A FARMERS’ group called on the government to go slow in setting a suggested retail price (SRP) for rice, as unscrupulous traders could take advantage of it by offering planters lower quotations for their crop.
Federation of Free Farmers Inc. (FFF) National Manager Raul Q. Montemayor said some traders are earning “extraordinary” profits at the expense of consumers due to the lack of regulation over imported rice.
“However, traders can again use the cap on rice prices as an excuse to buy at even lower prices,” Montemayor said in a statement.
“At this point in time when rice prices have normalized, the government must focus on addressing the problems of small farmers, especially since the main harvest season is about to begin,” he added.
Agriculture Secretary Emmanuel F. Piñol said rice farmers and other stakeholders could lose over P114 billion due to the opening up of the domestic market following the enactment of the rice trade liberalization law.
The figure is greater than the P10 billion that rice farmers will receive via the Rice Competitiveness Enhancement Fund (RCEF) as mandated by Republic Act (RA) 11203.
Last week, Piñol met with Department of Trade and Industry (DTI) officials to discuss the implementation of SRP on imported rice to ensure that the staple will remain affordable for consumers.
“We will come up with the SRP [suggested retail price for rice], because beyond that is profiteering,” he added.
According to Piñol, the Department of Agriculture is now drafting a joint memorandum of agreement with the DTI to strictly implement the provisions of the Price Act related to the SRP. The MOA will be signed this month.
“Traders are eager to import because they believe that no entity will regulate prices. The margin of profit is too huge for importers, but this was not the intent of the law. The intent is to make affordable rice available to consumers,” he said in a mix of English and Filipino.
“As for the SRP for imported commercial rice, the government will set it based on the landed cost. The DTI, the Department of Finance and the National Economic and Development Authority will come up with a computation,” he added.
‘Doubtful’ data
The FFF also questioned the claims of some government officials that the new law had resulted in a significant decline in rice prices. While retail prices declined from last year’s levels, the group said the figures were higher than the average quotations recorded in 2016 and 2017.
In pushing passage of the law, the country’s economic managers then claimed that local consumers were paying double what their Southeast Asian counterparts were paying for rice. They also said rice prices could go down by up to P10 per kilogram once imports are allowed to freely enter the country.
Citing Philippine Statistics Authority (PSA) data, FFF said the average price of well-milled rice declined to P42.92/kg in June, or by about P6/kg from the peak price of P49.36/kg in September 2018. Also, the average retail price of regular-milled rice dropped by P7.54/kg during the same month.
“What is interesting to note, however, is that the present retail prices of rice are actually higher than in 2016 and 2017, when the quantitative restrictions on rice imports were still in effect and RA 11203 had not yet been passed,” Montemayor said.
He noted that the spike in prices last year was abnormal, and was caused by the refusal of economic managers to allow the National Food Authority (NFA) to replenish its dwindling stocks.
“It was only when President Duterte intervened and allowed the NFA and the private sector to import that prices started to go down. Therefore, it is unrealistic to compare current prices against prices during the rice crisis in 2018. It is also deceptive to attribute the current decline in prices to the rice tariffication law,” he said.
FFF also said farm-gate prices of palay have gone down much faster than the decline in the retail prices of the staple.
Citing PSA data, FFF said palay prices fell by 23 percent to P17.85/kg in June, from P23.15/kg in September 2018. Compared to rice prices, retail quotations declined by 13 percent and 16 percent for well-milled rice and regular-milled rice, respectively, in the same period.
The group added that palay farm-gate prices were generally lower in 2019, compared to prices in 2016 and 2017 when the import restrictions were still in place.
“What is most painful to farmers is that their sacrifices are apparently going to waste because consumers are not getting the full benefits from the decline in palay prices and the entry of supposedly cheaper imports,” Montemayor said.
“The PSA data in fact appears to show that both consumers and farmers were better off when the quantitative restrictions were still in place, if we exclude the abnormal price movements in 2018,” he added.