The country’s paddy rice output in the first quarter may fall by 10 percent to 4 million metric tons, the lowest in four years, the Philippine Statistics Authority (PSA) said.
In its latest production forecast report, the PSA revised downward its palay output estimate for January-to-March period by 6.54 percent from its earlier projection of 4.28 MMT.
The PSA said as of February 1 total palay harvest area during the period could contract by 3.7 percent to 1.159 million hectares while yield per hectare (ha) may decline by 6 percent to 3.6 MT per hectare.e
“The updated January-March 2020 estimated palay production indicates a possible downtrend of 9.5 percent in the period of January-March 2020, from the previous year’s output of 4.42 million metric tons,” the PSA said in the report published recently.
The PSA said about 25.8 percent of the updated standing crop of 1.11 million hectares of palay during the quarter has been harvested.
“About 40.8 percent of 1.308 million hectares of standing crop were still at vegetative stage, 37.8 percent at reproductive stage, and 21.5 percent at maturing stage,” it added.
Based on historical PSA data, this could be the lowest first quarter palay output since the 3.9 MMT recorded in the January-to-March of 2016.
Low palay prices
Rice industry groups attributed the possible decline in harvest due to scaling down by farmers of their production following two seasons of income losses due to low prevailing market prices.
“It is possible that farmers did not plant because they anticipated low returns after two seasons of income loss or farmers converted to other crops,” Rice Watch and Action Network Executive Director Hazel Tanchuling told the BusinessMirror.
“It is also highly possible that many have sold or pawned their lands due to indebtedness as a result of [rice trade liberalization law],” Tanchuling added.
Federation of Free Farmers National Manager Raul Q. Montemayor concurred with Tanchuling and pointed out that the low palay prices was the biggest factor in the farmers’ planting intentions.
Montemayor said it is surprising that PSA is forecasting an output decline in the first quarter when there was no significant weather disturbances or pests during the period plus it was the first season of the Rice Competitiveness Enhancement Fund (RCEF).
“It is interesting that they are projecting both area and yield to go down. Yield decline could also be a reaction to low prices, as farmers scrimp on fertilizer and inputs. Surprising also, since this is the first season for RCEF seed distribution, so it seems the inbred seed program did not work,” he added.
Not a good sign
Montemayor said the projected first quarter palay harvest is a not a “good sign” for the overall first semester performance of the sector, following the initial roll-out of RCEF.
“If [second quarter] harvest also goes down, it only shows that seed support by itself is not enough specially if farmers scrimp on inputs, irrigation and other investments because of the disincentive brought about by low palay prices,” he said.
Montemayor noted that the projected palay harvest this quarter could be even the lowest beyond four years since El Niño hit farms in 2016 resulting in the drastic cut in output.
“If I am not mistaken, there was El Niño in the first semester of 2016, which explains the low output. If you take that out, this year’s output could be the lowest in 5 years,” he said.
From 2017-2019, the country’s first quarter palay harvest averages about 4.5 MMT, PSA data showed.
More likely than not, palay output in the second quarter would follow the first quarter’s trend since they were planted in almost the same period under the same weather and planting conditions, Tanchuling said.
Tanchuling added that the delays in the roll-out in the interventions under RCEF could have also affected farmers’ planting intentions during the period.
Furthermore, the direct cash assistance provided by the government to RTL-hit farmers was insufficient to offset their losses, hence, discouraging them from planting anew, she said.
Following the enactment of RTL, which deregulated the rice industry and eased import protocols, the average farm-gate price of palay plunged below P16 per kilogram, the lowest level in 8 years.
Image credits: Bernard Testa