NEDA: Reduced rice tariffs failed to lower prices

The National Economic and Development Authority (NEDA) disclosed that  President Ferdinand "Bongbong" Marcos Jr.'s Executive Order 62, which lowered the tariff on imported rice from 35% to 15%, did not lead to a reduction in rice prices as anticipated.

“This is a puzzle also for us... perhaps this deserves a more nuanced analysis," said NEDA Director Nieva  Natural during a House Murang Pagkain Supercommittee hearing.

Natural explained that in a competitive market, the reduction in tariffs should have led to increased rice imports, raising supply and subsequently lowering retail prices. However, this outcome was not observed.

Instead, she noted that dominant market players were pricing goods above competitive levels, making retail prices nearly equal to locally-produced rice.

This behavior resulted in minimal price changes in both wholesale and retail markets, consistent with a non-competitive market structure.

Customs Commissioner Bienvenido Rubio added that while the tariff cut reduced the landed cost of imported rice from  P40.26 to P33.93 per kilogram, retail prices remained high.

The lower tariffs spurred a 62% increase in imported rice demand but also led to lower government revenue, which fell to P2.952 billion due to reduced tariff rates.

Audit tax payments

Given the situation, House Ways and  Means Chairperson Joey Salceda urged the Bureau of Internal Revenue  (BIR) to audit tax payments by major rice importers, suspecting that these companies profited significantly from the tariff reduction.

Salceda also criticized profiteering practices, highlighting a substantial price gap.

He pointed out that when the government imposed a rice price cap from September to October 2023, the difference between import and retail prices was P3  per kilogram.

After lifting the cap, this gap widened to P20 per kilogram, even as farmgate prices fell.

"This is just short of supernatural. There is clearly pricing abuse—we just need to pinpoint at which stage," Salceda said, suggesting that large retailers and wholesalers might be involved.

Currently, the retail price of rice hovered at around P45 to 50 per kilo.

The Agriculture Department had said it needed P50 billion a year to provide rice worth P29 per kilo. — DVM, GMA Integrated News