Rice tariffication to boost GDP growth by 0.44 percentage point —NEDA

The country’s gross domestic product (GDP) is expected to gain and additional 0.44 percentage point from Rice Tariffication Law, the National Economic and Development Authority (NEDA) said Thursday.

Policy simulations conducted by NEDA and the International Food Policy Research Institute (IFPRI) showed that the Rice Tariffication Law would boost the economy. The GDP is a measure of the value of goods and service a country produces in a specific period.

“The preliminary results of the policy simulations done by NEDA and IFPRI show that, at the macro level, rice liberalization generates positive impacts on GDP across all sectors,” NEDA said in a statement.

Signed into law in February, the measure removed quantitative restrictions on rice and imposed a 35% tariff on imports from Southeast Asia.

“Under 35% tariff rate, GDP would improve by 0.44 percentage points. The agriculture sector would expand as there would be more crop diversification—as uncompetitive rice areas shift to other high-value crops with relatively higher net returns,” according to the NEDA.

NEDA Undersecretary for Policy and Planning Rosemarie Edillon said the new measure will free up the flow of funds going to private sector, which was previously restricted.

“Before the rice tariffication law was passed, the government had been monopolizing the rice trade. This set-up had been restricting the flow of private funds going to the sector,” she said.

Among the private firms seen benefiting from rice tariffication is publicly listed AgriNurtute Inc., which has already entered into an agreement with a Vietnamese trading firm to import as much as 2 million metric tons of long-grain rice from Vietnam.

For local farmers, the law earmarks P10 billion for the Rice Competitiveness Enhancement Fund, of which P5 billion will be allotted to farm mechanization and P3 billion to seedlings.

The fund intends to ensure that rice imports won’t drown out the agriculture sector and rob farmers of their livelihood.

“The agriculture sector, particularly the rice sector, is vulnerable to climate shocks, which have been increasing in frequency and intensity. So we want to be prepared and provide interventions ahead of time,” said Edillon.

For 2019, the government has lowered its economic growth outlook to 6.0 to 7.0%, lower than the earlier target range of 7.0 to 8.0%. —VDS, GMA News