Sponsorship Speech of Senator Cynthia Villar

Senate Bill No. 1998 (In substitution of Senate Bill Nos. 1476, 1689, 1839, taking into consideration P.S. Resolution Nos. 143, 146, and HBN 7735) under Committee Report 440

September 17, 2018

Mr. President, esteemed colleagues, I stand here today to sponsor Senate Bill No. 1998 under committee report no. 440 or "An Act Replacing The Quantitative Import Restrictions On Rice With Tariffs, Lifting The Quantitative Export Restrictions On Rice, And Creating The Rice Competitiveness Enhancement Fund, Amending For The Purpose Republic Act No. 8178, As Amended By Republic Act No. 9496, And As Further Amended By Republic Act No. 10848, And For Other Purposes".

Senate Bill No. 1998 was prepared jointly by the Committees on Agriculture and Food, Ways and Means, and Finance. It is in substitution of Senate Bill Nos. 1476, 1689, 1839, taking into consideration Proposed Senate Resolution Nos. 143, 146 and House Bill No. 7735, with Senators Ralph Recto, Leila De Lima, Joel Villanueva, Risa Hontiveros, Grace Poe, Sherwin Gatchalian and Cynthia Villar as authors thereof.

As we know, the only agricultural commodity in the Philippines that has a quantitative restriction (QR) is rice, in line with the government's policy of rice self-sufficiency. The QR allows the government to limit the volume of rice that could be imported by the country each year in order to protect local rice producers from cheap rice imports.

When the Philippines joined the World Trade Organization (WTO) in 1995, we made a commitment to lift the QR on rice or tariffy our rice or what we herein refer to as rice tariffication.

The Philippines established a tariffication system in 1996 through Republic Act (RA) 8178, otherwise known as the Agricultural Tariffication Act, when we opened up our agricultural market to WTO member countries. Through which, all QRs on agricultural products were converted into tariffs, that is except rice.

It was a "special treatment" given to the Philippines. The WTO Agreement on Agriculture (AoA) granted the Philippines an initial 10-year exemption for the lifting of the QR on rice and the subsequent conversion of this QR into a tariff. A rice QR allows the Philippines to prohibit rice imports from coming into the country beyond a minimum access volume, which that time was 238,940 metric tons (MT). MAV refers to the volume of rice that is allowed to be imported for a lower tariff committed by the country under the WTO.

The special treatment would have expired on June 30, 2005 but we again negotiated to have the special treatment for rice extended by seven years or up to June 30, 2012. The Philippines again negotiated to postpone rice tariffication up to July 1, 2017. We have already notified the WTO that we will tariffy rice, we have opted not to extend further the special treatment given to our country. Rice tariffication is not possible unless we amend RA 8178 or the Agricultural Tariffication Act. Thus, the urgency of the passage of this bill.

With tariffication or lifting of all existing quantitative import restrictions on rice with tariffs and the lifting of the quantitative export restrictions on rice, the substitute bill, repeals Section 5 of R.A. 8178. Thus, the NFA shall no longer establish rules and regulations governing the importation of rice and issue import licenses or permits for the private sector. Likewise, the power of the NFA to first certify the existence of a shortage, before importation is allowed, is hereby removed.

In effect, it will remove unnecessary government intervention in the rice market, as envisioned by the President during the meeting with rice traders, officials of the NFA and members of the NFA Council including NEDA, which expects that once the QR is replaced by predictable tariffs, the private sector can respond more efficiently to the market. And the government can focus on regulating to ensure food safety and fair market competition.

In terms of the tariff equivalent of the quantitative import restriction on rice, the bound rate shall be as notified by the Philippines to the WTO as follows:

A. For the minimum access volume (MAV) committed by the Philippines to WTO, the indicated rates in the applicable provisions of the WTO agreement on agriculture, shall apply;

B. For ASEAN member states, thirty-five percent (35%) or the import duty rate commitment of the Philippines for rice importation, pursuant to the ASEAN Trade in Goods Agreement or ATIGA; and;

C. For non-ASEAN member states, fifty percent (50%) or the tariff equivalent calculated in accordance with the WTO agreement on agriculture upon the expiration of the waiver relating to the special treatment for rice of the Philippines, whichever is higher.

The calculated tariff equivalent shall be determined by the NEDA board within 45 days upon the effectivity of this act.

And as warranted under Chapter 2 Title XVI of the CMTA or the Customs Modernization Tariff Act, the President may exercise his powers in the following cases: in case of impending rice shortages--when a lower applied tariff rate on a specified volume of importation of rice for a limited period of time is necessary; and in case the tariff equivalent for Non-ASEAN member states exceeds 100 percent. Any order issued by the president adjusting the tariff rates and/or the specified volume shall take effect immediately.

Senate Bill No. 1998 also provides for a special rice safeguard duty to protect the Philippine rice industry from sudden or extreme price fluctuations, in accordance with Safeguard Measures Act.

One of the key features of the bill is the creation of the Rice Competitiveness Enhancement Fund, which shall consist of initial appropriation of ten billion pesos (PhP10,000,000,000.00) a year until the all duties collected from the importation of rice can replace it. It shall be automatically credited to a special account in the general fund of the national treasury.

' Funding for the succeeding years shall come from the tariff revenues for rice importation, until such time that there is enough collection from tariff in the fund, and the rice production competitiveness in the country shall have been achieved, a yearly appropriation of ten billion (PhP 10,000,000,000.00) pesos shall be provided for in the general appropriations act (GAA) and shall be continuously used for the purpose for which it was earmarked and set aside.

The amount collected/allocated shall be released directly to the implementing agency as provided for in this law.

The rice competitiveness enhancement fund shall be allocated and disbursed to rice-producing areas, as follows:

• Fifty percent (50%) shall be utilized as grant in aid to eligible farmers associations, and registered rice cooperatives and LGUs, in the form of rice farm equipments for purposes of improving farm mechanization. The machines are tillers, tractors, seeders, millers, dryers and the like. It will be implemented by Philmech;

• Thirty percent (30%) shall be used for the development, propagation and promotion of inbred rice seeds to rice farmers. Layunin nito na tulungan at turuan ang mga rice farmers na maging seed growers. We also want them to engage in seed production and sale of improved seed varieties. This will be implemented by Philrice.

•  Ten percent (10%) shall be made available in the form of credit with minimal interest to rice farmers and cooperatives to be managed equally by Land Bank and the Development Bank of the Philippines;

• Another ten pecent (10%) of the fund shall be for the extension services divided between Philmech, Philrice, Agricultural Training Institute (ATI) and TESDA to teach skills on rice crop production, modern rice farming techniques, seed production, farm mechanization, and knowledge/technology transfer thru farm schools nationwide.

Ang prayoridad ay ang mga rice farmers na adversely affected by the tariffication and lifting of the quantitative restriction on rice; and in accordance with the thrust and priorities of RA No. 8435, otherwise known as the Agriculture and Fisheries Mechanization Law, and the Philippine Development Plan.

Three months after the enactment of the bill, the DA together with the NEDA, DOST, National Irrigation Authority (NIA), Land Bank, DepED, TESDA and other relevant agencies have to finalize a rice roadmap to restructure delivery of the government's support services for the rice sector. Hangad natin na matugunan ang kanilang mga pangangailangan lalong lalo na sa equipment, facilities, technology, research and development among others. Gusto rin natin siguruhin na ang future generation of Filipinos will be experts in rice production.

Mr. President, it should be also pointed out that besides being bound by our WTO commitment, rice tariffication will also solve pressing rice-related problems that the country is facing. Foremost of which is that the price of rice will decrease by PhP4 and PhP7 per kilo due to improved supply in an open market.

We are aware also that it may affect the income of Filipino farmers, but that is why we are providing a safety net for them--the rice competitiveness enhancement fund comprise of a yearly appropriation of PhP10 billion to be replaced by the tariff revenues if it is enough. Over the long run, when the fund has been utilized as intended--to enhance the competitiveness of local farmers, then we are confident that we can narrow the competition gap.

Palay production here costs 90 percent more than our neighboring countries, particularly Vietnam. Based on studies, the Philippines produces palay at PhP 12.41 per kilogram (kg), while Vietnam's cost is only PhP 6.53 per kilo. Kaya nahihirapan ang ating mga magsasaka.

While the DA and other agri-related agencies have been providing support through various interventions, at tayo rin mismo dito sa Senado ay nagpasa na ng mga batas katulad ng ACEF at free irrigation, the cost of rice production and the price of rice remain high. And the upward trend is expected to continue.

Hindi lang ang mga Pilipinong magsasaka ang nahihirapan, pati na ang mga mamimiling Pilipino, lalo na ang mga mahihirap na pamilyang Pilipino na hindi na halos makayanan ang presyo ng bigas.

As pointed out by the Philippine Institute of Development Studies, based on the 2012 Family Income and Expenditure Survey, poorer Filipinos tend to allocate greater share for rice. In fact, the people in the poorest 20 percent of households spend 21 percent of their budget on rice. Walang duda na ang pagbaba ng presyo ng bigas ay mas malapit sa sikmura ng mga mahihirap nating mga kababayan.

Talagang napapanahon na para maisakatuparan na natin ang rice tariffication. Hindi lang dahil sa ating commitment sa WTO. Lalong-lalo na dahil sa malulutas nito ang marami sa ating mga kinakaharap na problema sa suplay at presyo ng bigas. It cannot be overemphasized that besides being an agricultural country, the Philippines is a rice-eating nation, it is incumbent upon us to do right with rice. Para naman makapag unli-rice pa rin ang ating mga kababayan.

With that, Mr. President, I seek the urgent approval of Senate Bill No. 1998.