Agriculture Secretary Proceso Alcala has vowed to scrap the privilege extended to private companies which have been importing rice with the same tax subsidy enjoyed by the National Food Authority (NFA).

This developed as the Bureau of Customs (BoC) stepped up its drive against traders allegedly involved in rice over-importation and rice smuggling by filing charges against five officers of two Escolta-based companies and a customs broker before the Department of Justice (DoJ).

Alcala made the pledge to scrap the tax privileges as he met with members of the Philippine Confederation of Grains Associations (Philcongrains) Wednesday afternoon at the Department of Agriculture (DA) in Quezon City.

Philcongrains President Herculano “Joji” Co told the Manila Bulletin that Alcala's pledge was welcomed by his members who came from Isabela, Bicol, Central Luzon, the Visayas, and Mindanao.

The rice millers had earlier complained that the special treatment extended to the companies, including the 40 firms that queued up to secure allotments in the 200,000 metric ton (MT) volume granted to the private sector, meant that local traders lost the chance to sell 200,000 MT to these firms.

Worse, they enjoyed the same tariff subsidy extended to the NFA, a cost center of the national government that had racked up P171 billion in debt.

Co said that by scrapping the tariff perks enjoyed by the companies, the playing field would be leveled to encourage more traders to compete even as farmers are also persuaded to plant rice rather than other crops.

In the same meeting, NFA Administrator Lito Banayo promised to seek the help of the National Bureau of Investigation (NBI) in identifying rice smugglers, particularly a father-and-son tandem that had been bringing in contraband rice for the last nine years.

Co stressed that the private sector should not enjoy the privileges extended to NFA, which is not expected to profit by acting as a market disciplining force and incurring huge losses by selling grain at subsidized prices.

Asked how Alcala was perceived by Philcongrains members from provincial chapters, Co said they were impressed and believed the meeting was “positive.”

Co said he expects that all Philcongrains members would cooperate with Alcala, a farmer himself, to ensure that rationality prevails in the rice industry.

Smuggling case

Meanwhile, in the campaign against smuggling, Customs Commissioner Lito Alvarez identified those charged several businessmen and Customs brokers.

The respondents were indicted for allegedly violating Article 172 of the Revised Penal Code (falsification of commercial documents); Section 3601 of the Tariff and Customs Code of the Philippines (failure to secure import permit); and Section 3602 of the TCCP (intentional and fraudulent misdeclaration).

Alvarez said the companies’ shipments declared as mung beans “magically” morphed into white rice after clearing Customs.

The BoC commissioner also said the case covered only four import entry declarations. The shipment arrived on June 17 this year and was released the following day without paying duties or taxes.

“If correctly declared, the BoC should have collected over P10 million representing duties and taxes but since the subject shipments were misdeclared and were fraudulently imported, the shipment worth over P38 million should have been forfeited in favor of the government.”

Alvarez said, “This is just the proverbial tip of the iceberg. Since records now in the hands of BoC lawyers show that between 2008 and 2009, Plum Blossom and Full Story cleared 102 entries involving at least 2,400 containers of mung beans.”

Lawyer Gregorio Chavez, Deputy Customs Commissioner for Revenue Collection and Monitoring Group (RMCG) and executive director of the agency’s Run After the Smugglers (RATS) Program, said his group started looking into the liability of customs employees assigned in the Entry Processing Unit, Formal Entry Division and other units which processed and released the shipments in question.

Self-sufficiency

In a related development, some observers noted that there is no hope for the country to achieve rice self-sufficiency by 2013 if it does not veer away from its import commitments under the Agreement on Agriculture (AoA) with the World Trade Organization (WTO).

This agreement, signed in 1995, compelled the Philippines to import between one percent and four percent of its rice requirements from other countries in exchange for access of its food exports to other nations.

As a result, one researcher noted that the Philippines, which was exporting rice from 1980 to 1995, started to import the staple, eventually purchasing up to 18.4 percent of its needs overseas during the previous administration.

As late as November 2009, the Inter-agency Committee on Rice and White Corn told the Department of Agriculture (DA) to import up to 3.265 million metric tons (MMT) of rice for the current year but the total import volume was somehow reduced to 2.45 MMT, which was large enough to make the Philippines the world’s biggest importer.

It was a story that the Manila Bulletin first broke, and DA officials never publicly admitted the confidential memo that recommended such huge import volume.

Compounding the problem is the rather thin global rice market, which is now running below 6 percent of total world production.

The Kilusang Magbubukid ng Pilipinas (KMP) believes that the WTO was mistaken in imposing the minimum access volume (MAV) for foreign rice, particularly for Asian countries that have traditionally been dominated by subsistence farming rather than production for the external market.

Moreover, the National Federation of Women Farmers (Amihan) said the WTO imposition on countries to remove a high tariff wall and scrap quantitative restrictions on rice, end any type of support for rice production and subsidies for rice exports act as a brake on vibrant local grain production.