Extended RCEF needs to be less rigid — analysts


By Adrian H. Halili, Reporter

ANY EXTENSION of the Rice Competitiveness Enhancement Fund (RCEF) should make the farm modernization fund more flexible, analysts said.

“The current design of RCEF is too rigid and may not address the actual or changing needs of farmers in particular localities,” Raul Q. Montemayor, national manager of the Federation of Free Farmers said in a Viber message.

The House of Representatives is seeking to amend the Rice Tariffication Law of 2019 to extend RCEF beyond its original term. The amendments also include and the expansion of the National Food Authority’s regulatory powers. Last week its agriculture and food committee approved an extension for another six years and an increased annual take from rice import tariffs of P15 billion from P10 billion originally.

“We need to track whether RCEF and the whole (Department of Agriculture) rice program is achieving its targets (if there are) in terms of farmer productivity, profitability and competitiveness, and not just how many machines or bags of seed have been doled out,” Mr. Montemayor added.

The Rice Tariffication Law, or (Republic Act No. 11203) funds RCEF from rice import tariffs. It liberalized rice imports but made traders pay a 35% tariff on the grain.

Under the proposed amendments, 53% of RCEF will go to mechanization, 28% to rice seed, and the rest to farm credit, and extension services.

“The increased budgets for crucial public goods necessary to improve the productivity of rice farming and agriculture more generally are welcome and crucial,” Monetary Board member V. Bruce J. Tolentino said in a Viber message.

“However, such increased support will be for naught if trade restrictions are not eased to ensure that Philippine agriculture is made more competitive for the benefit of both farmers as well as consumers,” he added.

The US Department of Agriculture projects Philippine rice imports of 3.9 million metric tons (MT) this year, downgrading its initial 4.1 million MT estimate.

Rice imports have hit 1.6 million MT as of early May, according to the Bureau of Plant Industry.

Leonardo A. Lanzona, Jr., economics professor at the Ateneo de Manila, said that the RCEF extension was initially implemented to address a “market failure” due to the divergence between farmer and social interests caused by the imports.

“This additional P15 billion seems to have no underlying rationale. Unless the government can identify what exact market failure it is addressing, there is no reason for this added expense, especially as other programs are already correcting these other market failures,” Mr. Lanzona said in a Facebook messenger chat.