The passage of the Rice Liberalization Law has led to the collapse of the Philippine rice industry and threatens the country's food security. Local palay production has declined significantly since the law removed restrictions on rice imports. The influx of cheap imported rice has lowered palay prices and forced thousands of rice mills to close, worsening the suffering of local farmers. While rice prices have remained high, the law has failed to deliver affordable rice to Filipinos as promised. To ensure food security, the document recommends repealing the Rice Liberalization Law and replacing it with reforms that prioritize domestic production over unrestricted imports.

1. The collapse of the Philippine rice industry under
the rice liberalization policy regime
An Analysis of the Rice Liberalization Law
January 2020
The passage of the Rice Liberalization Law is a death sentence in the dying state of the Philippine
agriculture. The law, which was enacted last March this year, removes restrictions to volume of rice
importation. The liberalization of the rice industry has been catastrophic for the entire rice industry and
imperils the country’s food security. The law has not fulfilled its promise to provide accessible and
affordable rice to Filipinos and to make the rice sector competitive. The huge influx of imported rice has
only worsened the suffering of our local farmers, ultimately threatening the country’s food security and
self sufficiency.
The declining state of local palay production
Palay production has been in a declining trend except for the second quarter of 2017 and the first
semester of 2018. For the second quarter of 2015, the production dropped by 2.88% compared to the
previous year in the same period. It continued to slide in the second quarter of 2016 compared with 2015
at a staggering rate of 6.10%. Palay production recovered with an increase of 11.72% in the second
quarter of 2017 compared with 2016 of the same period. But it significantly dropped from the second
quarter of 2017 to 2018 from 1.44 to 5.82 from 2018 to 2019 in the same period.
The first half of 2015 compared to 2014 also had a notable decline of 0.67% that continued from 2015 to
2016 in the same period marking a considerable decrease by 8.13%. It increased in 2017 compared to
2016 in the same period by 12.06%. It sustained an increase in the first half of 2017 compared to 2018 at
1.68%, then it eroded by 5.1% in 2018 at 1.68% then it eroded by 5.1% in 2018 in comparison with the
current year.
Table 1. Trend in the volume of palay production from 2014 to 2019
Period Year
2014 2015 2016 2017 2018 2019
2nd quarter 4,073.00 3,955.84 3,714.59 4,149.92 4,090.24 3,852.39
1st semester 8,379.90 8,323.56 7,646.88 8,569.18 8,713.22 8,269.24
Table 2. Percentage change of palay production from 2014 to 2019
Period Year
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
2nd quarter -2.88 -6.10 11.72 -1.44 -5.82
1st semester -0.67 -8.13 12.06 1.68 -5.10

2. On land areas devoted to palay production, the second quarter of 2019 has a low palay output, which is
mainly due to the decrease in the harvest areas. From 932,790 hectares in 2018, harvest areas were
reduced to 18,000 hectares by 2019. With 932,790 hectares planted with rice, almost 90% were
harvested.1
The shrinking of palay production from 2017 to 2019 in the second quarter and in the last
semester is generally attributed to prolonged dry spell and the lack of water during the planting season,
the critical phase of of the production particularly in rice producing areas specifically in Occidental and
Oriental Mindoro, Marinduque, Romblon and Palawan, Bicol and Western Visayas.
The decreasing trend in the palay production has implication on the food security of the country from the
local source as we have been trying to achieve food security and self-sufficiency of rice as the country’s
major staple commodity. With the passage of the Rice Liberalization Law, the Import Dependency Ratio or
the ratio of the country’s rice supply of rice imports became highest in 2019 at 13.8%. It is equivalent to
177.15% increase from 2016, as the year, having the lowest import dependency ratio.
Rice liberalization distorted the price of palay and rice
With the local market opening to cheap imported rice, the palay production has been gravely neglected as
the farm-gate price of palay has plunged into a significant decline. From the first to the third quarter of
2018, there is a declining but a positive increase in the prices of palay. In comparison with the 2019 data,
the third quarter of the year has a sharp decline by 9.1%.
The retail price of well-milled rice has increased in 2018 from the start of the year until September from
2.45% to 9.68%. In 2019, there is a slight decline in the price from 0.47% in the first quarter to 1.36% in
the third quarter.
The type of rice commonly bought by the poor because it is much cheaper than well-milled rice, the
regular milled rice also registered an increase in the price by 3.47 % in the first quarter to 4.41% in the
third quarter of 2018. But in 2019, the retail price of the regular milled rice was steadily decreasing from
3.07% to 7.68% in the first quarter.
The rule of thumb in the retail pricing of rice would be to double the price of palay for the price of milled
rice. With the average cost of PhP 21.05/kg of palay in 2018, the cost of milled should be around PhP
42.10. The actual cost of PhP 45.00 for well-milled rice is much higher by PhP 3.00 while the actual cost of
PhP 41.14/kg for the regular milled rice is much lower by PhP 0.96/kg. In 2019, the average cost or palay
is Php 17.97. It is expected to have a cost of milled rice around PhP 39.94. But the actual cost of well-
milled rice is PhP 43.26 and PhP 38.85 for regular milled rice. Well-milled rice is costly by around PhP 3.00
while the regular milled-rice is cheaper by around PhP 1.00. The palay and rice pricing has not followed
the rule of thump but being dictated by the supply and demand of rice wherein rice imports dominated
the local market.
With the promise of lowering the price of rice at the local market, this was not achieved as the retail price
of well-milled rice at NFA’s cost of P 27.00/kg or atleast a lower price rate by P7/kg , this was never been
attained as the average retailed cost of well-milled rice from January to October is PhP PhP 43.26/kg
while regular milled rice is PhP 38.85.
1 https://businessmirror.com.ph/2019/07/17/rice-output-likely-dipped-5-6-in-q2/

3. Hence, the distortion in the prices of palay and both the well-milled and regular milled rice are glaring as
the prices of milled rice remained high, the farm gate price of palay continues to fall as imported rice
started to dominate the local market.
Table 3. Prices of palay, well-milled rice and regular milled rice for 2019
Month
Prices per kilogram
Palay Well-Milled
Rice
Regular Milled
Rice
January 19.58 44.47 41.42
February 19.64 44.69 40.88
March 18.91 44.26 40.15
April 18.54 43.72 39.35
May 18.31 43.16 39.81
June 17.89 42.96 38.62
July 17.80 42.79 38.41
August 17.34 42.53 38.20
September 16.18 42.21 35.46
October 15.50 41.86 37.22
Table 4. Quarterly Percentage change of of palay, well-milled rice and regular milled rice for 2018
and 2019.
Palay 2018 2019
1st
quarter 7.12 - 3.42
2nd
quarter 3.19 - 3.51
3rd
quarter 5.69 - 9.10
Well-Milled Rice
1st
quarter 2.45 - 0.47
2nd
quarter 1.35 - 1.74
3rd
quarter 9.68 - 1.36
Regular Milled
Rice
1st
quarter 3.47 - 3.07
2nd
quarter 1.75 - 5.00
3rd
quarter 4.41 -7.68

4. Figure 1. Price trend of palay, well-milled and regular milled rice from January to October 2019.
Putting at risk is the food safety and food quality of rice.
The food safety aspect of rice imports relies on the issuance of Sanitary and Phytosanitary Import
Clearance (SPSIC) from the Bureau of Plant Industry BPI. The Sanitary and Phytosanitary measures is part
of the agreement under the World Trade Organization that employs food safety, animal and plant health
regulations. Under the agreement, all country members of the WTO shall comply with the internationally
established guidelines and risk assessment procedures.
This certification is being issued for all agricultural imports to ensure that the products derived from
foreign source are free from contamination that would compromise the health of the consumers. Like
any other Asian countries, the Philippines faced challenges and constraints in employing sanitary and
phytosanitary measures because of the complexity of the procedures and its mechanism and the limited
technical manpower and insufficient facility.
The implementation of the SPS measures is governed by the Department of Agriculture through the Bureu
of Plant Industry, the National Meat and Inspection Commission (NMIC), Fertilizer and Pesticide
Authority (FPA), and Bureau of Agriculture and Fisheries Product Standard (BAFPS). They are ensuring
food safety of agricultural products that are live, fresh, or semi-processed. The Bureau of Animal Industry
and the Bureau of Fisheries and Aquatic Resources are mandated to conduct animal and fish quarantine.

5. Despite having the governing body to oversee the quarantine of food products, there is a conflict in the
overlapping of functions that result to unclear duties and responsibilities of the respective government
agencies. Such is the case of the BPI, BFAR, NMIC and FPA that may have overlapping functions with
BAFPS. With the Bureau of Customs, the issues emanate from their mandate of collecting duties for
government revenues that becomes a major priority rather that the sanitary and phytosanitary concerns.
This has implication on safeguarding the food imports because the priority may lean towards the revenue
from tax duties rather than the assurance of food safety.
The SPS measures can be a trade barrier as it could limit the entry of rice imports due to strict measures.
However, in the Rice Liberalization Law, the regulatory agency, in this case BPI, have to issue Sanitary and
Phytpsanitary Import Certifcate (SPSIC) within seven (7) days. Failure to do so would mean automatic
approval of the SPSIC. Given the extensive tasks of BPI from its original mandate of providing technical
services on farm mechanization, physico-chemical, microbiological and pesticide residue analysis, seed
testing and seed certification, and pest surveillance, control, management, and forecasting, ensuring that
its regulatory function such as the food safety of imported rice would be a big challenge.
We have experienced in the past receiving imported rice with bukbok, a general term for storage pests
and rotting rice stocks of rice imports and other chemical contaminants. And with the flooding of more
rice imports, there is a great pressure for the government to keep up with the phytosanitary services by
strengthening the institutional capacity of the regulatory institutions to be sufficiently capable of
assessing risk associated with rice importation.
Reduction of palay production also affects rice by-product utlization
As reported by the Philippine Confederation of Grains Association Inc. (Philcongrains), about 3,000 rice
mills from the total of 10,000 have closed due to a significant reduction of palay when rice imports was
fully liberalized in March. Rice milling is important in providing good rice quality and it also has added-
value for the rice industry. With the shut-down of a number of rice mills in the country it has ripple effect
on the agro-industry specifically on the the utilization of rice by-products such as rice husk and rice bran.
The rice hull is the coating on grain of rice that is being removed during milling. Rice husk converted into
solid fuel is among the biomass technology that is being utilized for energy efficiency.
About 100 million Filipino electricity users are taking advantage of the energy in which 30% is derived
from the biomass that are used for household cooking in the rural areas while 15% has been utilized as
primary energy use with 200 MW capacity.2
it limits our opportunities to veer away from dirty energy
sources such as coal-fired energy.
Another rice by-product that has economic value is the rice bran that is produced when brown rice or
whole grain mass is polished or whitened. Rice bran is rich in protein, fat, ash, and crude fiber, hence,
being used as an ingredient for animal feeds, thereby, an important component of the feed industry. In
the Philippines, feeds account for 60% of the expenditure of the production cost of pork, poultry meat
and eggs.3
Analysis
2 Biomass industry in the Philippines. https://www.aseanbriefing.com/
3 Corn and other feed grains. http://www.pcaarrd.dost.gov.ph/home/momentum/cofgin/index.php?
option=com_content&view=article&id=213&Itemid=241

6. The Rice Liberalization Law has made the country the highest net importer of rice with record-breaking
volume of 3 million metric tons that even surpassed the importation of China. It is the major factor for the
continuous erosion of our palay producing areas and its production while the farmgate price of palay has
hit rock bottom because of the unrelentless entry of rice imports. For an agricultural country, it is a
paradox that the food we eat comes from other countries rather than producing our own.
With the liberalization of the rice industry, it left farmers bankrupt and displaced from their main sources
of livelihood with the rising costs of production that comprises farm inputs such as fertilizers, seeds,
chemicals, other infrastructure and services required for production. Rice production in the Philippines is
now becoming a tribulation rather than a gratification as the food producers are the one experiencing
hunger and poverty.
The consuming public falls prey to the ever-exorbitant cost of rice wherein both the urban and poor
communities are allocating food expenditures for rice supply. And with the absence of state subsidy
through the injection of cheaper rice, in which the National Food Authority has supplied PhP 27/kg
retailed cost of rice, it can never be claimed that consumers are the gainers of liberalizing the rice
industry.
It is also a devastating impact on the workers from the rice industry sector, specifically the agro-
industrial sector that utilizes rice byproducts for other agricultural, commercial and industrial use. The
law will also rob us of the opportunity to develop our agro-industrial capacity in order to achieve rural
development. It is also of great concern if the country is prepared to handle million tons of rice imports
in making sure that food safety is in placed for the consumers.
Recommendation
The food security of this country is correlated to human security as defined by the United Nation
in their adopted resolution that amplifies survival, livelihood and dignity of people. In the
resolution, it emphasized on the interlinkage between the human security and food security that
raises the importance on the right to adequate food, as a fundamental human right, and that no
one is left behind. Food security, should be first and foremost, the priority of any state.
Hence, in order to address the chronic rice crisis, we must reorient the current framework
of our local agriculture. We must cease to be dictated by the imposition of the international
financial institutions that dictates the liberalization of the rice industry. We must therefore
pursue an independent and nationalized agricultural development. The government must
give the land to the food producers for its development and to provide a comprehensive
and sustainable support to all stakeholders and key players in the agricultural sector. And
in order to achieve this, we must repeal the Rice Liberalization Law that warrants the
unbridled rice imports and replaced this law with Rice Industry Reform Act and the
Genine Agrarian Reform. Such laws prioritize the development of the rice industry,
according to the needs of the people and the country. The right to have access to safe,
affordable and sufficient rice supply is realized when every man, woman and child, will
never experience hunger and poverty.