act (RA) No. 11203 or the Rice Liberalization Act was signed and approved by President Duterte last February 14. It took almost 30 years for government to fi ally pass this law it took more than 30 years under various administrations to get the Congress to approve this vital reform that many opposing lobbies have tried to block.
The cartels that blocked this basic reform, benefitted from the old quota system that effectively ensured that our rice supply was always not enough since only a few can import rice subject to approvals from the Department of Agriculture, thereby ensuring that prices will be kept high enough. This benefitted the cartels since the locals, who produce at higher cost, will not have competition that will force them to produce at lower cost.
Again, the reality is that middlemen, not farmers make the killing on the rice trade. Keeping it artiificially high by preventing competition is good for those making their killing as middlemen and moneylenders. The farmer suffers just the same.
Thus, RA 11203 created the P10-billion Rice Competitiveness Enhancement Fund (RCEF) to help palay growers and their farmers’ cooperatives transition to a new rice regime, where the RCEF will be used to provide farmers tools and equipment, assistance in the production, promotion, and distribution of certified rice seeds, upgrading of post-harvest storage facilities, credit assistance, irrigation support, and research and development (R&D) support. In short, it will boost the production of rice.
Kudos to the economic team for making this happen.
Its initial effects, as predicted, would be the lowering of retail rice prices felt in the end of the first half of the year. This benefits about 100 million FIlipinos, all of who consume rice daily.
True enough, the Bureau of Customs data shows that 1.43 million metric tons (MT) of rice stocks imported by private traders in various ports in the country, allowing the government to collect P5.9 billion in tariffs.
The rice cartels always wanted the old quota imposed regime in place so that they could ensure that the supply and its retail and wholesale price could be controlled by them.
With this, affordable rice has arrived at the neighborhood store and is within reach.
The longer term effect , which is desired, is that of improving the growing capability of local rice farmers, or enabling them to transition into growing other suitable crops we alao consume,that may also give them better income than rice. This is something we need to monitor in the coming months.
