Mariella S.

Palompo March 24, 2018

AB Foreign Service/ FS302 Sir. Jumel G. Estrañero

The Political Economy of Quantitative Restriction on Rice Importation and its

Implications to Philippine Rice Sector

I. Introduction

Rice is considered as one of the basic commodity food in Filipinos. The country’s
consumption per capita yearly was 93.2 in 1995 that rose up to 123.3 kg in 2009, which
means that rice production is essential in the food supply of the Philippines.

Rice trading during the Marcos era was controlled by Chinese traders then. During harvest
they buy rice at the farmers' gate at the price they dictated. Because of lack of drying
facilities, farmers were forced to sell their harvest for a picayune fearing the moisture
content will turn their rice rancid. Realizing this predicament, Marcos created the National
Grains Authority which later on become National Food Authority, which was created to
mandate to buy farmers produce at a much higher than what the Chinese traders do. The
NGA then that was able to come to the aid of farmers. They have the drying facilities and
rice mills which our farmers do not have.

According to World Rice Statistics on 2008, Philippines has been the one of the largest
importer of rice throughout the world, importing around 1.8 million tons of rice with Thailand
and Vietnam as its main suppliers. The Philippines' quantitative restriction on rice, which
allows the government to limit the volume of rice that could be imported each year, will
expire. The Philippines is one of the three countries granted exemption in 1995 from the
removal of quantitative restriction (QR) on rice under Annex 5 of the World Trade
Organization (WTO) agreement. Japan and South Korea are the other two countries.

The primary objective of the paper is to know how the Philippine government play a pivotal
role on the importation of rice in the country and its possible poverty and distributional
effects particularly on the Philippine rice sector. Furthermore, In addition the President
signed Executive Order 23, which adopts the recommendation of the National Economic
Development Authority (NEDA) to extend the reduction of duties on certain agricultural
products that aims to protect Filipino farmers from cheap agricultural imports. In exchange
for the extension of reduced tariffs on rice, the government has agreed to allow rice imports
with lower tariffs at a restricted amount, called the Minimum Access Volume (MAV).
 II. A. STATEMENT OF THE PROBLEM
The study aims to determine the major stakeholders in the implementation of Quantitative
Restrictions on Philippine rice imports. It also assesses the implications to the Philippine Rice
Sector.

Specifically, this study sought to answer the following questions:

1. Why does the Philippines import rice?

2. What is Quantitative Restriction?
3. How does the Philippine government intervene in the implementation of Quantitative
Restriction on rice importation?
4. What are the implications of Quantitative Restriction on rice importation to the Philippine rice
sector?
5. What are the other possible options the government can utilize subsequent to the
termination of Quantitative Restriction on rice?

B. METHODOLOGY
The Qualitative research methodology was used for this study in order to discuss the Political
Economy of Quantitative Restriction on Rice importation and its Implications to Philippine Rice
Sector.
The Qualitative Documentary Analysis seeks to obtain relevant documentary evidence to
support and validate the facts stated in this research. The goal in document analysis is to aim
for objectivity and sensitivity and maintain the balance between both. Furthermore, to acquire a
mental grasp on the content of each document in order extract thereafter the matter in regard
to the topic being assessed.
The documentary analysis is very useful for getting relevant information from existing
documents. The researcher’s first task is to define the goals and objectives of the study.
Correspondingly, the researcher gathered as much information as possible. After that, the
researcher summarized all the information obtained. Thereupon, the researcher contextualized
the document.
 III. REVIEW OF RELATED LITERATURE

Foreign Literature
Southeast Asia is the hub of the world’s rice economy. As a region, it has been a net exporter
of rice for most of the past 110 years (the exception being some years between 1967 and
1978). It has two of the world’s top three exporters but also has two countries that, from time to
time, have each been the largest importer in the world. 1 However, not all countries in this
region are self-sufficient in rice. People in the traditional rice-importing countries such as
Indonesia, Philippines, and Malaysia consume more wheat and less rice than those in the
traditional exporting countries. The lower rice consumption gives the rice exporting countries a
head start in achieving rice self-sufficiency. Yet, the explanation of why some countries imports
rice must be found on the supply side and not on the demand side. Rice exporting countries in
Southeast Asia has more production per person because of a higher percentage of rice land is
irrigated. Furthermore, the proportion of total crop harvested area is the most important factor
explaining rice production among countries. Geography is the reason why some countries
have more land suitable for growing rice. Hence, in terms of achieving rice self-sufficiency
island countries have natural disadvantages.2

In some countries like Indonesia and Philippines, the government plays a more outsized role
by directly determining the volume of imports. Both countries also set a floor price for farmers
and a ceiling price for consumers. Consequently, the people pay above-market rates for rice
which lowers their purchasing power and even increase poverty, particularly in rice importing
countries. In fact, keeping the prices high just benefits the rich farmers with most surplus rice
to sell and not those farmers with too small holdings to grow enough rice .3

In a strategic review by the World Food Programme in 2017 entitled, “Food Security and
Nutrition in the Philippines”, it is stated that policy incoherence is one of the gaps and
challenges of food security and nutrition in the Philippines. The exceeding rice prices paid by
the consumers are due to the restrictive trade policies in rice. The importation of grains in the
Philippines was subjected to the statutory monopoly under the National Food Authority (NFA).
In 1995, the Philippines acceded to the World Trade Organization (WTO), thereby accepting
disciplines on subsidies, tariffs and non-tariff barriers, including the tariffication of Quantitative
Restrictions (QR). Prior to that, the Philippines obtained a special treatment on rice, allowing it

1Dawe, David Charles, Steven Jaffee, and Nuno Santos. 2014. Rice in the shadow of
skyscrapers: policy choices in a dynamic east and southeast Asian setting. Rome: Food and
Agriculture Organization of the United Nations (FAO). http://books.irri.org/rice_skycrapers.pdf
2 Ibid.
3“Paddy-Whacked.” 2015. The Economist. The Economist Newspaper. November 12.

https://www.economist.com/news/finance-and-economics/21678256-meddling-market-rice-
asian-governments-make-their-own-citizens.
to maintain import QRs up to 2005. However, the special treatment was subsequently
extended to 2012 and yet another time to 2017 through a waiver. 4
The Philippine government is being urged by the regional coalition of civil society
organizations, national farmer federations, fisher folk associations and women’s organizations
to develop agricultural policies and strategies to support rice farmers like extending the rice
quantitative restrictions beyond the June 2017. The Asia-Pacific Network for Food Sovereignty
(APNFS) which is supporting the move, stated that the withdrawal of domestic support
provided to small-scale farmers around the world has contributed to increased hunger
incidence in many countries, especially in Asia. It also urged the Philippines to provide a strong
stand and leadership to support small-scale farmers.5

During the negotiations for the second extension, the Philippines had agreed to increase the
Minimum Access Volume (MAV) of rice to 805,200 Metric Tonnes (MT) and reduce the in-
quota tariff to 35% corresponding to the Asean Trade in Goods Agreement (ATIGA) duty and a
most-favored nation (MFN) rate of 40% for volumes imported outside the MAV. This
arrangement gave the Philippines more time to achieve self-sufficiency in rice. Meanwhile, the
Philippine government is eyeing to set up a tariff scheme for rice which still requires
amendments involving Republic Act 8178 or the Tariffication Act of 1996. On the other hand,
prior to the expiration of QR, President Rodrigo R. Duterte signed Executive Order No. 23 in
April that extends the “effectivity” of MFN, MAV and “other Philippine commitments” relating to
the waiver granted by WTO on the special treatment of rice.6

Local Literature

The four main reasons why the Philippines imports rice: the late establishment of the Philippine
Rice Institute (1985); the water scarcity to smaller rice areas and lower fields during dry
season; the lack of irrigation sources; and the exporting of rice as a losing proposition which
translates to P9 per kilo at farm gate, way below the market price of around P15 per kilo.7
Quantitative Restriction (QR) is the most common Nontariff Barrier (NTB) applied by countries

4Roehlano Briones, Ella Antonio, Celestino Habito, Emma Porio, and Danilo Songco. 2017.
Strategic Review:Food Security and Nutrition in the Philippines.World Food Programme
(WFP). https://docs.wfp.org/api/documents/WFP-0000015508/download/
5 Rewari, Mr. Gulshan. 2017. “APNFS and coalition of civil society organizations urge

Philippines for extension of rice import quota.” Riceoutlook. March 2.

http://riceoutlook.com/apnfs-and-coalition-of-civil-society-organizations-urge-philippines-for-
extension-of-rice-import-quota/.
6 Rewari, Mr. Gulshan. 2017. “Philippines gov't not to extend QR exemption on rice beyond

June 2017.” Riceoutlook. June 30. http://riceoutlook.com/philippines-govt-not-to-extend-qr-

exemption-on-rice-beyond-june-2017/.
7 Dy, Rolando T. 2015. “Why we have to import rice.” BusinessWorld. April 21.

http://www.bworldonline.com/content.php?section=Opinion&title=why-we-have-to-
importrice&id=106455.
to protect its local markets. The Philippines’ accession to the WTO subjected its agricultural
commodities to liberalization. However, one commodity persisted to retain it market protection:
rice. The Philippines availed the special treatment clause to protect its local rice industry from
cheaper rice imports by invoking Annex 5 of Agreement on Agriculture (AoA). The agreement
allowed Manila to keep its rice QR until 2005. Unfortunately, consecutive failures resulted in
the extension of the Philippines’ right to QR before the WTO.8
Piñol, stated in 2016 that subsequent to the expiration of the Quantitative Restriction (QR) on
30 June 2005, the Philippines, however, successfully negotiated a seven-year extension of QR
up to 30 June 2012. As the Philippine rice sector continued to remain uncompetitive, the QR
was again, negotiated to be retained through a waiver until 30 June 2017. He emphasized that
the Department of Agriculture (DA) will stand on its position to promote a two-year extension of
QR to allow the Administration’s support program to take effect and set the sector to the proper
path of sustained self-sufficiency at competitive levels.9
In a policy note by the Philippine Institute for Development Studies (PIDS) authored by
Roehlano M. Briones, Ivory Myka Galang and Lovely Ann Tolin in 2017 entitled, “Quantitative
Restrictions on Rice Imports: Issues and Alternatives”, PIDs said that the government could
pursue two policy option following the expiration of the rice Quantitative Restriction. First is to
extend the QR for two more years and second, the preferred option is to pursue tarrification
with revenues earmarked as safety net for farmers. Opposing the Department of Agriculture’s
stance to extend the QR, PIDS pointed out that the government still has no clear strategy to
hasten domestic farmers’ competitiveness within two years. It will also continue the burden of
the Philippines’ poorest households with overpriced rice and force other WTO members to
bargain for non-rice concessions.10
Briones and Tolin, stated in 2016 that the removal of rice QR would boost governments
revenues dues to more rice imports. The earmarking rice tariff revenue is a practicable funding
strategy that could be used to product-enhancement measures for rice farmers. The
government should compensate the farmers as the removal of QR may have a great impact on
their income. They suggested that farmers cultivating 2 hectares of irrigated land should
receive around P19,000 a year and receive a compensation computed using the National Food
Authority (NFA) support price of P17 per kilogram. Tarrification of the Philippine rice sector is
inevitable and should be accompanied by safety nets for smallholders suffering from intensified
competition from imports.11

8 Arcalas, Jasper Y. 2017. “What Filipinos should know about this thing called
‘QR’.” BusinessMirror. April 9. https://businessmirror.com.ph/what-filipinos-should-know-about-
this-thing-called-qr/.
9 Piñol, Emmanuel F. 2016. “On the Rice QR.” Official Portal of the Department of Agriculture

On the Rice QR Comments. December 21. http://www.da.gov.ph/on-the-rice-qr/.

10 Briones, Roehlano M., Ivory Myka Galang, and Lovely Ann Tolin. 2017. “Quantitative

restriction on rice imports: Issues and alternatives.” Philippine Institute for Development
Studies. March. https://pidswebs.pids.gov.ph/CDN/PUBLICATIONS/pidspn1707.
11 Briones, Roehlano M. , and Lovely Ann C. Tolin. 2016. “Compensatory payment scheme for

rice farmers after tariffication.” Philippine Institute for Development Studies. November.
https://dirp3.pids.gov.ph/websitecms/CDN/PUBLICATIONS/pidspn1620.pdf.
 IV. Presentation, Interpretation & Analysis of the Data (PAID)
Rice is an integral part of Philippines history and culture. It is also considered as the staple
food of most Filipinos. Although the Philippines is an agricultural country, rice production hardly
meets the demands of the country’s growing population estimated at 103.9 million people in
2016 from 26.3 million in the year 1960.12 In line with the increasing population, the demand
for rice also increases (Figure 1).
Figure 1. Philippines Milled Rice Domestic Consumption by Year

Source: Index Mundi (n.d.)

The figure above shows the annual consumption of rice in the Philippines from1960-2016. As
you can see in the graph, from 2,800 Metric tons (m.t.) in 1960, rice consumption rose to
12,900 m.t in 2016. There is indeed, an increasing trend in consumption of rice.13

12 “Philippines Population 1960-2018 | Data | Chart | Calendar | Forecast.” 2018. Philippines

Population | 1960-2018 | Data | Chart | Calendar | Forecast. Accessed March 23.
https://tradingeconomics.com/philippines/population.
13“Philippines Milled Rice Domestic Consumption by Year.” 2018. Philippines Milled Rice

Domestic Consumption by Year (1000 MT). Accessed March 23.

https://www.indexmundi.com/agriculture/?country=ph&commodity=milled-
rice&graph=domestic-consumption.
Figure 2. Philippines Milled Rice Production by Year

Source: Index Mundi ( n.d.)

Along with the increase in rice consumption, the production rate of rice in the country also
increases (Figure 2). In 2016, the country had produced 11,686 m.t. of rice.14 However, the
improvement in rice production doesn’t guarantee the country’s rice self-sufficiency. The
Philippines still needs to import rice as it fell short of meeting the demands of rice and of
achieving 100% self-sufficiency rate.15
Besides the demand for rice, another key factor that affects the rice supply in the Philippines
is: Geography, the endowments of land and water.16 Exporting countries such as India,
Thailand, and Viet Nam have wide flat plains watered by large river systems, such as the
Ganges, Chao Phraya, Mekong, and Red Rivers, which enable them to produce large
surpluses of rice at constant production cost. Meanwhile, relative to population, the Philippines
has very limited lands suitable for rice cultivation.17

14 “Philippines Milled Rice Production by Year.” n.d. Philippines Milled Rice Production by Year
(1000 MT). https://www.indexmundi.com/agriculture/?country=ph&commodity=milled-
rice&graph=production.
15 Cayabyab, Marc Jayson. 2015. “Rice Production Improves, but PH Not Yet 100% Self-

Sufficient–DA.” Inquirer News Rice Production Improves but PH Not Yet 100 SelfsufficientDA
Comments. August 25. http://newsinfo.inquirer.net/716113/rice-production-improves-but-ph-
not-yet-100-self-sufficient-da.
16 Dawe, David C., Piedad F. Moya, and Cheryll B. Casiwan. 2006. Why Does the Philippines

Import Rice?International Rice Research Institute, Philippine Rice Research Institute

(PhilRice). http://books.irri.org/9712202097_content.pdf.
17 Briones, Roelhano M., Ivory Myka Galang, and Lovely Ann Tolin. 2017. “Quantitative

Restriction on Rice Imports: Issues and Alternatives.” Philippine Institute for Development
Studies. Philippine Institute for Development Studies. March.
https://pidswebs.pids.gov.ph/CDN/PUBLICATIONS/pidspn1707.pdf.
In effect, rice from abroad became much cheaper than domestically produced rice. For
example, the palay production in the Philippines cost 90% higher than Viet Nam (Figure 3).18

Figure 3. Comparative Cost of Producing 1 kilogram of Palay, 2013–2014

Source: Moya et al. (2016)

As indicated in the graph above, the Philippines produces palay at P12.41 per kilogram while
Viet Nam’s cost is only P6.53 per kilogram, because of this, to protect millions of Filipino
farmers from foreign competition. The National Food Authority (NFA), by authority of its
statutory monopoly on rice importation, has applied Quantitative Restrictions (QR) on rice. The
Philippines accession to World Trade Organization (WTO) by the signing of Marrakesh
Agreement, subjected its agricultural commodities to liberalization. However, prior to the
signing of the said agreement, the Philippines was able to invoke Annex 5 of Agreement on
Agriculture (AoA) and was granted a 10-year Special Treatment on rice, allowing Manila to
keep its QR until 2005. To comply with the provision of the AoA , Manila had agreed to institute
a Minimum Access Volume (MAV) scheme on rice imports (Table 1).
Table 1.

YEAR Minimum Access In-Quota

Volume (MAV) Tariff
2005 238,940 m.t 50%

2012 350, 000 m.t 40%

2017 805, 200 m.t 35% (ASEAN rate)

18 Ibid.
The table above shows that upon acquiring the Special Treatment on rice until 30 June 2015,
the Philippines applied a Minimum Access Volume (MAV) of 238,940 m.t. with corresponding
50% in-quota tariff. This is due to the need of for the Philippine Rice sector, particularly the
small farmers to be protected and achieve competitiveness and be ready to liberalize trade
upon termination of the agreement aforementioned. However, subsequent to the expiration of
the agreement on 2005, the Philippines once again successfully negotiated a 7-year extension
of QR until 20 June 2012. As a compensation, the Philippines increased the MAV to 350, 000
m.t with a 40% in-quota tariff. The QR for the third time was successfully negotiated to be
retained, this time through a waiver, until 30 June 2017 with an increased MAV at 805,200 m.t
with a 35% in-quota tariff. Unfortunately, despite the given extensions of QR on rice, the
Philippine Rice sector remained uncompetitive. In fact, according to the Philippine Statistic
Authority (PSA), in 2006, poverty incidence rate among farmers was at 38.5%, it slightly
declined to 38% in 2009, but increased to 38.3% in 2012.19 Last 2015, poverty incidence
among farmers vaguely decreased to 34.3%.20 However, according to PSA’s Poverty Statistics
for Basic Sectors, Filipino farmers are still among the poorest sector in the Philippines; which is
very unfortunate given the fact that the Philippines is an agricultural country with rice as the
staple food of the most of its citizens.
Hence, indicated below are the possible options the government can utilize subsequent to the
termination of Special Treatment on Rice last 30 June 2017:
Option 1:The government should negotiate again with the World Trade Organization
(WTO) for the extension of QR for two more years.

ADVANTAGES
 The entry of rice imports in the
country would be limited
 QR ensures a greater
protection than tariff
 The profit of local industries will
increase
DISADVANTAGES
 The limited amount of rice imports may
lead to unstable prices
 Distortion of Free Trade
 QR harms both consumers and
downstream industries (in the importing
country)
 QR hinders domestic producers to
rationalize their operation and improve
productivity

Extending once again the Quantitative Restriction on rice has its advantages. First is that the
entry of rice imports in the country would be limited; it allows the government to control
the amount of rice imported in the country to maintain the competitiveness of domestically

19 “Philippines: Impact on WTO's Extension of QR on Philippines Rice to Farmers.”

2014. UkrAgroConsult. September 1. http://www.blackseagrain.net/novosti/philippines-impact-
on-wtos-extension-of-qr-on-philippines-rice-to-farmers.
20 “Farmers, Fishermen Are PHL's Poorest.” 2017. BusinessWorld. July 4.

http://www.bworldonline.com/content.php?section=Economy&title=farmers-fishermen-are-
phl&id=147655.
produced rice. Second, is that the QR ensures a greater protection than tariff because it
protects the local farmers and their product from foreign competition. And third, the profit of
the domestic industry will increase because as QR protects the domestic products the
domestic industry will be able to produce competing products and maintain a stable
employment in the industry.
However, extending the Quantitative Restriction also has its disadvantages. First, because of
limited about of rice import, it may lead to unstable prices; if QR will be lifted, foreign
countries can freely export their products to the Philippines. Consequently, the supply of rice
will increase making the imported rice much cheaper than the domestic ones. Thus, Filipinos
may opt for cheaper imported rice and that would hurt the local farmers particularly the small
ones, as the surge in rice imports will give them negative income. Second, it causes distortion
of free trade because a country imposing QR on their products cannot export them in excess
of the given quota.21 Third, the QR harms consumer and downstream industries because it
leaves at best import-substitute effects that leads both the consumers and downstream
industries suffer from higher prices. Thus it may cause the importing country’s economy an
overall negative effect in the mid or long term. Lastly, QR hinders domestic producer to
rationalize their operation and improve productivity in the mid or long term.22
By and large, the extension of Quantitative Restriction may cause positive and negative effects
on the importing country’s economy in general. This first option exemplifies the mid as well as
the long term effects that evidently outweighs the benefit of protecting domestic rice
production.
Option 2: The government should pursue tariffication.

ADVANTAGES DISADVANTAGES

 Import tariff grants price advantage to the
rice produced locally
 Under tariffication, both the Producers
and the Government will earn revenues
 Government no longer needs to compute
for the annual quota of imported rice
 Avoids uncertainty from discretionary
import targeting
 Avoids the problem of allocating of import
quotas to private traders
 Government needs to renounce its rice
control to the private sector
 Local Farmers will face foreign
competition
 There could be unpredictable domestic
prices

21 Mangabat, Minda C. 1999. “Effects of Trade Liberalization on Agriculture in

Philippines.” AgEcon Search. Regional Co-ordination Centre for Research and Development of
Coarse Grains, Pulses, Roots and Tuber Crops in the Humid Tropics of Asia and the Pacific
(CGPRT Centre). December. https://ageconsearch.umn.edu/record/32689/files/wp990051.pdf.
22 “CHAPTER 3 QUANTITATIVE RESTRICTIONS.” n.d.

http://www.meti.go.jp/english/report/data/gCT9903e.html.
 Tariffication is the converting of Non-tariff barriers (NTBs) into import tariffs. Unlike Quantitative
Restrictions, tariffs have less distorting effects and helps generate revenues.
Tariffication provides five advantages, first is that import tariff grants price advantage to the
rice produced locally. For small or developing countries like the Philippines, the domestic
price of rice is the same as the amount of the tariff, unlike for those large or developed
countries the increase in rice price is less than the amount of tariff imposed because part of it
is reflected in the decrease of international prices.23 Second, under tariffication, the
producers and the government will earn revenue in the form of taxes. Third, the
government no longer needs to compute the annual quota on imported rice because the
only thing needed for the government to do is to collate all information on domestic demands
and supply and the deficit or surplus to be filled up by imports regarding the current condition
of supply and demand. Fourth, it avoids uncertainty from discretionary targets on import
because the government’s role is only to intervene on the domestic price stabilization and
reducing its volatility. However, some private sector doesn’t want to work with the public sector
believe that they might be politically-motivated. And fifth, it avoids the problem of allocating
import quotas to private traders for tariffication shows favourable opportunities as import
business became liberalized.
On the other hand, the disadvantaged of tariffication is that the government will renounce its
control of imports to the private sector; this would challenge the transparency of private
sectors for there is no guarantee that they would give the right amount of rice and if they would
be able to balance out domestic industry and farmers interest with household food security.
Also, the local farmers will face foreign competition. Lastly, there could be an
unpredictable world and domestic prices that would challenge an importing state to
estimate the equivalent tariff needed.
If the government would pursue tariffication, the country could anticipate the increasing volume
of imported rice will force domestic rice producer to lower their price as a countering attack on
cheaper imported rice.
Option 3: The government should extend the QR for two more years whilst devising a
long-term policy to improve rice production in accordance to liberalization of rice trade.

ADVANTAGES
 QR limits the entry of rice imports
 The profit of domestic industry will
increase because of QR
 Locally produced rice will gain price
advantage through import tariff
 Revenues will be earned by both the
Producer and the Government under
tariffication
 There will be an employment security in
the rice industry
DISADVANTAGES
 Higher government disbursements
 Government needs to renounce its rice
control to the private sector
 There could be unpredictable world and
domestic prices
 A need for political stability

23 “CHAPTER 4 TARIFFS.” n.d. http://www.meti.go.jp/english/report/data/gCT9904e.html.

 There will be an efficiency in rice
production
 two-year extension will serve as a
transition period in preparation towards
tariffication

The third option involves continuous plan concearing economic implications both in the short
and long run. In the short run, the government could negotiate for the two-year extension of the
Special Treatment on rice and within that period, the government must take action in preparing
the country’s resources and devise new policies that would be beneficial in the implementation
of the tariffication. Hence, the extension would serve as the country’s preparation for the total
abolishment of QR and by 2020, the Philippines would be ready enough to impose tariff and
open itself to free-trade.
The first advantage in the short run is, the QR limits the entry of rice imports in the country
therefore preventing the sudden increase in the volume of imported rice. Second, the profit of
domestic industry will increase because QR protects domestic products from competition.
Third, a two-year extension will serve as a transition period in preparation towards
tariffication because it will give the government plenty of time to formulate new policies e.g.
boosting farmer’s competitiveness by subsidizing them equipments and resources that can be
used for rice production.
While in the long run, revenues will be earned by the producers and the government in
the form of tax. Also, there will be an employment security in the industry because of the
increased incentive to farmers that will prevent them from shifting to other kinds of industry.
Lastly, there will be an efficiency in rice production that will increase the quality of rice
produced locally, making it competitive enough.
Unfortunately there are disadvantages. In the short run, there could be higher government
disbursements because the government needs to invest heavily on: educating and training of
local farmers. Also the government should spend more on new technology for equipment,
research and development and in the improvement of the irrigation system. Whereas, in the
long run, as the government renounce its control on rice imports to the private sectors,
there will be a fluctuation of market prices resulting to the unpredictability of world and
domestic prices.
Thus, maintaining political stability is very much needed for both short and long run for it is
never-ending effort in managing the ceaseless problems and changes in a country. Having a
stable political condition, Philippine economy could achieve stabilization and eventually thrive
for a stable government is the foundation of a burgeoning economy.
All things considered, President Rodrigo Duterte signed Executive Order 23 on 28 April 2017,
which adopts the recommendation of the National Economic Development Authority (NEDA) to
extend the reduction of duties on certain agricultural products. Henceforth, the Philippines
should anticipate the possible pros and cons of extending the QR once again.24

V. Summary, Conclusion & Recommendation

Summary
Rice is considered as one of the basic commodity in the Philippines, that is why our
country has been one of the largest importer of rice throughout the world consuming with
around 1.8 million tons of rice per year with Thailand and Vietnam as its main suppliers. (World
Rice Statistics, 2008). Philippines has enacted a law on Quantitative restrictions on rice in
which allows the government to limit the volume of rice that could be imported each year.
Unfortunately the Philippine Rice Sector remained uncompetitive. There are three options the
government can utilize subsequent to the termination of Quantitative Restriction on rice. The
President signed an Executive Order No. 23 which adopts the recommendation of the National
Economic Development Authority (NEDA) to extend the reduction of duties of agricultural
products that aims to protect the Filipino farmers.

Conclusion
The Quantitative Restriction on rice served as a protection to Philippine Rice Sector by
imposing the Minimum Access Volume (MAV). However despite three extensions, the
Philippine Rice Sector is still uncompetitive. In fact, they are still one of the poorest sector in
the Philippines. There were three possible options the government can utilize following the
expiration of QR last 30 June 2017; to should negotiate again with the World Trade
Organization (WTO) for the extension of QR for two more years; to pursue tariffication; and to
extend the QR for two more years whilst devising a long-term policy to improve rice production
in accordance to liberalization of rice trade. Last 28 April 2017, President Rodrigo Duterte
signed an Executive Order No. 23 which adopts the recommendation of the National Economic
Development Authority (NEDA) to extend the reduction of duties of agricultural products that
aims to protect the Filipino farmers.
Recommendations

 The government should provide agricultural assistance in the form of infrastructure,

irrigation system, more rice yields, better seedling varieties and other farmer support
services.
 Further studies regarding the Philippines’ rice self sufficiency and the competitiveness
of Philippine Rice Sector.
 Institutions should be more aware regarding the current situation of rice in the
Philippines.

24Placido, Dharel. 2017. “Philippines Extends Rice Import Quota for 3 Years.” ABS-CBN
News. May 22. http://news.abs-cbn.com/business/05/22/17/philippines-extends-rice-import-
quota-for-3-years.
 VI. References
Briones, R., Galang, I., & Tolin, L. (2017, July). Quantitative restriction on rice imports: Issues
and alternatives. Retrieved from https://www.pids.gov.ph/publications/5790
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