By Vonn Andrei E. Villamiel
THE DEPARTMENT of Agriculture (DA) will replace the benchmark price used for the “flexible” rice tariff scheme to higher reflect the actual prices of rice varieties that the country imports.
Agriculture Secretary Francisco P. Tiu Laurel, Jr. told BusinessWorld that the agency will not use the Food and Agriculture Organization’s (FAO) free-on-board price for Vietnam 5% broken rice because the basis for tariff adjustments.
“Most of our import is just not the essential Vietnam 5% broken rice. The vast majority of the imported rice here is the Vietnam DT8 variant, and that’s what we needs to be monitoring and using as the idea,” he said in a Viber message.
Mr. Laurel said the worth of the DT8 rice variety is $430 to $450 per metric ton, which is higher than the FAO’s $361-per-metric-ton quotation for Vietnam 5% broken rice in December.
The flexible rice tariff scheme, which began this yr under Executive Order (EO) No. 105, allows import duties to rise or fall in response to global prices. Tariff adjustments are made in increments of 5 percentage points, with rates capped at 15% and 35%.
Under the EO’s implementing guidelines, signed by the interagency group consisting of the Economy, Agriculture, Trade, and Finance departments in December, the benchmark for tariff adjustments was originally the monthly average FAO price for Vietnam 5% broken rice.
FAO data from December showed Vietnam 5% broken rice at $361.32 per metric ton. That is inside the threshold price range of $350 to $367 per metric ton, which translates right into a 20% duty under the flexible tariffication formula.
The tariff adjustment for the primary quarter of the yr was purported to take effect on Jan. 16, however the DA didn’t issue a certification, saying that actual prices of imported rice haven’t fallen below the $367-per-metric-ton trigger level for the duty.
The department also said the 15% tariff rate on imported rice is retained until the top of March.
Mr. Laurel didn’t say whether the inter-agency group would issue latest guidelines or amend the prevailing rules to reflect the change within the benchmark.
Farmers’ groups have criticized the variable tariffication scheme as being designed to maintain the tariff rate low, allowing cheaper imported rice to flood the market and depress farmgate prices.
“The place to begin for any adjustment needs to be 35%. The present scheme only serves to keep up the 15% tariff,” Jayson H. Cainglet, executive director of the Samahang Industriya ng Agrikultura, earlier told BusinessWorld.
Farmers argue that the tariff should return to a hard and fast 35%, the speed originally imposed on Southeast Asian rice imports when the Rice Tariffication Law took effect in 2019.
The tariff was cut to fifteen% in June 2024 under EO 62 to assist contain inflation. Since then, the landed cost of imported rice has fallen by as much as 40% to 50%, in accordance with Mr. Cainglet.
He added that the low tariff rates primarily profit importers, while rice producers bear the brunt of the policy, and consumers see little improvement in retail prices.
“We cannot accept the claim that ‘market forces’ are driving rice prices. Farmers struggle while importers receive protection, and consumers have never truly benefited. Tariff reductions and consumer interest are only pretexts for higher profits for importers,” Mr. Cainglet said.