CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

1.1 Introduction

Rice Tariffication Law has been a nationwide issue concerning our local farmers. Rice

Tariffication Law or Republic Act No. 11203 (an Act of Liberalizing the Importation,

Exportation and Trading of Rice, Lifting for the Purpose the Quantitative Import Restriction on

Rice, and for Other Purposes) was signed on February 14, 2019 by the 16​th President of the

Philippines, President Rodrigo Duterte at the Malaca​ñang Palace. Under this law, the Philippines

will raise the quantitative prohibition and authorize the entry of imported rice with tax. In

addition, the Rice Tariffication Law limit the role of the National Food Authority (NFA).

Nevertheless, this act intends to lower the price of rice by increasing the supply.

In a world where nothing seems to be constant but change, we face different problems

and obstacles. Each and everyone have their own tragedy this tragedy may cause tragedy of a

nation. We all know we, Filipinos are very fond of rice and every meal or dish we ate seems to

be lacking if it does not have rice partnered with it. Now that the Rice Tariffication or

Liberalization Law has been signed, it allows foreign countries to import their rice in our country

unlimitedly. We may think that “​unli-rice​” is a good thing because we are fond of unlimited

stuffs but in this scenario. It can cause problems to our farmers. This could lead to a possible

insufficiency of local rice in our country.

 We all are aware that planting grains are a task that is difficult to do. Imagine, our

farmers were the one who plants seedlings of rice in a wide hectares of land, and their own

property, for some farmers at the least. However, no matter how industrious they will be, the

income would still be insufficient for their family to consume. Ironically, the people who thrive

to plant and produce rice for us to eat are also one of the people who do not have enough budget

to provide them the same necessities that we ought to need. Nowadays, a lot of farmers are

getting viral in social media because of their hardwork, but sadly some of our farmers died while

planting crops. Farmers are the most affected about the Rice Tariffication Law because they are

having a hard time competing with imports that comes with a cheaper price. Also we all know

that our country is agriculturally sufficient so, why should we rely on important of other country

instead of supporting our own farmers or the grains that they produce.

As the researchers, we aim to know the readiness of our local farmers about this bill. We

aim to know on how would they find a solution to this problem or are they willing to accept

solutions at the very least. However our government does not seem to care even before. Rice

Tariffication Law aims to collect funds that will be used by our local farmers to improve their

productivity by lending them money or equipment to increase their crops production. This study

seeks to measure the preparedness of our local farmers towards the possible outcome of Rice

Tariffication Law.

1.2 Background of the study

The world are currently sufficient enough to develop plenty of rice, but the ultimate crisis

in regards to rice was caused by various factors in the country Philippines, the issue is the high
price of rice. And because of that issue, the lawmakers come up with something that might help

the country is regards of the high price of rice. The Philippines was originally independent in

Rice Production way back in the year 1970's, in fact the mentioned country was one of the major

rice exporter to the neighboring ASEAN (Association of Southeast Asian Nation) countries. The

country slowly turned into a net rice importer because of the rapid growth at population and

limited land resources to produce total rice requirement. As eloquently stated by Simeon in 2019,

the Philippines is the second largest rice importer next to china in world. As indicated by

Santiago in 2019, the country imports rice mainly from Vietnam for about 52% and 29% from

Thailand in the year 2017.

The Southeast Asian country is currently experiencing a problem, and this problem is

unusual for the country. The Philippines is an agricultural country full of natural resources but it

is now the biggest and largest rice importer. The Philippines might be a country full and

endowed with natural resources but still happen to have higher price of rice compare to other

Countries Rice Production in the country is seasonal but the consumption of individual

households are still the same since the people of the Philippines are very fond of rice.

1.3 Statement of the Problem

This study assessed the current situation of the local farmers in the Philippines despite the

possible loss they might encounter as the Rice Tariffication Law proceeds.

Specifically, this study will tackle the following matter:

1. The demographic profile of the respondents in terms of:

1.1 Age
 1.2 Gender

1.3 Years in Farming

1.4 Monthly Income

1.5 Types of Products

2. The benefits of the Rice Tariffication Law in terms of:

2.1 Local Farmers

2.2 Consumers

2.3 Retailers

2.4 Wholesalers

3. The possible techniques to utilize the allotted budget of the Local Farmers in the

Philippines.

4. The practiceable strategy of the farmers to conform with Rice Tariffication Law.

5. The problems identified by the respondents and solutions suggested relative to the

implementation of the Rice Tariffication Law.

1.4 Significance of the Study

The result of this study will be of great benefit to the following:

​Consumers​. In this study the researches can help the consumers become knowledgeable

about the possible decrease of the price of rice.

 Households​. The researchers will help them understand what Rice Tariffication Law is

and how it can help them in saving up much more money per year because of the decrease price

of rice.

Local Farmers​. With the help of this study the researchers can help the Local farmers

voice their opinions about the Rice Tariffication Law. The Local farmers can use the researchers

as a bridge to voice out their perspective about the mentioned law.

Future Researchers​. With the help of this study the future researchers can use this as

reference to the research they might conduct.

1.4 Conceptual Framework

Input Process Output

ers:
1. Lack of knowledge ● Conduct trainings,
seminars, and
orientation
2. More competitors in ● Prioritize the local
the market farmers when buying
grains
● Farmers will not be
gullible anymore
● It could be an
economic growth of
the local farmers

esalers:
1. They might consider
buying more
imported rice since it
is cheaper than the
local rice in the
industry
● Educate or orient
them about the
importance of
Philippine Economy
● There will be a
balance in the local
market between the
imported and local
rice
ers:
1. Difficulties on ● Check it properly ● To ensure the
knowing the true and test if it is safe or safeness of the
condition of the not imported rice
imported rice
 CHAPTER 2

REVIEW OF RELATED LITERATURE

Rice Tariffication Law is worldwide known. It is not only known in the country

Philippines but also in the world. It has been part of some countries in Asia, not only in Asia,

even inside America. It was patronized by the citizens because of the benefits they have gained.

In some other countries, it was not as bad as what is currently happening in the country

Philippines. In the country Japan, they have implemented Rice Tariffication in the year 1999.

The reason is to replace the current Japanese Minimum Access Policy for rice imports. It was

implemented as part of its commitment under the General Agreement on Tariffs and Trades

(GATT), which obliges Japan to import rice equal to eight percent (8%) of total domestic

consumption by the year 2000. Way back in the year 1995, Japan began importing rice at a rate

of four percent (4%) and committed to an annual zero point eight percent (0.8%) increase in

imports each year. By the means of implementing tariffication, it will be allowed to show its

mandatory increase in imports to zero point four percent (0.4%) per year. The imported rice will

now be equal to the price gap between Japanese and Foreign Rice. The United States

immediately criticized the method used by Japan to calculate the tariff which makes United

States’ Rice be more expensive in Japan than most Domestic Rice. According to the country

United States, it would take about twenty (20) years of mandatory annual tariff reduction for

imported rice from the United States to be comparable in price to domestic product in Japan. The

country United States threatened to bring the case to the World Trade Organization (WTO) if the

two parties refuse to make an mutual agreement.

 Furthermore, according to Sunchul Choi, John Dyck and Nathan Childs, in Korea rice has

been the most important agricultural crop and staple grain for centuries. Korean Policies have

isolated Korea’s rice market from the global rice imports. The farmers in Korea are more

productive because they are using machineries in planting grains and even harvesting it which

causes them to work more efficient and effective because the work with the help of machines are

easier and can produce more products compare to the harvested crops without the help of

machines. In addition, the support of Korean Government has shifted toward the income support,

but some subsidies are still directly linked to rice output. Korea has maintained their high

barriers to imports. Their Rice Import System was a special case set up in the year 1995.

Uruguay Round Agreement (URA) of the World Trade Organization (WTO) but the permission

of WTO has been expired at the end of 2014. Korea is an important market for United States, the

mentioned country has shipped over 1.1 million tons of rice to Korea since the end of the

Uruguay Round (UR) in 1995. The late 2014, Korea announced that it would exit the Special

Arrangement under the URA and put an absolute quantitative limit on the rice imports

As of 2016, India was the largest rice exporting country and China was the largest rice

importing country in the world. In 2012, the world produced about 738.1 million tons of rice and

about 162.3 million hectares of land was dedicated to the cultivation of rice in the same year. 4.5

tons per hectare was the average farm yield for rice in the year 2012. Meanwhile, a segment of

agricultural group calls for more percentage of tariff for the protection of the local rice in the

Philippines. They seek immediate imposition of higher tariffs on imported rice to provide

security to the local farmers inside the country that is currently face sufferings from competition
from foreign countries’ grains. According to the chairman and co-founder of Alyansa

Agrikultura, the Filipino farmers are losing money and because of that the Government must

change the tariff. The Agriculture department is looking into imposing possible safeguard

measures on rice imports by October, a course of action authorized by the Safeguard Measures

Act if the government deems an industry to suffered harm from unfair foreign completion

(Galang, 2019. Agriculture Group Calls for More Tariff Protection for Rice. Retrieved from

https://www.bworldonline.com/agriculture-group-calls-for-more-tariff-protection-for-rice/​)

According to the Philippine Statistics Authority (PSA), the price of regular milled rice

varies from P38 to P43 per kilo however, this price are still far from P27 per kilo which is the

target of the signed law. Meanwhile, the price of grains purchased from farmers is greatly

reduced. On average, the market value of grain falls to P17 per kilo, which is lower than the P22

price last year. In the worst case scenario, the price of grain falls to only P7 per kilo. There is a

huge loss in the part of the local farmers since the cost of production of grains per kilo is placed

at P12. Rice Tariffication Law brought competition in the market since the price of imported rice

is much cheaper than the local rice that our local farmers provide. It has brought danger to the

Filipino farmers. The mentioned law might give benefits to the local consumers but it is

saddening for the most of the citizens of the Philippines, especially to those in cities far away

from the rural areas which produces grains of the country that does not understand the struggle

the local farmers are facing. The Government promised to give rightful amount of funds to the

local farmers to help farmers become more productive and give protection that the farmers need

against the unfair and oppressive systems that traders and other importers follow.
 Rice Tariffication Law silently begun, there are already affected farmers because of this

law. Nevertheless, the government decides to roll out a 1.5 billion load program for the farmers

who were affected by the mentioned law due to the influx of cheaper imports. According to the

Agriculture secretary William D. Dar, the affected rice farmers tilling one hectare of land and

below may avail of a P15,000-loan via the Expanded Survival and Recovery Assistance Program

for Rice Farmers (SURE Aid). Under the SURE Aid, rice farmers who are farming one-hectare

land and below, may avail of a one-time, zero-interest loan amounting to P15,000 payable up to

eight (8) years.

 CHAPTER 3

PRESENTATION OF CASE STUDY

3.1 Problem Statement

Rice Tariffication Law has been broadly known in the Philippines, it has been a hot topic

nationwide because of the possible effects of the act to the local farmers. The mentioned law

might give benefits to the Filipino consumers since the price of rice will be cheaper compare to

the local rice. However, threats are inevitable since it came from unknown source. The benefits

that the consumer could experience might be a disadvantage to the local farmers in the

Philippines. Additionally, if the government give allotted budget to the local farmers if could’ve

been easier. However, if the government proposed this budget, the corrupt officials might take

advantage of this budget. The strategy of individual farmers is also important to know how they

would adapt to the future changes Rice Tariffication could bring.

3.2 Situational Analysis

The agriculture of the country Philippines has been chaotic since Rice Tariffication Law

was signed. Other people theorized that the law could only bring negativity in the economy of

the country. Disadvantages are quiet known with the law because of the few scholars who

restlessly fighting for the rights of the local farmers in the Philippines. Earlier of 2019, Preside of

the Philippines Rodrigo Duterte told the people of the Philippines to prioritize buying local rice
instead of the imported one. However, disbelief is still written in the faces of every Filipino

farmer, the Rice Tariffication Law remained unchanged. People kept on asking the President to

stop importing and start consuming and buying local rice. However, ​“As of this time there is no

order to stop rice importation given the Sec. Dar of the Department of Agriculture per the latter,”

presidential spokesperson Salvador Panelo said in a text message. A report by the United States’

Department of Agriculture-Foreign Agricultural Services (USDA-FAS) has projected the

country’s rice imports to reach a record three million metric tons (MT) by year-end, making the

Philippines the world’s biggest importer of rice this year. (Corrales, 2019)

Rice Tariffication Law seems to be harmless because it is merely a law. However, this

law could destroy and bring damage to the local farmers in the country. In fact, it can be way

much worse than a typhoon in terms of the damage it will bring. As p​alay​ prices dropped amid

the flood of imported grain, the farmers' groups said total losses for rice farmers this year could

reach P140 billion, or P30,000 per hectare. President Duterte apologizes for the loss of the

farmers because of the low prices of grains but it doesn’t mean he would take back what he

signed. The tariffs could get higher if the President wanted too however, the result remains

unknown since the people still don’t know what will happen after Rice Tariffication is fully

implemented.

As of this year, there are 10 million Filipino farmers in the Philippines. The law prioritize

the food security of the 100 million Filipino consumers but put the lives of the 10 million

farmers at stake. ​For decades, in the name of “protecting” the farmers, rice importation was

limited by quota restrictions. There was tons of money to be made, reportedly by bureaucrats
who approved the import allocation, the traders who cornered the importation permits and which

allegedly acted as a “cartel” in order to dictate market prices. And, of course, there were the

smugglers-scarcity being the mother of smuggling. Buying palay at P8 per kilo will certainly kill

the poor farmer, who is forced to agree to this confiscatory price just to be able to pay for the

children’s schooling, have food money for the family and buy the seeds for the next planting.

(​Dejaresco III, 2019)

3.3 Objectives of the Study

1. To understand the effect of the Rice tariffication Law to the Local Farmers and Retailer.

2. To provide farmers enough knowledge about Rice Tariffication Law.

3. To understand Local Farmerspoint of view about Rice Tariffication Law, whether they

are agree or not.

4. The research advocates to help Local Farmers and Retailers.

5. To guide the future researchers as their basis for their future research.
3.4 Fishbone Diagram
3.5 Proposed Alternative Courses of Action

1. Build or create an organization that gives activities that focuses on helping local

farmers.

2. Government should set up a market for the local farmers only.

3. Provide materials or machineries for planting and harvesting.

4. Provide scholarship or sponsorship for the children of farmers.

5. Provide health insurance to the impoverish farmers.

6. Local Fastfood chains and Restaurants should prioritize buying local rice instead

of imported rice.

7. Local Government should start buying local rice to the local farmers and give it to

the poor families who cannot afford to buy rice

CHAPTER IV
 P​RESENTATION OF ANALYSIS

4.1 SWOT Analysis

STRENGTH

• The customers will afford to buy a rice because of the imports.

•The income of the government will increase because of the tariff from the foreign rice.

•Address the rice shortage.

WEAKNESS

•Some of retailers and consumers will not patriorize local rice because of the low price of

imported rice.

•The farmers will going tp bankrupt.

• Some impoverish farmers will suffer more.

OPPORTUNITIES

•Having a good relationship with other countries.

THREATS

•The farmers will lessen.

RETAILERS

FARMERS