NEDA: Reduced Rice Tariffs Failed to Lower Prices

The National Economic and Development Authority (NEDA) revealed that Executive Order 62, which lowered tariffs on imported rice from 35% to 15%, has not resulted in the anticipated reduction in rice prices.

Unexpected Outcomes

Speaking during a House Murang Pagkain Supercommittee hearing, NEDA Director Nieva Natural admitted that the tariff reduction, expected to increase imports and lower prices, did not yield the intended effect.

“This is a puzzle for us… perhaps this deserves a more nuanced analysis,” she said.

Instead of price drops, dominant market players priced rice at nearly the same levels as locally-produced varieties, keeping retail prices high. This behavior reflects a non-competitive market structure where major players dictate prices above competitive levels.

Limited Impact on Retail Prices

Customs Commissioner Bienvenido Rubio reported that while the tariff reduction lowered the landed cost of imported rice from ₱40.26 to ₱33.93 per kilogram, retail prices remained unaffected.

The lower tariffs caused a 62% increase in imported rice demand but also resulted in reduced government revenues, which dropped to ₱2.952 billion due to the lower tariff rates.

Calls for Accountability

House Ways and Means Chairperson Joey Salceda urged the Bureau of Internal Revenue (BIR) to audit tax payments of major rice importers. He expressed concerns that importers profited disproportionately from the tariff reduction without passing on savings to consumers.

Salceda pointed to possible profiteering, noting that:

• When the government imposed a rice price cap in September and October 2023, the gap between import and retail prices was ₱3 per kilogram.
• After lifting the price cap, the gap widened to ₱20 per kilogram, despite falling farmgate prices.

“This is just short of supernatural. There is clearly pricing abuse—we just need to pinpoint at which stage,” Salceda said, suggesting that large retailers and wholesalers might be driving the inflated prices.

Current Rice Prices

Retail rice prices currently range between ₱45 to ₱50 per kilogram, far above the ₱29 per kilo price proposed by the Agriculture Department, which estimates it would need ₱50 billion annually to sustain such pricing.