Wednesday, April 09, 2008

Rice supply crisis: another policy swindle?!

I thought all along the government has lifted the quantitative restrictions for rice, thus allowing the private sector to import the commodity whenever they want and at whatever quantity provided the appropriate tariffs are paid. Now, based on Business Mirror reports, its seems Malacanang is simply telling the private sector to import what is allowed under the minimum access volume (MAV). See Crazy!

The fact is that the MAVs have been there all along and no one dared importing much lately simply because tariff is high (50%). Who would be encouraged to import rice that are already expensive in the world market and pay 50% on top of it, thus making the landed ones so expensive? If I’m the importer, I’ll wait for local prices to really move up the heavens before I even thought about availing of the MAVs. That’s what is happening now.

So the supposed policy pronouncement about “allowing the private sector to import rice” was a bogus one—a deception. Or probably it was real, only that government, as usual, simply backtracked, nay backslided. My goodness! Now, the private sector is saying they will only import rice at zero tariff, and given the government’s very slow decision making process, we might end up having those imported rice landing our shores when the farmers are already harvesting their palay. Some of them has actually started harvesting now. That will be tragedy.

But that’s the tragedy about maintaining the QR on rice. Unless, we remove it and replace it with tariffs, a low one if necessary, all these problems about supply shortages will always be there no matter how much rice stocks are available out there in the global marketplace. Timing is important and historically, government bureaucrats always act when its too late. Solution: we need to remove the QR, replace it with tariff, and if necessary a low one. And of course, we need to rev up our production capacity.

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