Neda bats for removal of QR to cut rice prices

March 18, 2015 at 09:48

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The Philippines should consider the removal of the quantitative restriction (QR) on rice to bring down the price of the staple, the National Economic and Development Authority (Neda) said on Friday.

Economic Planning Secretary Arsenio M. Balisacan said making rice cheaper would help temper inflation, which picked up in the first half of 2014 due to higher food prices. The increase in food prices was cited by the government as a significant factor behind the rise in the country’s poverty incidence.

“While we definitely need to support the agriculture sector in general, we should also maximize the gains from trade and globalization,” said Balisacan, who is also director general of  the Neda.

“The private sector should be allowed to take the driver’s seat, while government simply facilitates the access to both the import and export markets,” he added.

The Neda said rice prices grew by nearly 12 percent in the first semester of 2014 from 1.7 percent in the same period in 2013 due to tight supply caused by lower harvests and less imports.

“At a time when the world price of rice was declining, the domestic price of rice was skyrocketing,” Balisacan said.

Neda noted that rice is a staple food for low-income and vulnerable families, usually accounting for 20 percent of their budget.

“Higher food prices resulted in a huge increase in poverty thresholds,” said Balisacan.

The Philippines was allowed by the World Trade Organization to extend the QR on rice until 2017. The QR enabled Manila to limit the entry of cheap-rice imports into the country.

The government said it sought the extension of the QR to protect rice farmers.

The tariffication of the country’s rice QR has also been recommended by state-owned think tank Philippine Institute for Development Studies (Pids). The removal of the QR, the Pids said, will increase rice imports tenfold, but bring down rice prices significantly.

Aside from revisiting the QR policy, Balisacan also stressed the need to update the government’s budget for poverty-reduction programs.

“The government’s social- development programs, particularly the Conditional Cash Transfer, provided through the Pantawid Pamilyang Pilipino program, may have provided additional support to temper the rise in poverty, but could have contributed more toward  reducing poverty had the value of the grants increased with inflation,” he said.

“It is also important to ensure the timely disbursement of the budget to maximize the impact of programs and projects,” Balisacan added.

Cai U. Ordinario, with a report from PNA



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