According to the Philippines’s National Economic and Development Authority (NEDA), the removal of import caps by July would not necessarily spell doom for the local rice sector, as the production of the staple in 36 provinces is now cheaper compared to imports. NEDA’s Assistant Secretary Mercedita A. Sombilla, in a recent presentation, said that the average production cost of rice in 36 provinces will be P3 per kilogram lower than the unit cost of imported rice. This estimate is based on the assumption that the country will slap a 35-percent tariff on imported rice starting on July 1, when the quantitative restriction (QR) on rice expired. “Those 36 provinces represent about 61 percent of our total use, 68 percent if we are just going to take food use. So it’s only about 39 percent shy of 100-percent self-sufficiency,” Sombilla added.
Ms. Sombilla further explained that out of the 36 provinces, 14 had an average yield of 3.5 metric tons (MT) per hectare which means there is a high potential to increase the yield in these provinces given that government hikes its support for rice production. It would also mean encouraging farmers in these provinces to use certified seeds, hybrid seeds, cultivating these seeds in suitable areas, providing irrigation facilities, and mechanizing farm facilities. There is a huge potential in the rice industry to be scaled higher in order to become competitive. Moreover, out the 36 provinces, there are eight large provinces that may have high yields but have recorded high production cost, NEDA observed. Sombilla further added that if the government is able to institute reforms that could bring down the cost of production in these eight provinces, these areas can be “very competitive” in producing rice. “We should also look at how we can help these farmers lower their production cost to be more competitive,” she added.
The NEDA study was based on their survey of 82 provinces nationwide. The agency examined rice production under normal yield levels, particularly in 2012 and 2014. Sombilla said 2012 data were used for the production cost estimates, including inputs and logistics. These were adjusted to the 2015 and 2016 levels. These costs were then compared to the unit import cost of 25-percent broken rice imported from Thailand and Vietnam using 35-percent tariff plus a transport cost of P2.50 per kg. The QR on rice, a trade privilege which the World Trade Organization has allowed the country to enjoy for two decades, will expire on June 30. This means that the government can no longer limit the volume of imported rice that may enter the Philippines starting July.