The Philippines has clarified that lowering the PH rice import tariff from 35% will still keep local prices stable.

A story on the Business Mirror on September 5, 2024 details how producers were circumspect of a drastic price reduction.

Producers thought that a tariff cut for Thai and Vietnamese palay shipments would bring retail prices below the current 50 pesos ($0.89) a kg. 

But according to Agriculture Secretary Francisco Tiu Laurrel Jr., the country still has to exhaust its pre-tariff revision rice reserve. 

Thus, before October 15 when the old stock will end, traders will continue selling the commodity at its original price.

By the time the stock finishes, the country will have entered its wet season which ends November, and local supplies will be up.

Even then, the new low tariff may not drastically impact prices because import prices by Vietnam and Thailand are up. Vietnam upped its rate by $7 to $559 a tonne,  while Thailand’s inched up by $2 to $573 a tonne.

Comparably, Vietnam’s broken palay is costlier in September 2024 by $15 a tonne than Thailand’s, according to experts. 

PH’s local price could also remain stable even with a production boost, given that the country might import less grain than in earlier estimates. 

This August, the U.S. Department of Agriculture (USDA) slashed its previous PH’s rice import estimate for 2024 from 4.7 to 4.6 million tonnes. Driving the 100,000-tonne undercut is the ongoing decline in orders from Vietnam and Thailand.

Since the tariff slash, imports have shrunk to 150,000 tonnes in July 2024 versus a prior monthly median of 400,000 tonnes.

All the same, the Philippines will still retain its 2023-24 status as the biggest buyer of rice in the world.

As the sixth-biggest rice consuming-nation, the country keeps its prices under frequent monitoring. 

During shortage which drives prices up, national Kadiwa centers offer locals discounted rice quotas at 29 pesos ($0.52) a kg. 

Currently, the retail price of premium palay in the Manila metropolitan area in early September 2024 is 50 pesos ($0.89) a kilo. This is even as imported premium rice costs at least 49 pesos ($0.88).

So, unless production improves phenomenally, the PH rice import tariff decrement will hardly impact prices.  But as the following tariff statistics show, tariffs do have inflation impact on local prices, historically.

PH Rice Import Tariff Statistics 

The rice sector of the Philippines has always defined the country’s agricultural policies. One of these policies are tariffs that protect consumers from price manipulation by importers. As of 2017, the country was second to China in rice imports, 52% of which from Vietnam and 29% from Thailand. By the 2023-24 season however, the country had surpassed China in imports at 4.6 million tonnes, per an August 2024 USDA estimate. With this high import total, tariff laws have become essential to buffer local farmers from unfair cheap-priced imports.

In 1995 when the Philippines became a major rice importer, it applied tariffs to most agricultural imports apart from rice. Instead, it applied quantity restrictions for rice shipments per year to meet consumption demand and to keep prices stable. However, the rich only spent 3% on rice and the impoverished a lion’s share. Hence, rice prices tended to be high most of the time due to inflation and quantity restriction. 

This is why since 1996, the Agricultural Tariffication Act introduced a rice tariff and removed quota restrictions. This meant from now on all rice imports would attract 35% import duty. The 35% only applied to regional nations including Thailand and Vietnam. Other nations attracted 40 to 50% import duty, according to the Philippines’ Agricultural Policy Platform (FFTC-AP).

How have PH’s rice retail prices behaved since tariff introduction?  

Interestingly enough, rice prices have seen an upward curve even with tariff laws. Beginning 2003, regular-milled palay retailed at 17.95 pesos ($0.32) a kg, but by 2005 was at 20.75 ($0.37). This trend continued partly due to rising food inflation, which rice mostly drives. This is why by 2008, the price was at a decade high of 30.84 pesos ($0.55) a kg. During 2018’s high inflation, the price was at 40.75 pesos ($0.73) a kg, while in 2023 it was 42.8 pesos ($0.77).