Rice farmers seen to suffer from lower farmgate price due to price ceiling

Advocacy groups on Friday sounded the alarm over the issuance of an executive order setting retail price ceilings on rice across the country as it could result in lower farmgate prices of the commodity to the detriment of farmers.

President Ferdinand Marcos Jr. approved the the joint recommendation of the Department of Agriculture (DA) and the Department of Trade of Industry (DTI) to set price ceilings on rice in the country, according to Executive Order No. 39, signed by Executive Secretary Lucas Bersamin.

The mandated price ceiling for regular milled rice is P41 per kilo while the mandated price cap for well-milled rice is P45 per kilo, according to the EO.

Marcos' approval of the price ceiling stemmed from the surge in retail prices of rice in local markets. Current prices of rice per kilo range from P45 to P70.

The price ceiling, however, did not sit well with AMIHAN National Federation of Peasant Women secretary general and Bantay Bigas spokesperson Cathy Estavillo.

“Posibleng ibunga nito ang todong pambabarat ng presyo ng palay, dahil nga sa rule of thumb nila na ang presyong retail ay times two ng farmgate…,” Estavillo said.

(This could possibly result in the buying of palay at an unreasonable cheap price, because the rule of thumb is the retail price should be twice as much as the farmgate.)

IBON Foundation research head Rosario Guzman has a similar view about the retail price ceiling on rice.

“The lowest price of regular-milled rice, based on DA (Department of Agriculture) monitoring, is P42 per kilo, the President sets the price ceiling at P41. Without meaningful production support and crackdown on traders’ price-taking, the farmers will only bear the EO with much lower farmgate price than what they are already receiving,” Guzman said.

“Invoking the Price Act is useful in emergency situations. But our rice problems are long-drawn problems of neglect and trade liberalization. The President’s EO does not address these,” Guzman added.

Farmgate prices refer to the amount received by farmers for the sale of their crops.

For his part, Federation of Free Farmers Cooperatives national manager Raul Montemayor said that the price ceilings  “look unrealistically low.”

“If traders/millers cannot sell at that price, then either they will stop selling rice, or they will shift to, or rebrand, their rice products to grades other than regular milled rice or well milled rice in order to evade the price cap,” Montemayor said.

The Kilusang Mangbubukid ng Pilipinas (KMP) said the price cap could be set even lower if the so-called “rule of thumb” in setting retail prices is observed.

“Sa totoo lang, kaya pang ibaba ng mas mababa kaysa sa P41 at P45 ang presyo ng kada kilo ng regular milled rice at well milled rice, kung susundin lang ang rule of thumb sa pagtatakda ng presyo ng bigas,” KMP said.

(Actually, the prices per kilo of regular and well milled rice could be lower beyond P41 and P45 per kilo if the rule of thumb in setting prices is followed.)

“Halimbawa, kung nabili ng rice traders sa median price na P19 hanggang P22 kada kilo ang palay at idagdag pa ang mga mga gastusin sa milling, drying, hauling, transportasyon at iba pa, kung babatay sa rule of thumb, dapat nasa P30 hanggang P37.40 lang ang magiging presyo ng kada kilo ng bigas,” the KMP said.

(For example, if rice traders bought palay at a median price of P19 to P22 per kilo and add the cost of milling, drying, hauling, transportation, and others, based on the rule of thumb, the prices per kilo of rice should be P30 to P37.40.)

The KMP called on the government to go after rice cartels, who manipulate the supply and price of rice in the local market.

Repeal Rice Tariffication law

Estavillo urged the government to suspend the Rice Trade Liberalization law or the Rice Tariffication law which lifted import limits on rice, opening doors for more imported rice to enter the country.

“Sa kagyat, maglabas si Marcos ng EO para i-suspend ang Rice Liberalization law para kagyat na maibalik ang mandate ng NFA (National Food Authority) sa pagbebenta ng P27 at P32 kada kilo ng bigas na abot-kaya ng mamamayan,” Estavillo said.

(Marcos should issue an EO to suspend the Rice Liberalization law to bring back the mandate of the NFA to sell rice at an affordable price of P27 and P32 per kilo.)

KMP echoed Estavillo’s call, saying that the Rice Tariffication law should be repealed.

“Kailangan na talagang i-repeal ang RA 11203 o Rice Tariffication law at ibalik ang mandato ng NFA na direktang mamili ng signipikanteng bolyum ng palay mula sa mga magsasakang Pilipino. Muli, palakasin ang lokal na produksyon at hindi importasyon ang solusyon,” KMP said.

(The RA 11203 or Rice Tariffication law should be repealed and bring back the mandate of the NFA to directly buy palay from Filipino farmers at significant volumes. Again, local productions should be improved and importation is not the solution.)

No reason for price increase

Samahang Industriya ng Agrikultura (SINAG) meanwhile, lauded the issuance of EO 39.

However, SINAG executive director Jayson Cainglet said, “There is no reason for any price increase these past weeks as there was/is no rice shortage in the country.”

“Traders capitalized on the initial public panic created by the statement of the NFA that government buffer stock is only good for 1.5 days,” he said.

Cainglet called on the NFA “to start buying palay from our farmers.”

“Our stocks are good to last until the first quarter of next year. And we have yet to harvest the expected seven million metric tons of rice this harvest season. At any given time, our buffer stock is good for 50 to 60 days, prior to the onset of the harvest season later this month,” the SINAG official said.

“Farmgate price remains at P24-P25 per kilo and by harvest time by the end of this month, we expect a drop between P1 and P2 per kilo; there is really no basis for rice prices to increase,” he added.

The SINAG official said rice imports until August this year were already at 2.6 million metric tons.

“And according to the DA, more imports are expected to arrive until December. We urge the regulatory agencies, especially the DA and the DTI, with the help of the NBI and local government units to strictly implement the EO of the President,” Cainglet said.

But for Makabayan bloc lawmakers, imposing a price ceiling for rice at this point was just done to mask the President's failed campaign promise of bringing rice prices to P20 per kilo.

"President Marcos Jr.'s issuance of Executive Order No. 39 imposing price ceilings on rice is a desperate move to quell people's mounting frustration over his failure his deliver his campaign promise of P20 per kilo of rice. It will primarily hurt small retailers - who are merely at the receiving end of rising farmgate palay prices due to costlier production inputs - but may do very little to curb hoarding and price manipulation by rice importers and syndicates," House Assistant Minority Leader Arlene Brosas said in an online press conference.

"Instead of imposing artificial price controls, President Marcos Jr. should instead order the immediate suspension of the Rice Liberalization (Tariffication) Law (RTL) and roll out significant subsidies rice farmers battered by incessant rice imports and typhoon devastation," she added.

The RTL, Brosas said, only favors rice importers and hikes rice prices.

"We should not be depending on imported rice, given that global rice prices are rising," she added.

House Deputy Minority Leader France Castro agreed.

"This is a deodorizing effort given that the government should have acted sooner rather than later amid the increasing rice prices," Castro said.—AOL, GMA Integrated News