At least 3,000 rice mills nationwide have stopped operation due to the influx of cheaper imports, the Philippine Confederation of Grains Association Inc. (Philcongrains) said on Monday.
Of the 10,000 rice mills nationwide, Philcongrains President Herculano Co Jr. said only 60 to 70 percent are currently operating after the rice trade liberalization law, or Republict Act (RA) 11203, took effect on March 5. Co said the figure includes six rice mills in Luzon worth a total of P600 million.
Co said the sudden drop in unhusked and milled rice prices due to the increase in imports forced the mills to stop operations as they bought palay at a much higher price.
“They were caught in a losing position because they bought palay at higher prices last wet season harvest. Suddenly, rice prices went down. So no one would buy their rice at higher prices,” he told reporters on the sidelines of the launching of SL Agritech Corp.’s Masaganang Ani 300 program in Quezon City on Monday.
In February, stakeholders warned that the deregulation of the rice industry could hurt banks more than the default of South Korean shipbuilder Hanjin Heavy Industries and Construction Co.-Philippines as thousands of millers could go bankrupt.
Coalition of Farmers’ Organizations, Unions, Retailers and Rice Millers to Protect the Philippine Rice Industry (C-FOURR PROTECT) argued that the underutilization of rice mill facilities could lead to eventual closures and worse, the default of P300 billion in loans borrowed by millers from commercial banks.
Based on the group’s estimates, a complete rice mill facility costs about P30 million to P50 million, which would mean that the whole Philippine rice milling industry is valued at about P200 billion to P300 billion.
Higher ‘darak’ prices
With fewer mills operating, the price of darak or rice bran, which is used in animal feeds, has gone up to P17 per kilogram from the usual P7 to P8 per kg due to the shortage.
Rice bran is a by-product of rice milling and a decline in milling operations would mean a drop in the production of the animal feed component, Co said.
He added that the increase in rice bran prices pull up the cost of animal feeds and eventually the price of meat.
United Broiler Raisers Association President Elias Jose Inciong confirmed this development and described the higher prices of darak as “unusual” since it is normally lower than palay prices.
Due to this, poultry raisers have lost a cheaper alternative for feeds when corn prices are high. The prices of yellow corn and rice bran are now in the range of P17 to P20 per kg.
The average farm-gate price of palay as of July second week declined by 17.3 percent to P17.87 per kilogram from P21.61 per kilogram recorded last year, Philippine Statistics Authority data showed.