Farmers are seeking the intervention of lawmakers for the declining prices of palay, which was triggered by several factors including the National Food Authority’s (NFA) limited capacity to procure rice as well as traders’ decision to delay their purchase in anticipation of more imported rice entering the country.
For the Federation of Free Farmers (FFF), all of these things should be blamed on the implementation of Rice Tariffication Law (RTL), which allowed unlimited rice importation in the country starting last year.
Farmgate prices have reportedly dropped to between ₱11 per kilogram (/kg) to 13/kg for wet palay and ₱14/kg to 17/kg for dry palay.
This means that farmers are barely making money since the cost to produce rice in the country is still about P12/kg due to the lack of machinery and relatively high fuel cost.
The government, through the NFA, buys palay from farmers at ₱19/kg, but NFA Administrator Judy Dansal said the state-run grains agency can’t afford to buy all the rice being produced in the country.
Prices, FFF estimated, are expected to go down even more when harvests reach their peak in October and November.
“Many traders are playing safe and buying low because imports might flood the market again like last year and make it unprofitable for them to dispose of their stocks. Other traders have decided not to take risks and have reportedly stopped buying for the meantime,” FFF National Manager Raul Montemayor said.
“Difficulties in drying and transporting grains and the limited outreach of the NFA have also contributed to the drop in prices,” he added.
According to him, Congress, particularly the Senate, is to a large extent responsible for the problems farmers are facing now due to RTL.
He noted that it was the senate version of the RTL, authored by Senator Cynthia Villar, that was enacted into law and unlike the house version, the senate did not only remove volume restrictions on imports as required by the World Trade Organization (WTO) but it also unilaterally liberalized the
whole rice sector by removing NFA’s direct involvement in the market and ceding the management and control over the rice industry to the private sector.
“They have a moral responsibility to promptly rectify any deficiency or omission in the law before these bring more harm to our farmers. They also need to address indications that the benefits of rice trade liberalization have been captured mostly by market intermediaries, while consumers have not benefitted significantly from cheaper rice prices,” Montemayor said.
The FFF has proposed that the law should make it mandatory for the DA to avail of the safeguard provisions of the WTO and local laws.
This will allow the government to impose additional customs duties on imports for a specified period in the event of an import surge and proof that the surge has caused significant harm to local farmers.
The DA considered imposing safeguards in 2019 but terminated the initiative without any explanation.
The FFF further pushed for an amendment of the RTL that will allow for the temporary reinstatement of quantitative restrictions on imports under certain conditions, which is also allowed by the WTO.
Two weeks ago, as the prices of palay started to sink, Senator Risa Hontiveros acknowledged that there’s a need to amend the RTL and promised to convince Villar about it.
The DA already pledged to help intensify its palay procurement through the NFA, whose main task is to beef up the government’s buffer stock for emergencies and calamities.