The International Food Policy Research Institute (Ifpri) said a measure that will allow the extension of the Rice Competitiveness Enhancement Fund (RCEF) should include its gradual phase out.
Research Fellow Emeritus at the IFPRI Director General’s Office, Mark Rosegrant, recently told reporters on the sidelines of the Asian Development Bank (ADB) Food Security Forum held recently that it is important to place sunset provisions on farm subsidies.
Rosegrant issued the statement after recent reports indicated that Senator Cynthia A. Villar is proposing to extend the RCEF for another six years, doubling the support for farmers to P20 billion.
“Granted they’re going to do it [extension] for six years but why not start phasing down the level of support at two to three years and you could briefly put that into just direct payments to farmers? So that it doesn’t distort the way the production decisions are made. I think that would be a useful way to do it.”
Once the RCEF is phased out, he said the funds from rice tariffs could be used for other investments in the agriculture sector. This will ensure that government funds are spent for agriculture that could lead to “higher returns.”
These other areas include research and development, improving value chains, and efforts that would help reduce post-harvest losses, among others.
One key investment, Rosegrant said, is irrigation systems that may become too expensive in the medium- to long-term. “So the idea then for repurposing, is to move funding from some of the subsidies programs into more productive investments.”
The RCEF is a fund dedicated to improving farmers’ competitiveness through the provision of certified seeds, mechanization, expansion of credit access, and delivery of extension services.
RCEF is a six-year P10-billion rice production development program created under the rice tarrification law, or Republic Act 11203, which deregulated the rice industry.
The law mandates that P5 billion should be allocated for farm mechanization, P3 billion for inbred seed distribution, P1 billion for credit and P1 billion for extension.
In 2020, two years before the mandatory review of RCEF, economists said the P10-billion RCEF can be used to finance the Registry System for Basic Sectors in Agriculture (RSBSA).
The National Economic and Development Authority said the mandatory review is part of the Implementing Rules and Regulation of the Rice Trade Liberalization law.
The University of Asia and the Pacific (UA&P) Center for Food and Agribusiness (CFA) told the BusinessMirror that the RSBSA’s budget allocation was only P200 million when the World Bank estimated that it should be P1.7 billion to P2 billion. The funding from RCEF can finance the support given to farmers through the RSBSA.
The CFA also said the other components of RCEF should also be examined and funded. Some P5 billion of the funds should also finance other attachments of farm mechanization.
It pushed for other improvements in the law, such as allowing farmers to choose the seeds they will plant.
