What’s inside the IRR of the Rice Tariffication law?

MANILA, Philippines – The signing of the Rice Tariffication law was only half the battle won.

While industry stakeholders failed to persuade President Rodrigo Duterte to veto certain provisions before signing the law, various groups had to settle for the next best thing: imposing safeguards in the law’s implementing rules and regulations (IRR). 

Before the Department of Agriculture (DA) gave its stamp of approval to the IRR, Agriculture Secretary Emmanuel Piñol said they took the rice industry stakeholders’ requests into consideration: 

• For farmers who worry there will be no trader to buy their crops, the National Food Authority will be using a “rolling buffer stock” – releasing the rice bought from the farmers to the market and buying fresh palay, or unhusked rice, from the farmers again.
• For the National Food Authority employees who will lose their jobs due to the loss of the agency’s regulatory function: Some employees will be moved to the Bureau of Plant Industry (BPI), as this agency will now be tasked to issue sanitary and phytosanitary permits to anyone who will want to import rice.
• Easier access to the rice competitiveness enhancement fund (RCEF): farmers can also avail of the P1-billion credit facility, farm equipment, and rice seeds for free. The interest rate for the loan facility will also be one-third only of the prevailing rates set by the Central Bank.

Does the promise hold true for farmers?

Last week, Piñol finally signed the IRR. The DA was the last among concerned agencies to approve the IRR, which should also contain the safeguards the department promised to industry stakeholders. 

Under the provisions changing the NFA’s new role, there was no mention of a rolling buffer stock. The NFA was only told to make sure that its buffer stock is at an “optimal level.” The buffer stock should also factor in needs for emergency situations and government’s disaster relief operations. 

The IRR also says the NFA will retain buffer stock that can last for only 15 days at any given time and specifies 30 days’ worth of buffer stock during lean months. 

“Simply because it’s not mentioned there, specifically the rolling buffer stocking, we can always come up with strategies on how to do it,” Piñol told Rappler in a mix of English and Filipino on Wednesday, April 10.

“What is basic there is that number one, the NFA is allowed to buy palay, number two, it is allowed to dispose of its stocks as they age, so it’s natural, we can come up with whatever name we like to call it,” he added. 

Restructuring the NFA

Now tasked to only maintain buffer stock, the NFA will still continue to survey commercial rice stock up until December 2019. By July 1, 2020, the stock survey should be transferred to the Philippine Statistics Authority.

The NFA will be given 60 days upon the effectivity of the IRR to restructure. But the agency only has 30 days to submit its restructuring or reorganization plan to the Governance Commission for Government-Owned and Controlled Corporations.

Aside from crafting a new corporate structure and recommending compensation packages for affected employees, the NFA will also have to plan for new roles for employees who will be transferred to another position.

The NFA and the DA will also have up to 15 days upon the effectivity of the IRR to modify and transfer the Food Development Center – a department in charge of providing scientific support on food safety – to the DA.

Piñol said that drafting the new corporate structure and transfer of duties will be dealt with after the Holy Week, putting the fate of NFA employees who could still remain in government service on hold as well. 

Imports regulated? 

The IRR clarifies that aside from issuing sanitary and phytosanitary import clearances (SPSIC), the Bureau of Plant Industry (BPI) will also keep track of incoming rice and put out on their website a list of accredited importers, along with the volume of rice they will import.

Only traders who are part of the DA Trade System can apply for the SPSIC.

The IRR also says that the imported rice should arrive in the country before the SPSIC expires, but is silent on what happens if the rice imports are delayed. 

With its new function, the BPI will have to open up new positions but the creation of these new roles “shall be at the barest minimum,” according to the IRR.

It does not say if the NFA employees who will lose their jobs will be moved to these new positions, but Piñol previously gave assurances that they will be seconded to the BPI to help with the issuances of the SPSIC. 

Promoting productivity

Complementing the RCEF, the IRR also mandates that a new rice roadmap will be crafted within 180 days, which means that it would have to be implemented on or before September 5, 2018. 

The DA will be leading agencies concerned, such as the National Economic and Development Authority (NEDA), Department of Finance, and the Department of Budget and Management, to formulate and adopt a new rice roadmap based on the following principles:

• Sustainable investments, particularly on rice support infrastructure and post-harvest facilities
• Improve productivity, efficiency, and profitability of small rice farmers and landless farmworkers
• Strengthen research and development programs 
• Preserve and enhance rice production capabilities
• Provide accessible, targeted, and technology-oriented support services that cover the entire value chain
• Set up responsible, participatory and effective governance mechanisms
• Address impact of income loss due to rice tariffication 

“This will be implemented through a complementation of DA’s rice sector programs which are funded by the GAA (General Appropriations Act) and the RCEF,” says the IRR. 

What if there’s too much or too little rice?

The IRR says the President will be given the power to intervene, upon the recommendation of the NEDA Board and the NFA Council.

Article VI of the IRR says that the President can “adjust existing rates of import duty up to the bound rate committed by the Philippines under the WTO (World Trade Organization) Agreement on Agriculture and under the ATIGA (ASEAN Trade in Goods Agreement).” 

Under the ATIGA, any rice import from ASEAN countries would only be slapped with a 35% tariff. As for non-ASEAN countries, the tariff would be placed at 40% so long as imports do not exceed 350,000 metric tons under the minimum access volume (MAV) or the quantitative limit of a product which can enter a country at a lower tariff.

Going above the MAV would increase the tariff further to 180%. 

Imposing lower tariffs can only take effect for up to 90 days, or until the rice shortage has been fixed.

The President, however, can only intervene if Congress is not in session. The adjusted tariff rates will also only take effect 15 days after publication. – Rappler.com