The problem with the Rice Tariffication Law

The Rice Tariffication Law, enacted in 2019 to stabilize rice prices and ensure food security through liberalized imports, has significantly disrupted labor dynamics in the rice industry. While it opened opportunities for businesses to access cheaper imports and reduce costs, it destabilized the livelihoods of workers and farmers. From a labor economics perspective, the policy has disrupted employment, wages, and labor demand across the rice value chain, raising concerns about equity and sustainability.

One immediate consequence has been the sharp drop in farmgate prices for palay (unmilled rice), which fell as low as ₱8–₱10 per kilogram by mid-2025, far below the ₱12–₱14 production cost. This collapse has left farmers unable to pay seasonal workers for critical tasks like planting and harvesting, slashing job opportunities in communities dependent on precarious, daily-wage labor. Millions of workers reliant on the rice sector now face stagnant wages and shrinking job prospects, further deepening poverty and inequality.

The decline in farm incomes and labor demand has also weakened local economies. With lower incomes, farming households cut back spending, reducing demand for goods and services in sectors like retail, transport, and milling. This highlights a key labor economics challenge: the erosion of purchasing power in farming communities dampens broader economic activity, creating ripple effects that impact workers and businesses throughout the supply chain.

The influx of cheaper imported rice has prioritized efficiency over labor-intensive practices, displacing workers in processing and distribution. Large-scale importers have consolidated market dominance, forcing smaller, labor-reliant traders and millers to cut jobs or shut down. This underscores a key labor economics issue: while liberalized trade boosts efficiency, it often comes at the expense of employment and equity, hitting vulnerable workers the hardest.

In late 2025, the government suspended rice imports, extending the ban until year-end to stabilize farmgate prices and boost domestic palay procurement. While this provided short-term relief by creating jobs in farming, milling, and distribution, it failed to address structural issues in the rice sector. Critics warn that when imports resume, cheaper rice will again depress prices, limiting businesses’ ability to sustain wages and jobs. This cyclical instability highlights the limits of short-term fixes to labor disruptions from trade liberalization.

The Department of Agrarian Reform (DAR) has proposed government-led rice procurement to stabilize prices and support agricultural labor by ensuring fair palay prices. However, logistical challenges for traders, millers, and logistics providers could disrupt the supply chain and sideline private-sector actors, further impacting labor demand.

More broadly, the Rice Tariffication Law has also widened the divide between labor and capital. While businesses benefit from cheaper imports and lower costs, these gains have come at the expense of workers and farmers. Declining farm incomes and reduced labor demand pressure businesses to adopt equitable practices, but efforts remain limited as firms prioritize cost efficiency to stay competitive globally.

This tension is particularly evident in calls for higher tariffs under the Safeguard Measures Act, which advocates argue would protect farmers and sustain jobs in the rice sector. While such measures could provide relief to workers and stabilize labor demand, critics warn they could raise costs for businesses and consumers, creating additional pressures on the economy. This underscores a core labor economics challenge: balancing the needs of workers and businesses in a liberalized trade environment while ensuring long-term sustainability.

To address labor disruptions from the Rice Tariffication Law, trade policies must align with workforce needs. Strengthening the Rice Competitiveness Enhancement Fund (RCEF), setting a minimum palay price, modernizing the National Food Authority (NFA), and investing in infrastructure are crucial to stabilizing labor demand, protecting livelihoods, and maintaining business competitiveness.

For businesses, the challenge lies in balancing labor equity with competitiveness. This requires investing in rural economies, adopting fair labor practices, and collaborating with the government on sustainable reforms. Supporting farm-level labor and local supply chains is not just ethical but essential for building industry resilience.

The success of the Rice Tariffication Law depends on balancing labor and capital. While it has opened global markets and reduced costs for businesses, it has also exposed the vulnerabilities of farmers and workers. A collaborative approach that supports both business growth and labor welfare is key to building a competitive, equitable, and sustainable rice economy.