Merlisa Casipe

Luchille Tonog

Law of Supply and Demand in Rice Tariffication Law

Our country, Philippines, is known to be agricultural. We have a lot of agricultural

lands which cultivate different crops. The wide varieties of crops we offer include rice, corn,
coconut, sugarcane, banana and many others. Among these, rice crop owns the top spot when
it comes to production. We are rich in rice fields and we are considered to be one of the
world’s top producers of rice.

We, Filipinos, consider rice to be on top of our list of staple foods. Most of us eat rice
three times a day while some even more. It’s funny if you happen to ask a fellow Filipino if
he has already eaten breakfast, when he ate bread in the morning, and would answer you “not
yet” because he wasn’t able to eat rice. This simply illustrates that a Filipino meal is not
considered a full meal without rice. Filipinos are so fond of eating rice that restaurants which
offer unlimited rice tend to attract more attention. Our country’s rice industry became so
important that it do not just provide livelihood to our local farmers but plays a big role in our
culture and history. The demand for rice is always high and our country’s agricultural
produce addresses this demand for many years now. Indeed, it is a vital part of our economic
growth.

Philippines being an agricultural country should have been able to provide enough
rice for its people. Rice crop is still what most of our local farmers produce but, also what
most of the consumers eat, so as the population of our country increases the supply of rice
produced by our local farmers cannot keep up to the demand of the consumers resulting to
shortage of rice and increase of its price last year. According to Philippine Statistics
Authority, “The country’s Palay production for October-December 2018, at 7.16 million
metric tons, was lower than the 7.32 million metric tons production in 2017 or by 2.2 percent.
Yield per hectare dropped from 3.93 metric tons in 2017 to 3.87 metric tons in 2018.”1 These
numbers caused a continual increase in the price of rice in 2018. In September 2018, the price
of well-milled rice reached up to P46 while the regular milled rice priced at P43. This
increase contributed a lot to the issue on inflation which burdened the Filipinos. The country
was disturbed even more when the National Food Authority (NFA) under the leadership of
Jason Aquino revealed that the agency had only less than two days' worth of buffer stock.
“The NFA is required to maintain a 15-day stock at any given time, and a 30-day stock from
July to September to prepare for calamities. NFA is mandated to ensure national food
security and stabilize supply and prices of staple cereals both in farm and consumer level.
Amidst this mandate, rice shortage issue in our country continued to rise.”2

Due to the shortage of supply of rice, our government resorted to import rice from
neighboring countries like Vietnam, Indonesia, Thailand and Myanmar which resulted to the
price hike of rice due to mismanagement of importation. Our government’s solution to the
soaring inflation is the Republic Act No. 11203 (An Act Liberalizing the Importation,
Exportation and Trading of Rice, Lifting for the Purpose the Quantitative Import Restriction
on Rice, and for Other Purposes) otherwise known as “Rice Tariffication Law”. The law is
intended to cut inflation, solve the rice shortage in the country to make rice more affordable,
available and accessible to consumers, and raise income of palay farmers and help them be
more competitive to foreign competitors. This will ensure security for both, the income of
producers and need of the consumers and technically bring balance to the economy.

Since the implementation of the “Rice Tariffication Law” on March 05, 2019,
importation of rice increases and with this more competitors enter in the rice market and by
law of supply and demand, the equilibrium price of rice in the market should decrease. This is
good news for the consumers as they can increase their purchasing power and buy more in a
lower price. This will show the little success and positive effect of the new “Rice
Tariffication Law”, but this also affects our local farmers. The farm-gate price rate of palay is
so low that if compared to the cost of production of the palay, our farmers are losing instead
of having a profit. This threatens the livelihood of our local farmers and soon no farmers will
want to plant or sell rice.

Our country was once self-sufficient in rice but as our population continues to grow,
the demand will continue to rise as well. The local supply cannot keep up with the demand
since other factors are affecting it. This includes, but is not limited to, the cost of production,
agricultural lands turned into residential lots and natural calamities. The passage of Rice
Tariffication Law or any other law will always have positive and negative effects. Only time
will tell which side will weigh more than the other.

Currently, the expected positive effect of the “Rice Tarrification Law” is not yet fully
experienced at the consumer’s end. That’s an issue, we, as consumers, should look into. On
the other hand, there should be safety nets for our local farmers so that they will not suffer.
We couldn’t imagine how our local farmers have worked hard to give us food yet they
couldn’t even feed themselves because they only earn a little from their produce. The real
question is, how long will foreign traders sell rice at a lower price? In the near future, they
could take advantage in this free trade market and leave us Filipinos, victims of our own law.

References:
1
Rice and Corn Situation and Outlook, January 2019 Round. Retrieved, October 16, 2019
from https://psa.gov.ph/ricosit-main
2
A Staple Problem? A History of Rice Crisis in the Philippines. Retrieved October 16, 2019
from https://www.rappler.com/newsbreak/iq/212410-history-rice-crisis-philippines-yearend-
2018

Gov’t moves to implement rice tariff act, projects P7 -11B collection. Retrieved October 17,
2019 from https://www.bworldonline.com/govt-moves-to-implement-rice-tariff-act-projects-
p7-11b-collection/