DA to lower NFA's palay buying price to P23-P25

The Department of Agriculture (DA) on Wednesday announced its plan to bring down the National Food Authority’s (NFA) buying price of palay for its buffer-stocking mandate.

In a statement, Agriculture Secretary Francisco Tiu Laurel Jr. said the plan to reduce the NFA’s palay buying price was meant “to balance the financial gains of Filipino farmers with consumer demands for more affordable rice.”

Tiu Laurel, who also chairs the NFA Council, said that the new procurement price range for the grains agency would be lowered to P23 to P25 per kilo.

The agriculture chief said the NFA currently procures palay at a floor price of P25 per kilo.

Early this year, the NFA Council raised its buying price range to P17 to P30 per kilo from P16 to P23 per kilo to enable the grains agency to compete with private traders, who have driven up prices due to the effects of El Niño and the lingering impact of India’s rice export ban.

“World prices of rice have gone down. But rice prices in the local market won’t decline if the buying price of palay remains high,” said Tiu Laurel.

“At P23 per kilo, farmers will earn a decent return for their efforts. Actually, even at P21 per kilo, they’ll still enjoy a good profit. We have the interests of farmers at heart when we determine the buying price of palay,” he added.

Last week, India lifted its export ban on rice.

With this, the DA is expecting rice prices to go down further by December.

Early signs of stabilizing rice prices were already observed as rice inflation dropped to a single digit last month after trailing within high double-digits in recent months.

Rice inflation slowed down to 5.7% in September from 14.7% in August.

NFA Administrator Larry Lacson said that the adjustment of the palay procurement price range to around P23 to P25 per kilo would be "calibrated" and would depend on the quality of palay and prevailing market conditions.

Lacson said that it takes approximately two kilos of palay to produce a kilo of rice.

“As a rule of thumb, considering the additional costs of processing and marketing, the retail price of rice per kilo is usually double the cost of palay,” the NFA chief said.

For this wet season, the NFA is planning to buy between 6.4 million and 8.7 million 50-kilo bags of palay.  —VBL, GMA Integrated News