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Manila Bulletin devider Business devider Trade & Industry devider PIDS warns mandatory palay floor prices could raise rice costs

PIDS warns mandatory palay floor prices could raise rice costs

Think tank urges Senate to drop palay floor price provisions

Published Mar 10, 2026 06:00 pm  |  Updated Mar 10, 2026 01:07 pm
(Dexter Barro II/MANILA BULLETIN)
(Dexter Barro II/MANILA BULLETIN)

Philippine Institute for Development Studies (PIDS) has recommended removing provisions that would mandate floor prices in the palay market from three pending Senate bills (SBs) seeking to amend the Agricultural Tariffication Act.

In a March 4 position paper on SB Nos. 284, 1346, and 1619, the state-run policy think tank said lawmakers should delete provisions authorizing the Department of Agriculture (DA) to set minimum buying prices for palay.

The bills, authored by Senators Francis Escudero, Imee Marcos, and JV Ejercito, propose inserting a new provision under the Agricultural Tariffication Act that would allow the DA to impose mandatory palay floor prices at national, regional, and provincial levels.

“We hereby recommend deleting provisions related to setting mandatory floor prices in the palay market,” PIDS senior research fellow Roehlano M. Briones and research analyst Amerah C. Azis said.

According to PIDS, price controls historically work only under limited conditions and may be difficult to enforce when they diverge significantly from market prices.

“Historical experience with price controls all over the world has shown that floor prices, and price controls in general, can work only within a narrow set of conditions,” it said.

The position paper noted that when price controls create a large gap between government-set and market-clearing prices, enforcement problems may arise.

It cited the government’s 2023 rice price ceiling as an example, when maximum retail prices (MRPs) set for well-milled and regular-milled rice were exceeded by prevailing market prices the following month.

“Even if properly enforced, a floor price may have the unintended consequence of elevating the retail price of milled rice,” PIDS said.

The think tank noted that this possibility was anticipated in Section 25 of the Magna Carta of Small Farmers under Republic Act (RA) No. 7607, which mandates price support for rice and corn, but only if it does not result in retail prices beyond the paying capacity of the average consumer. It also requires that the support price be responsive to changing economic conditions, PIDS added.
In practice, PIDS said, it is difficult to meet all these requirements in real time, especially in a world of rapid change at both the local and international levels.
The SBs seek to amend provisions of the Agricultural Tariffication Act and introduce additional policy tools to support farmers, including the proposed palay floor pricing mechanism.
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