Palay prices falling; SRP on rice eyed

Published July 17, 2019, 3:49 PM

by CJ Juntereal

By Madelaine Miraflor and Argyll Geducos

A nationwide uproar among rice farmers in the country has forced the government to act on the falling palay prices – a trend that could rob farmers of potential income worth P114 billion for the entire 2019.

On Wednesday, Agriculture Secretary Emmanuel Piñol sought a meeting with Trade Secretary Ramon Lopez and National Economic and Development Authority (NEDA) Undersecretary Mercedita Sombilla to discuss the implementation of the Suggested Retail Price (SRP) policy on commercial rice sold in the market based on the Price Act.


“The only way that we can help them [rice farmers] is to buy their harvest at a competitive price. Palugi talaga ang gobyerno (The government is at the losing end but it is) to save the farmers. So another working productive day for them,” President Duterte said in a separate interview.

“With the NFA [National Food Authority] stripped of its supervisory and regulatory powers over the rice industry, the Price Act is the only remaining instrument of government to rationalize the pricing of agricultural products in the market,” Piñol said.

During the meeting with Sombilla and Lopez, which was also attended by Finance Assistance Secretary Tony Lambino, they decided to put an SRP on the retail price of rice based on the landed cost of imported stocks, Piñol said.

A joint memorandum of agreement between the Department of Agriculture (DA) and the Department of Trade and Industry (DTI) will be signed within this month to impose this.

This decision came a day after farmer leaders and rice industry stakeholders asked the DA during an impromptu consultation meeting to address the continuous decline in the prices of palay, which was possibly triggered by the loopholes in the Rice Tarrification Law or Republic Act (RA) 11203, which legalized in March the unlimited entry of cheaper, imported rice into the Philippines.

Piñol said the meeting took place amid the “nationwide uproar” among farmers who have been suffering since farm gate prices of paddy rice dropped to a record low of P12 per kilogram (/kg) to P14/kg in many parts of the country, a steep drop from an average of P20/kg price for fresh palay earlier this year.

During the fourth week of June alone, the average farmgate price of palay continued to decline, falling by 0.3 percent to P17.85 per kilogram (/kg) from previous week’s level of P17.90/kg. This was a huge drop of 16.5 percent from the previous year’s same week level of P21.38/kg.

What upsets the farmers is that while the price of palay remains to be on a downtrend, the retail price of rice or the price that consumers are paying for to buy a kilo of the staple has remained the same, Aldrin Cardenas, a leader of a farmers’ cooperative in Tarlac, pointed out.

Based on their computation, the market prices of rice – which was expected to drop by P7/kg with the entry of more imported rice – have remained relatively high, reporting a drop of only P1/kg to P2/kg four months since the passage of RA 11203.

“The drop in the price of rice in the market of P1 to P2 per kilo does not even come close to the financial sacrifices of the rice farmers,” said farmer leader Pedro Lim of Caraga Region.

The rice industry stakeholders also decried the massive profits being enjoyed by rice importers and traders, as the stocks they have imported are now being sold in the market at prices higher than their landed cost.

A data from Bureau of Customs (BOC) showed that the imported rice that entered the country so far had landed cost of only P18.22/kg for Myanmar’s 25 percent broken rice; P25.33/kg for Vietnam’s 5 percent broken rice; P23.06/kg for Thailand’s 5 percent broken rice.

These are being sold in the local market for P32/kg to a high of P70/kg, while the average selling price is at P42 per kilo, based on the validation conducted by the DA Regional Offices.

Premium or 5 percent broken rice imported from Vietnam and Thailand is sold from P50/kg to P60/kg for a whooping margin of P25/kg to P35/kg.

At the end of their meeting, Piñol assured the rice industry stakeholders that their concerns will be submitted in a formal memorandum to President Duterte.

President Duterte, in an interview with Pastor Apollo Quiboloy, said the government has no choice but to import rice from other countries since the harvest of farmers are not enough for the entire country.

Duterte said he recognizes the plight of Filipino farmers who are selling palay for prices as low as P12/kilo, a figure below the production cost.

The President said the government is willing to buy the harvest of the farmers but said this will still not be enough since the country has run out of lands for planting crops.

“The Philippines cannot be a rice sufficient nation. We have run out of lands and most of the prime real estate went to big corporations now planting cash crop: banana, pineapple,” he said early Wednesday.

Meanwhile, a group of rice farmers sounded the alarm last week over a possible price manipulation among local rice traders, which may be declaring the wrong import price to reduce their tariff obligations to the Philippine government.

Based on its latest monitoring, the Federation of Free Farmers (FFF) said it has noticed a huge gap between the value of imported rice declared by local traders and the landed cost of rice based on the data from international monitoring groups such as the Food and Agriculture Organization (FAO).

Under the Rice Tariffication Law, importers are allowed to bring in any volume of rice at any time provided they pay a 35 percent tariff based on the declared value of their imports.

The Department of Finance (DOF) recently reported that the BOC had collected P5.9 billion in tariffs from imports of 1.43 million metric tons (MT) of rice since the effectivity of RA 11203 in March.

FFF National Manager Raul Montemayor said that using DOF’s data and assuming a P52 per dollar exchange rate, it will come out that the average landed price of the rice imports before imposing tariffs was US$227 per MT.

Data from international monitoring groups such as the FAO, however, indicate that the real landed cost of these imports should have been around US$391 per ton if these were 25 percent broken rice.

“In effect, importers appear to have undervalued their shipments by 42 percent and paid P4.24 billion less than what was due from them,” Montemayor said.