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Low inflation traced to rice tariff law

Imported rice (right) is cheaper by P1 than local rice at a supermarket in Cebu City. (Ventures Cebu)

Government officials have hailed the Rice Tariffication Act a success in terms of taming inflation as price adjustments decelerated further in September 2019, with headline inflation falling to 0.9% from 1.7% in August 2019.

This brought the year-to-date average inflation rate to 2.8%, which is well within the government’s target range of 3.0 percent ± 1.0 percentage point for the year, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said in a statement.

Core inflation, which excludes the volatile food and energy items, was reported at 2.7% in September, lower than the 2.9% in August.

The National Economic and Development Authority (NEDA), citing data released by the Philippine Statistics Authority, said food and non-alcoholic beverages posted deflation at 0.9 percent while non-food inflation moderated to 1.6 percent.

Rice deflation was observed for the fifth consecutive month, reaching an 8.9% decline in September 2019 from a 5.2% drop in the previous month.

“We see the Rice Tariffication Law continuing to help pull down overall inflation in the near term as it continues to help improve rice stock inventory of the country. This access to cheaper rice is good for Filipino consumers,” NEDA Director General and Socioeconomic Planning Secretary Ernesto M. Pernia said in a separate statement.

He said the country’s rice inventory increased by 40.3% in August 2019 due to higher importation of rice.

Trade Secretary Ramon M. Lopez said he expected prices of rice to decline further.

Pernia, however, cited the importance of fast-tracking the implementation of projects financed by the Rice Competitiveness Enhancement Fund to help the farmers cope with falling prices of play (unhusked rice).

“While consumers enjoy lower rice prices, we must at the same time protect the Filipino farmers from falling palay prices. The government must fast-track and prioritize programs and projects under the Rice Competitiveness Enhancement Fund to boost production and improve profitability of the Filipino farmers,” Pernia said.

A joint resolution that directs several government agencies and LGUs to buy rice from local producers is awaiting approval in Congress.

Pernia also said the Department of Agriculture signed on October 1, 2019 a memorandum of agreement with the Philippine Competition Commission to investigate “anti-competitive” factors affecting rice fair trade such as cartels, price fixing, and market allocation, among others.

Rice tariffication, which started on March 5, 2019, was a commitment made by the Philippines to the World Trade Organization (WTO) over two decades ago.

Republic Act 11203 was signed by President Rodrigo Duterte on February 14, 2019. It scraps the quantitative import restrictions on rice and replaces these with tariffs of 35% for rice coming from the ASEAN countries and 50% for non-ASEAN rice.

Under this law, concerned government agencies, such as the Bureau of Customs and the Bureau of Plant Industry of DA, no longer require the NFA permit, license, or registration for trade and importation of rice.

The only requirement to import and trade rice is the phytosanitary import clearance, which can be obtained from the Bureau of Plant Industry. (Ventures Cebu)

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