FARMERS said the government’s plan to release imported palay into the market threatens to weaken prices further for palay, or unmilled rice, the form in which they sell their produce to traders.
“There is already a big glut in the market because of the large volume of cheap rice imported by private traders. This glut is the main reason why palay prices are going down. Flooding the market with NFA rice will just worsen the glut,” Federation of Free Farmers National Manager Raul Q. Montemayor said in a statement.
The government announced plans to release 3.6 million bags of imported rice from its reserves, in a bid to bring retail prices more in line with what it considers to be fair consumer price given the low cost of imported grain.
The palay farmgate price has been falling since the passage of the Rice Tariffication Act, which liberalized rice imports by private traders. Access to cheap foreign grain has made traders reluctant to buy domestic palay, softening the market for domestic products and leaving the government scrambling to implement palay purchasing schemes at better — than-market prices that provide breathing room for farmers.
On the retail side, consumer prices have remained persistently high despite the decline in acquisition price for imported rice and palay, prompting the Department of Agriculture (DA) to order releases of inventory from the reserves.
The freeing up of warehouse space at the National Food Authority (NFA) is expected to encourage more buying at the NFA support price for farmers, which has been raised to P19 from P17. The NFA’s purchasing budget has also been raised to about P22.5 billion.
According to the Philippine Statistics Authority (PSA), the average farmgate price of palay fell 4.4% year-on-year during the fifth week of August to P16.68 per kilogram (kg). Some reports have indicated that traders are offering as little as P7 in some rice-growing provinces.
On Sept. 12, Agriculture Secretary William D. Dar said that the NFA Council approved at a Sept. 10 meeting the release of 3.6 million bags of imported rice onto the market until early October to increase supply and keep retail prices low.
The measure targets “price manipulators” and “hoarders” who have kept retail prices high despite the drop in the value of imported rice and palay.
The NFA inventory release will be sold at P25 per kilo at wholesale and P27 retail.
Mr. Montemayor said that the timing of the release coincides with the harvest this month and will serve to depress prices amid high levels of supply.
“Private traders will be the ones who will buy most of the palay, and they will be forced to buy low because they will have to compete not only with the cheap imported price plus now also the P27 NFA rice,” he said.
The Rice Tariffication Law was enacted in response to the inflation crisis of 2018, with the government making a bet that consumer prices will fall with the entry of more imported rice. The traders then turned reluctant to buy palay at fair prices, threatening a collapse in farmer incomes and forcing the government to step up palay purchasing, roping in local governments to engage in palay purchasing. — Vincent Mariel P. Galang