The mounting rice prices in the Philippines are a matter of national concern, impacting not just the dinner tables but also the wider socioeconomic fabric of the country. The nefarious role of cartels in artificially elevating these prices remains a constant issue, one that government actions like the Rice Tariffication Law have struggled to fully eliminate.
A first step toward disempowering these cartels is to lower the existing tariff rates on rice imports. Currently, high tariffs indirectly sustain cartels by keeping the domestic prices steep and uncompetitive. With the current 35 percent tariff rate for Asean countries, there’s a glaring need for recalibration. By reducing this rate, we open the local rice market to international competition, pushing local suppliers into a position where they must either lower their prices or risk being edged out of the market.
But tariffs are just a single element in a complex equation. An empowered Philippine Competition Commission (PCC) is the linchpin for maintaining a fair and competitive market. As the primary body responsible for investigating anti-competitive behavior, the PCC needs greater latitude to be proactive. In partnership with the Department of Agriculture, it could thoroughly investigate the cartel manipulating rice prices through extensive market reviews. These efforts must be backed by teeth—stiff penalties, including hefty fines and potential license revocations, should be on the table to ensure compliance and serve as a potent deterrent to others.
Rice hoarding, another pervasive issue, requires robust action. Law enforcement agencies should be given the resources and mandate to conduct surprise inspections on suspected hoarding facilities. Swift legal prosecution and steep penalties would discourage hoarding, sending a message that this form of market manipulation won’t be tolerated.
For immediate relief, the government could release rice from its stockpiles to stabilize prices. However, this is merely a stopgap solution. Strategic planning on the role of the government in supply intervention vis-à-vis the private sector should be done. The current price ceiling should also be calibrated with the proviso that such a move doesn’t disincentivize local farmers and should be temporary. The target for such intervention should be the cartel.
Long-term, the rice producing sector needs to be fortified. Assistance to rice farmers must be rationalized through adequate incentives to increase their productivity and incomes. Additionally, investing in research for high-yield and climate-resistant rice varieties will ensure future resilience. Technology, in the form of farm mechanization and smarter irrigation systems, can also play a pivotal role. By incentivizing the use of technology and advanced machinery, the government can increase yields and lower production costs. Research partnerships with tech firms could offer real-time advice to farmers via apps, and grants could support the development of high-yield, climate-resistant rice varieties.
However, the country must accept that self-sufficiency is an impossible dream. The Philippines does not have a natural comparative advantage in the production of rice unlike Cambodia, Thailand and Vietnam. The target should be rice security through an optimal mix of local production and importation; maintenance of buffer stocks for emergencies and supporting rice farmers and producers with direct livelihood assistance as well as long-term productivity improvement through technology and extension programs as mentioned above.
Social safety nets, particularly targeted programs such as the Pantawid-Pamilyang Pilipino Program (4Ps), play a critical role in cushioning vulnerable populations against the immediate economic shocks caused by rising rice prices. The 4Ps, which currently provides cash grants for education, health, and nutrition, could be expanded to include a dedicated allowance for basic food staples like rice. By increasing the cash grants or introducing direct food vouchers, the government can ensure that marginalized families are still able to access this crucial dietary staple, even as market prices fluctuate. Additionally, the implementation of community kitchens and food banks, either as a component of the 4Ps or as separate initiatives, could offer immediate relief and nutritional security to those most affected. By enhancing these social safety nets, the government can offer immediate and targeted relief while longer-term solutions are being developed and implemented.
Finally, no single entity can tackle this issue alone. A multi-pronged effort involving government bodies, civil society organizations, and the private sector can create a coalition strong enough to address the cartel issue comprehensively. Joint task forces could be established to pool resources, expertise, and intelligence, ensuring that any action taken is both swift and effective.
In sum, while lowering tariff rates is an essential component, it’s not a standalone solution to the problem of rising rice prices in the Philippines. A robust and empowered PCC, along with decisive law enforcement actions against hoarders, are equally critical. Add to that a multifaceted strategy involving social safety nets, agricultural upliftment, and public-private partnerships, and we can build a future where rice—a basic staple—is affordable and accessible for all Filipinos.
Dr. Fernando T. Aldaba is Professor of Economics and former Dean of the School of Social Sciences at Ateneo de Manila University.