Farmers wary of further palay price declines as traders reluctant to buy
FARMERS have asked the government to address the steep decline in farmgate prices for palay, or unhusked rice, warning that the traders who buy from farmers are inactive in the market because they are stuck with expensive inventory from before the government allowed imports of cheaper foreign rice.
In a statement, the Federation of Free Farmers (FFF), citing data from the Philippine Statistics Authority (PSA) said the farmgate price for palay, the form in which domestic farmers sell their harvest, has declined 23% from their peak in September of P22.88 per kilogram (kg).
The FFF warned that prices could decline further with the harvest season about to start in September, because of the combination of ample supply and reluctant buyers.
“Many local traders cannot unload their stocks from the previous season due to the large volume of imported rice in the market. Unless they find a way to free up their inventories, they will either stop buying palay, or they will buy at much lower prices in order to cover for anticipated trading losses. Either way, farmers will end up carrying the bag,” FFF National Manager Raul Q. Montemayor said in a statement.
He estimated that farmers have foregone some P40 billion in revenue as of the end of June due to the falling farmgate price from peak levels, based on a harvest of 8 million tons of palay in the first half.
The government liberalized rice imports earlier this year, allowing more private entities to import rice while paying a tariff of 35% on grain from Southeast Asia.
Mr. Montemayor also asked the Department of Agriculture (DA) to start imposing additional levies on top of the 35% tariff, such as as safeguard measures and anti-dumping duties.
Farmers have claimed that tariffs generated by the Bureau of Customs (BoC) on rice imports are out of line with the landed cost of the volumes imported, suggesting widespread underdeclaration.
Underdeclaration means the proper tariffs are not collected, thereby shortchanging the Rice Competitiveness Enhancement Fund (RCEF), which is funded by tariffs.
Mr. Montemayor said if duties are imposed, it will result in more expensive imported rice, which will make domestic rice more competitive and make traders more willing to dispose of their stocks and resume purchasing.
He also added that this will not result in higher retail prices due to the large gap between the cost of imported rice and domestic rice prices.
BoC data, he said, suggests that imported rice is landed at P24 per kg including tariffs, but is sold at P35.
“At the moment, there is a lot of profiteering going on. Even if import prices go up because of the remedial tariffs, there is still room for retail prices to actually go down,” Mr. Montemayor said.
He also urged that importers be required to obtain certifications that their shipments are pest- and disease-free, and to secure food safety certificates before bringing in their shipments.
He said rice imports are only randomly tested for hard metals, chemical residue, and general food safety after arrival, and brought up the huge costs the industry might incur if a shipment should contain disease, pests or contaminants.
He said the tariffs the government hopes to raise for RCEF are small relative to the potential damage on the farm sector from competition from imports.
RCEF ”will help, but it is not the saving grace that some legislators are projecting it to be. RCEF is intended to improve the competitiveness of rice farmers by reducing their costs of production and increasing their yields. This will not happen overnight, nor is success guaranteed,” Mr. Montemayor said.
“Although RCEF funds can be used for mechanization, better seed, credit, training and extension, other interventions that are not funded by RCEF such as irrigation, fertilizers and pesticides, and marketing are equally important,” he said. — Vincent Mariel P. Galang
