The Federation of Free Farmers (FFF) warned that the government could potentially lose P20.5 billion in foregone tariffs if President Bongbong Marcos Jr. reduces rice tariffs from the current 35% to 10%.
FFF National Manager Raul Montemayor presented this concern during a public hearing at the Tariff Commission on September 15.
Montemayor explained that the government currently collects approximately P28.7 billion in tariffs annually based on the import volume of 3 million tons of rice at a cost of P27,335 per ton. With the existing 35% tariffs on rice, the government’s collection from the 3 million tons of imported rice amounts to P28.7 billion.
However, if the tariff is reduced to 10%, the collection would drop significantly to P8.2 billion. This would result in a loss of P20.5 billion in foregone tariffs, with an additional impact on farmers who would lose P18.7 billion from the supplemental fund intended for them from the tariff collection.
Montemayor criticized the Foundation for Economic Freedom (FEF), which petitioned the Tariff Commission for the tariff cut, for not conducting a more comprehensive analysis for a more targeted solution.
The FEF had not provided estimates on foregone revenues, the potential decrease in rice prices with a 10% tariff, the number of affected farmers, or the impact on the cost of importing rice from non-ASEAN sources.
His estimate suggests that the effect on rice prices would be approximately P4.44 per kilo, resulting in a substantial reduction of P88 billion in farmers’ income.
Montemayor emphasized that the FEF’s proposal lacked thorough study despite their claims of having members with doctorates. He expressed concern that the failure of their proposal could jeopardize the livelihoods of millions of farmers.
The FEF had previously sought significant tariff cuts on various agricultural products, including pork, during the Duterte administration. Despite opposition from the agricultural sector, their proposals were accepted.
Montemayor also noted that when the Rice Tariffication Law was enacted, the promise was that rice prices would decrease by P7 per kilo. However, this reduction did not materialize, with importers benefiting from lower prices while not passing on the savings to consumers.