REPUBLIC ACT No.

11203 or The Rice Tariffication Law

An Act Liberalizing the Importation, Exportation and Trading of Rice, Lifting for the Purpose the
Quantitative Import Restriction on Rice, and For Other Purposes.

It is the policy of the State to ensure food security and to make the country’s agricultural sector viable,
efficient and globally competitive. The State adopts the use of tariffs m lieu of non-tariff import
restrictions to protect local producers of agricultural products. After the long 24 years since the
Philippines was granted approval in 1995 by the World Trade Organization (WTO) to impose quantitative
restriction (QR) on rice importation into the country

This Law took effect last March 5, 2019, the law was signed last February 15, 2019 by the President
Rodrigo Roa Duterte. The Tariffication Law was signed because Duterte declared the issue as “urgent”
due to price hikes that caused rice to hit P70 per kilo last year. Finance Undersecretary Tony Lambino
predicts that the law will cut rice prices by P7 per kilo. Bangko Sentral ng Pilipinas projects that this will
also cut inflation by 0.6 percent (Ichimura, 2019). The President said it is to address the urgent need of
improvement in the availability of rice in our country, reducing the price of rice, to prevent artificial
shortage and cartel domination in the rice industry. The law allows the liberazation of rice imports and
get rid of the rice qoutas on the imports of rice allowing them to import upto unlimited quantity of rice.
The ric^tariffication law uses the basic principle of demand and supply. Since this law allows more
competitor to enter the market increasing the supply of rice and will result to the drop of price of
rice.With rice supply issues blamed as one of the main drivers of higher inflation last year, the Philippine
agriculture department vowed strict implementation of the rice tariffication law to ensure prices are
within government's target (Business Nightly, 2019).

Positive and Negative effects

The tariffication law positive effects is the availability of rice in terms of price to consumers since their
will ba a price drop on the rice by 4 to 7 pesos and reduce inflation by 0.4 percent. It will make the rice
market more competitive. Since one of the key features of RA 11203 is the replacement of the rice
importation quota system with tariffs. In the new law, the following tariffs apply 35% if rice was
imported from within ASEAN, 40% if within the minimum access volume (MAV) of 350,000 metric tons
for imports coming from countries outside of ASEAN , and 180% if above the MAV and from a non-
ASEAN country ( Cororaton C., Yu K., & Tiongco M., 2019). It creates Competitiveness Enhancement Fund
(RCEF) or the rice fund consisting of an annual appropriation of P10 billion under the national budget.
Where its allocation will be done through the following fund allocations: 50 percent on rice farm
machinery and equipment, rice cooperatives, and local government units; 30 percent on rice seed
development, propagation, and promotion; 10 percent on rice credit assistance; and 10 percent to rice
extension services.

The negative effects are; the availability of rice is narrow the rice producing world consumes
90% of the rice produced where it is produce ( Guzman R., 2019). The government also argues that
increased importation of cheaper global rice will benefit Filipino consumers with lower local price. This,
however, is misinformed on two accounts – one, global rice is not necessarily cheaper (this should be
self-explanatory by the narrowness of the market alone), and two, the local market remains dominated
by a trading cartel that can impose a higher mark-up depending on the weakness of local production and
other supply factors. Despite the lower cost of unmilled rice the price of rice remains the same in the
market. While the vendors say ' even if the cist of rice is low the suppliers charges them just as the same'
that is why they dont have a choice but maintaion the old market prices. It became easier to hoard the
rice supply. The plunging of prices of local rice benifits the rice eating populace but hurting the livelihood
of many Filipino farmers.What is further inconceivable is for government to insist that cheap imported
rice will pull down local prices. From 1995 to 2010, based on National Food Authority (NFA) data, the
landed cost and wholesale prices of imported rice were higher than the wholesale and retail prices of
local rice (Guzman R., 2019).

Reflection

We Asians cannot live without rice. Rice is essential for our daily needs although the Rice Tariffication
has good effects but its only for the short run. Also the country cannot rely on the subsidized
importation of rice like Japan 90% of their produced rice is also consumed by their country. The
Philippines is an agricultural country it should natural that we can provide for our own. Although trade is
also important we cannot be fully reliant to imports it bad for our economy. If it happens that in the
future the international rice industry declines and we cannot import enough rice how can we feed
ourselves. Its a shame that we are called agriculutural country yet we cannot provide for ourselves. The
government should focus also in our agricultural sector. Even before only 0.8% of local rice is bought by
the NFA and only for 17 peso. Affordability is a dimension of accessibility, which the Rice Tariffication Law
has wrongly assumed. What is worse is that the law imperils the more important dimension of
accessibility – which is people having adequate incomes and livelihood – by subjecting the Filipino rice
farmers to undue competition with subsidized imports. If we really need to lower the price of rice the
goverment can lower the excise tax on oil or on any basic commodities but for a long term solution the
government should invest more on our agriculture and on our local farmers.

References:

https://news.abs-cbn.com/video/business/09/05/19/da-vows-strict-implementation-of-rice-tariffication-
law

http://www.interaksyon.com/politics-issues/2019/09/05/154489/farmers-rice-tarrification-law-effects/

https://www.ibon.org/what-the-rice-tariffication-law-violates/

http://fnbreport.ph/features/agriculture/the-rice-tariffication-law-explained-anrii-20190221/

Performance task
In

BACC1 :

BASIC MICROECONOMICS

Submitted by:

Michelline Lynor T. Limsiaco

Jade L. Mamigo

Vanessa L. Monreal

Stephanie T. Murilla

Rhea Lyn I. Orquiola

Submitted to: Grace G. Servano, MBEd, P

BACC 1 Instructor