The Rice Tariffication Law is Evil

The rice problem was already solved by the NFA which was fully integrated from import to wholesale (no middlemen).

The cheapest rice in Manila was 32 pesos retail in 2018 when the cheapest rice in Vietnam was 24 pesos.

Then, the neoliberal Rice Tariffication Law (RTL) destroyed the NFA.

And so in 2020, the price jumped to 35 then to 40 in 2022 when India banned exports. By 2024 it was 50.

Manny Pinol says that RTL was lobbied by the finance industry.

The Rice Tariffication Law (RTL) destroyed the NFA

Why would banks push for RTL?

The recent Congress hearing revealed that most importers only have a small capital and get the money on credit from lenders.

One importation could range from 1-5 billion pesos on credit. The usual problem with this scheme is that it might become a bad loan if the traders did not have guaranteed profits.

But this is solved by a quasi-cartel. This is because the importers import based on the loan that their credit score can give.

This creates vastly different import volumes, leading to an oversupply.

Butt the main problem is that the interest payments are fixed and so importers cannot lower their prices below this cost of money which includes the forex cost.

And so they naturally must hoard. This leads to a quasi-cartel effect.

This means that the traders might not have an intention to form a cartel. But the mechanics of interest rates and profit rates makes them do this without them knowing or intending it.

The rising cost of money also affects the wholesalers, retailers, and buyers of rice.

The proper solution is to vertically integrate like the NFA and cut the middlemen. The NFA gets its budget from the General Appropriations which is liquid and interest-free.

But if NFA is dominant, then importers and traders would have less business. They would then no longer need to borrow so much money.

This would then reduce the use of money and the need for the finance industry. And so the banks lobby to destroy this solution in favor of the free market where middle men can do profiteering.

The Competition Commission is unable to monitor all middlemen and is exposed as useless. And so the price stays high despite tariff reduction. This is because it does not strike the root cause which is the high cost of money.

The high cost of money is the arbitrary interest rates set by both the central bank and commercial banks.

So the cost of money, the oversupply of rice, and the free market are all caused by the finance industry which profits from the cost of money even if the importers incur a loss and the people go hungry.

The real profiteers from RTL are the middlemen and banks (which themselves are a middlemen between every transaction). The tax revenue was really transferred to them as a reward for lobbying.

This is why it is the Department of Finance that pushed for tariff reduction and why banking profits are at record high.

RTL is an example of a mercantile policy designed to transfer power from farmers, producers, and governments, to the traders, middlemen, and bankers.

This is why the Prophet Mohammad banned interest on loans. Consequently, Arabia suddenly grew in power and population to conquer North Africa to Indonesia.

The problem with Arabia began when the Europeans beat them to the spice trade through their better ships and navigation. This again led to the rise of the Mercantile class and the reduction of the power of governments.