Policy, purpose, and foundational approach
- The State policy is to ensure food security and make the agricultural sector viable, efficient and globally competitive.
- The State adopts tariffs in lieu of non-tariff import restrictions to protect local producers of agricultural products.
- The legislative shift is tariffication: lifting quantitative restrictions (such as import quotas or prohibitions) imposed on agricultural products and replacing them with tariffs.
Key definitions and core terms
- “Agricultural products” means specific commodities classified under Chapters 1-24 of the Harmonized Commodity Description and Coding System (HS) adopted and used in Section 1611 of Republic Act No. 10863 (Customs Modernization and Tariff Act (CMTA)).
- “ATIGA Rate” means tariff rate commitments under the ASEAN Trade in Goods Agreement (ATIGA) applicable to imports originating from ASEAN member States.
- “Bound rate” means agreed maximum tariffs on products committed by the Philippines to the WTO under the Uruguay Round Final Act and under ATIGA, consistent with its tariff schedule (Annex 2: Tariffs under ATIGA–Philippines).
- “Buffer Stock” means the optimal rice inventory level maintained for emergency situations and to sustain government disaster relief programs during natural or man-made calamities.
- “In-Quota Tariff Rate” means tariff rates for minimum access volumes committed to the WTO under the Uruguay Round Final Act.
- “Out-Quota Tariff Rate” means the higher customs duty rate levied on quantities imported in excess of the Maximum Access Volume (MAV).
- “Minimum Access Volume” means the volume of a specific agricultural product allowed to be imported with a lower tariff committed to the WTO.
- “Most Favoured Nation (MFN) Rate” means Philippine tariff rates applicable to imports from all sources as prescribed in the CMTA.
- “Quantitative Import Restrictions” means non-tariff restrictions limiting the amount of imported commodities, including discretionary import licensing and import quotas, whether qualified or absolute.
- “Rice” covers all products classified under HS heading 10.06.
- “Rice shortage” is a situation where market supply falls short of quantity demanded at a given time.
- “Tariff” is a tax levied on imported commodities that earns revenues and promotes local industries by maintaining a domestic price level equal to world price plus tariff.
- “Tariff Equivalent” reflects the rate of tariff providing comparable protection under existing quantitative restrictions, shown by the average price gap between domestic prices and world prices.
- “Tariffication” means lifting quantitative restrictions on agricultural products and replacing them with tariffs.
- IRR Rule 2.1 defines operational terms for buffer stock and emergencies, including:
- “Optimal Level” as strategic NFA rice inventory maintained at any given time, including emergency stocks and stocks needed for disaster relief programs.
- “Emergency Situations,” “Disaster Relief Programs,” “Natural calamities,” and “Man-made calamities” aligned with disaster risk reduction under Republic Act No. 10121.
Removal/transfer of NFA regulatory powers
- The IRR repeals laws and provisions prescribing import restrictions or granting agencies power to impose such restrictions on agricultural products or hindering liberalization of rice trade.
- Functions and powers in Section 6(a) of Presidential Decree No. 4 (as amended) are expressly repealed effective March 05, 2019, covering multiple NFA regulatory and licensing powers, including:
- instituting negotiable receipt/quedan system and interim price support procurement mechanisms (including bonded warehouse storage requirements and related procurement procedures),
- enforcing enumerated provisions under repealed authorities,
- inspection and inventory-related entries into premises for stored grains by any person,
- seizure actions tied to concerning or hoarding and price stabilization public sale,
- registration/licensing/supervision of warehouses and mills and imposition of licensing fees and surcharges,
- regulation of importation of rice and other grains and licensing and fee-collection tied to equalizing selling prices (including shortage certification, direct importation or quota allocation, and subsidy borne by the National Government),
- regulation of export of rice and other grains, including direct exportation or quota allocation after excess certification,
- registration/licensing/supervision of persons engaged in supporting activities and wholesale/retail rice trade and fee collection,
- rules and regulation enabling enforcement powers including investigations, subpoena/subpoena duces tecum, administering oath, arrests, and treatment of contumacy under the Revised Administrative Code,
- powers for contracting indebtedness and related bond/loan terms and tax exemptions,
- acquisition of lands for rice/corn/grains cultivation and a specified initial program fund,
- promulgating rules and regulations and creating subsidiary corporations for integrated operations.
- Starting March 5, 2019, permits, licenses, and registrations for rice importers, traders, warehouse operators, wholesalers, retailers, among others, are discontinued by the NFA under the repealed powers, and other government agencies must cease requiring NFA permits, licenses, or registrations as part of trade and import/export requirements for rice.
- The Department of Agriculture (DA) must issue a department order/circular on local and international rice trade during the transition period, consistent with the IRR.
Transition and organizational restructuring obligations
- A transition period of at most sixty (60) days after IRR effectivity is provided to allow NFA to restructure to perform its functions under the Act.
- Within thirty (30) days from IRR effectivity, NFA must submit its Restructuring or Reorganization Plan to the Governance Commission for GOCCs (GCG) for review and approval within thirty (30) days.
- During this review period, NFA must consult with the GCG, the Department of Budget and Management (DBM), and other relevant agencies, and the plan must include retirement and separation benefits under existing laws.
- NFA must propose a new corporate structure responsive to NFA’s role in buffer stock management and financial stability.
- The NFA Reorganization Plan must include:
- recommendation of compensation package for redundant employees,
- workforce plan for positions created or retained,
- job matching and retooling exercise,
- re-learning and capacity building program,
- institutional systems designed for the transformed role.
- Compensation packages for affected NFA officials and personnel are subject to President approval.
- Affected officials and personnel of NFA (regular or casual/contractual) may avail of separation benefits in addition to retirement benefits, computed as:
- First 20 years: 1.00 x MBS x No. of Years
- 20 years and 1 day to 30 years: 1.25 x MBS x No. of Years
- 30 years and 1 day and above: 1.50 x MBS x No. of Years
- where MBS is Monthly Basic Salary.
- The DA and NFA must formulate guidelines and an organizational modification plan on transfer of the Food Development Center (FDC) from NFA to the DA within fifteen (15) days upon IRR effectivity submission to DBM.
- DBM must issue a Notice of Organization Staffing and Compensation Action (NOSCA) within fifteen (15) days upon DA submission, and DBM must issue a corresponding NOSCA for BPI position creation based on DA submission for FDC transfer staffing and for the transfer of food safety function.
- NFA must continue its Commercial Rice Stocks Survey (CSS) until December 31, 2019; joint undertaking with the Philippine Statistics Authority (PSA) begins by the first quarter of 2020, with final turnover on July 1, 2020.
SPS import clearance for rice (BPI authorization and timelines)
- All importers of rice must secure a Sanitary and Phytosanitary Import Clearance (SPSIC) from the Bureau of Plant Industry (BPI) prior to importation in accordance with existing laws, rules, and regulations.
- The SPSIC shall not provide for import volume and timing restrictions.
- If BPI fails to release SPSIC without informing the rice importer of any error, deficiency, omission, or additional documentary requirement, the SPSIC applied for is automatically approved if no action is taken within seven (7) days after submission of complete requirements.
- Imported rice must arrive before expiration of the SPSIC from BPI.
- The food safety regulatory function of NFA under Item (i), Section 16 of Republic Act No. 10611 (Food Safety Act of 2013) is transferred to BPI.
- Rice importation for donation during calamities and other emergency situations must comply with SPS and food safety requirements, and the recipient agency/office/organization or private entity based in the country must apply and secure the SPSIC.
- DA must, within 15 days upon IRR effectivity, review and revise guidelines on issuance of SPSIC for imported rice consistent with the IRR.
- Importers of rice must register with BPI and be part of the DA Trade System for SPSIC application and issuance; the BPI importer registration form (BPI “Q” Form No. 1c) must be reviewed by DA to streamline documentary requirements.
- SPSIC applications must be filed online; BPI must act within seven (7) calendar days from submission of complete requirements.
- BPI must communicate online through the applicant’s Data Trade System (DTS) account any incomplete application or non-compliance before the end of the seven-day period; failure to communicate results in automatic approval, and the clearance must be communicated online through the same DTS account.
- BPI must regularly publish and update on its website the list of accredited importers issued with SPSIC, including volume of imports.
- BPI is the food safety regulatory agency for imported and domestic rice, corn, and other grains for purposes of implementing Republic Act No. 10611.
- The DA must submit resulting BPI organization and staffing modification to DBM within fifteen (15) days from IRR effectivity; DBM must issue the corresponding NOSCA for BPI within fifteen (15) days from DA submission.
- DBM must require positions in BPI to be at the barest minimum; BPI funding must come from existing appropriations and other appropriate funding sources identified by DBM.
- NFA must coordinate, advise, and assist BPI in implementing food safety regulations pending issuance of NOSCA for BPI positions.
Tariffication and tariff-equivalent mechanics
- Quantitative import restrictions are replaced by maximum bound rates committed under the Uruguay Round Final Act for the agricultural products whose quantitative restrictions are lifted by the Act.
- For rice, tariff equivalents replace quantitative restrictions; the bound rate for tariff equivalent must be notified to the WTO as follows:
- (a) For minimum access volume: the in-quota tariff rate indicated under the applicable WTO Agreement on Agriculture provisions applies.
- (b) For rice imports from ASEAN member states: the ATIGA import duty rate applies.
- (c) For rice imports from non-ASEAN WTO member states: the out-quota tariff rate is 180% or the tariff equivalent computed under Paragraph 10 of Annex 5, Section b of the WTO Agreement on Agriculture upon expiration of the Philippines rice waiver, whichever is higher.
- The calculated tariff equivalent for rice must be determined by the Tariff Commission and approved by the National Economic Development Authority (NEDA) Board within forty-five (45) days upon effectivity of the Act.
- The IRR operational rules require:
- ATIGA rates for ASEAN-origin rice.
- 180% or the computed waiver-expiration tariff equivalent—whichever is higher—for non-ASEAN WTO-origin rice.
- in-quota tariff for minimum access volume.
- The applied rate on rice is governed by Section 1611 of the CMTA, unless amended under Section 1608 of the CMTA and Section 7 of the Act.
- For rice for sowing, preferential rate modification under ATIGA must be reviewed immediately upon IRR effectivity; applying ATIGA preferential rates requires submission of an appropriate Certificate of Origin.
- If the calculated out-quota tariff rate exceeds 100%, the CMTA provision on tariff adjustments under Paragraph 1, Section 1608(a) does not apply.
Presidential tariff adjustment powers
- The President has delegated authority, consistent with national interest and safeguarding Filipino farmers and consumers, to adjust tariff rates with full delegated authority subject to the CMTA.
- Congress not in session is a condition precedent for using this delegated authority.
- The President may increase, reduce, revise, or adjust import duty up to the bound rate committed under the WTO Agreement on Agriculture and ATIGA, including necessary classification changes for rice imports.
- Orders adjusting applied tariff rates must take effect fifteen (15) days after publication.
- If there is an imminent or forecasted shortage or other situation requiring government intervention, the President may allow importation for a limited period and/or specified volume at a lower applied tariff rate to address the situation, with an immediate effect.
- These immediate orders can only be issued when Congress is not in session.
- For IRR implementation, the lower applied tariff rate applies for no more than ninety (90) days or until the shortage ceases, whichever comes first; it may be extended for a similar period upon NEDA Board recommendation advised by the NFA Council.
- If the calculated out-quota tariff rate exceeds 100%, the CMTA provision under Paragraph 1, Section 1608(a) does not apply.
- The NFA Council may create a Technical Working Group (TWG) to provide relevant information.
- In rice supply shortage situations, the President may direct the Secretary of Trade and Industry and the Philippine International Trading Corporation (PITC) to participate in the rice industry through contracts with private traders to purchase needed rice from domestic and foreign sources to enhance market competition and stabilize rice prices.
Trade negotiations authority for rice
- The President may enter into trade negotiations or renegotiations of international trade commitments on rice.
- The decision is made in the interest of the Philippine rice industry and consumers and upon recommendation of the NEDA and the Department of Agriculture (DA).
- In line with the CMTA, the NEDA Board Committee on Tariff and Related Matters (CTRM) determines the need for negotiation/renegotiation and recommends the Philippine position and tariff modifications as necessary.
- Trade commitments covered include:
- WTO Agreements,
- ATIGA,
- ASEAN Plus trade agreements including ASEAN-China FTA, ASEAN-Japan FTA, ASEAN-Republic of Korea FTA, ASEAN-India FTA, ASEAN-Australia-New Zealand FTA,
- bilateral and regional agreements such as Philippines Japan Comprehensive Economic Partnership and European Free Trade Association–Philippine Free Trade Agreement,
- Agreement on ASEAN Plus Three Emergency Rice Reserve (APTERR), and ASEAN Food Security Reserve (AFSR) Agreement.
Buffer stock maintenance rules
- The NFA must maintain sufficient rice buffer stock consistent with rules, regulations, and procedures to be promulgated.
- Buffer stock must be sourced solely from local farmers.
- The NFA continues its role in ensuring food security through maintenance of buffer stock sourced from local farmers.
- The NFA Council must promulgate rules, regulations, and procedures involving acquisition, maintenance, and distribution of buffer stocks.
- No later than December 31, 2019 (or earlier), the NFA Council must promulgate rules, regulations, and procedures involving acquisition, maintenance, and distribution of buffer stocks after commissioning an independent study covering, among others:
- optimal national rice inventory level,
- rules and procedures on procurement, composition, storage, processing, rotation/replenishment, and release,
- prepositioned stock locations and amounts for emergencies,
- transaction flow for release to government agencies for emergency response and disaster relief.
- Prior to approval and adoption of the independent study recommendations by December 31, 2019 (or earlier), the NFA must implement interim buffer stock rules:
- NFA adopts an optimal inventory equivalent to 15 to 30 days of national rice consumption.
- NFA acquires the optimal level through current palay procurement sourced only from local farmers.
- Procurement is funded by NFA’s 2019 appropriations for palay procurement.
- Any borrowings for buffer stocking requirements are accounted for separately; proceeds form part of NFA’s revolving fund for buffer stocking.
- NFA maintains optimal buffer stock at all times, except for emergency releases supporting disaster relief, or disposal of stocks when quality deteriorates or becomes unacceptable/unsafe.
- Storage, sale, and distribution follow existing guidelines consistent with the interim optimal level rule.
- The NFA must submit a monthly report to the NFA Council on actual buffer stock level versus optimal level.
- The NFA must issue a predetermined volume of palay to purchase annually to comply with the Philippines’ market price support obligation under the WTO Agreement on Agriculture.
- Acquisition, maintenance, and operations of buffer stock are funded through NFA corporate receipts and supplemented by the national government, including the General Appropriations Act (GAA).
- The NFA must engage DSWD and LGUs for distributing buffer stock during emergencies; in lieu of cash subsidy, NFA through DSWD may distribute actual rice to intended beneficiaries where logistically efficient, and this option must be considered in the independent study.
Lifting quantitative export restrictions
- Any and all laws, rules, regulations, guidelines, and other issuances imposing quantitative export restrictions on rice are repealed.
- Rice exportation is allowed under established rules, regulations, and guidelines.
- Rice exportation is not restricted in volume.
Special rice safeguard duty
- A special safeguard duty on rice must be imposed to protect the Philippine rice industry from sudden or extreme price fluctuations.
- The special rice safeguard duty is imposed in accordance with Republic Act No. 8800 (Safeguard Measures Act) and its implementing rules and regulations.
- The DA monitors the quantity and prices of imported rice in any given year.
- All tariff lines under heading 10.06 in the AHTN are added in the annex of the IRR of RA 8800 listing agricultural products eligible for SSG imposition.
Minimum Access Volume (MAV) allocation and auction
- The IRR mandates development and establishment of an equitable and transparent mechanism for allocating the MAV for agricultural products whose quantitative restrictions are lifted.
- The mechanism must include government intervention, address requirements by geographical area, and avoid cost to importers/users that would prejudice local consumers and end-users.
- For rice, MAV reverts to its 2012 level of 350,000 metric tons (350,000 MT) as indicated in the Philippines’ WTO commitment.
- The MAV Management Committee (MMC) must revise existing guidelines by amending Administrative Order (AO) No. 8, series of 1997, as amended, to include MAV allocation for rice through auction consistent with the Act.
- The Bureau of the Treasury (BTr) and Landbank of the Philippines (LBP) implement the rice MAV auction consistent with revised MMC guidelines.
- Revised guidelines must provide that if the MMC deems appropriate, it shall recommend to the President revisions/modification/adjustment of the MAV for rice in cases of shortages or abnormal price increases within fifteen (15) days from DA confirmation of shortage and the additional MAV required.
- MMC must amend AO No. 8 within fifteen (15) days after IRR effectivity.
Agricultural Competitiveness Enhancement Fund (ACEF)
- An Agricultural Competitiveness Enhancement Fund (ACEF) is created to implement the policy of the Act.
- ACEF consists of all duties collected from importation of agricultural products except rice, under the MAV mechanism, including unused balances and collections from repayments by loan beneficiaries including interests, if any.
- ACEF is automatically credited to Special Account 183 in the General Fund of the National Treasury.
- ACEF releases are not subject to any ceiling by the DBM.
- BOC must, upon effectivity of the Act, exclude from ACEF tariff revenue/customs duties the revenue accruing from importation of rice.
- Existing ACEF implementation and utilization guidelines remain valid; new MMC guidelines must be harmonized with existing ACEF guidelines except for the use of tariff revenues/customs duties from rice imports.
Rice Competitiveness Enhancement Fund (RCEF)
- A Rice Competitiveness Enhancement Fund (Rice Fund / RCEF) is created.
- The Rice Fund consists of an annual appropriation of Ten billion pesos (P10,000,000,000.00) for the next six (6) years following approval of the Act.
- The Rice Fund is automatically credited to a Special Account in the General Fund of the National Treasury within ninety (90) days upon IRR effectivity.
- DBM must include P10,000,000,000.00 in the annual National Expenditure Program (NEP) under DA-Office of the Secretary-Central Office for the next six (6) years, and transfer it to a special account upon effectivity of the Annual Appropriations Act.
- SAGF-RCEF must be in place within ninety (90) days upon effectivity of the Act.
- DBM releases SARO and NCA chargeable against SAGF-RCEF directly to implementing agencies per allocation in the Act.
- DBM must create a UACS fund code for SAGF-RCEF and IAs open modified disbursement system sub-accounts with servicing banks, with DBM copy.
- BTr issues a journal entry voucher recognizing appropriated amounts as SAGF-RCEF amounts upon receipt of SARO.
- Implementing agencies must submit quarterly utilization reports and statement of accounts within thirty (30) days after the end of each quarter to BTr, with periodic reconciliation, and furnish COA and DA copies.
- Usual budgeting and accounting procedures on incurrence and payment of obligations apply.
- COA prescribes accounting entries and financial reporting requirements.
- IAs must submit requested budget and financial accountability reports pursuant to DBM-COA Joint Circular No. 2014-1 dated July 2, 2014 and other issuances.
- DA must submit consolidated annual financial statements and other reports on SAGF-RCEF to the Government Accountancy Sector, COA on or before March 31 each year.
- A mandatory review must be conducted by the Congressional Oversight Committee on Agricultural and Fisheries Modernization (COCAFM) after the sixth (6th) year to determine continuation, amendment, or termination, using increase or decrease in farmers’ incomes as a primary benchmark.
- The Secretary of Agriculture is accountable and responsible for the Rice Fund in coordination with other government agencies.
- A Program Steering Committee (PSC) is established to oversee and provide policy directions on integrated implementation of Rice Fund programs, chaired by the Secretary of Agriculture and co-chaired by the Secretary of Socioeconomic Planning, with heads of implementing agencies as members; DA-FOS serves as Secretariat.
- Within 30 days upon IRR effectivity, the Secretary of DA must prepare an integrated utilization plan for the RCEF and fund in excess of Php 10 billion tariff revenue under the Act, including systems for transparency/accountability, procurement transparency, COA-audit-guided procurement and disbursement, grant structuring, and results-based monitoring, with TWGs for each component comprised of experts external to DA.
- DA must create a website within a framework to inform the public on the plan, progress by components, information and means to participate.
- DA must set up a “Rice Fund Impact Monitoring System” within one (1) year after IRR issuance to assess impact on income using RBHFS and other relevant surveys and broad welfare variables.
- Unutilized portions allocated to implementing agencies do not revert to the General Fund and remain for the same purpose.
- Rice Fund releases charged against the Rice Fund are not subject to any ceiling by DBM.
- Allocation and disbursement of Rice Fund to rice producing areas includes (as rules reproduced in the IRR):
- Rice Farm Machineries and Equipment: 50% of the Rice Fund is released to and implemented by Philippine Center for Postharvest Development and Mechanization (PhilMech) as grant in kind to eligible farmers associations, registered rice cooperatives and LGUs, in the form of equipment.
- PhilMech must procure, whenever feasible, from accredited local manufacturers for locally manufactured equipment.
- Eligibility and implementation mechanics for the 50% component require:
- PhilMech, in coordination with DA-RFOs, LGUs, private sector and farmers’ groups, must formulate implementing guidelines within sixty (60) days consistent with the Rice Industry Roadmap, including eligibility criteria, selection modality, and implementation/accountability for grant in kind procurement and distribution.
- Guidelines must be reviewed by the PSC and approved by the Secretary of the DA.
- Priority is given to eligible farmers, farmer-members of associations and farmer associations and registered rice cooperatives over LGUs.
- PhilMech must conduct or cause procurement in accordance with Republic Act No. 9184 (Government Procurement Act) and equipment must comply with PAES, or in absence of PAES, equivalent international standards determined by PhilMech.