Amid the slowdown of inflation in most commodity’s prices, the price of rice, the country’s staple, stood out as the commodity that posted the highest increase in January, according to the Philippine Statistics Authority (PSA).
PSA data also showed rice price inflation experienced by All Income Households averaged 22.6 percent, the highest since the 22.9 percent posted in March 2009.
Rice inflation rose to 24.8 percent for the poorest Filipinos or the Bottom 30 percent of households. This is the highest in the series, which began in 2013.
“Kung patuloy na ganito yung presyo dahil may base nga tayo, ang expectation natin is that we will have rice inflation in the vicinity of 20 percent or higher hanggang mga July,” National Statistician Claire Dennis S. Mapa said.
Based on the data monitoring of the PSA, Mapa said prices of rice subgroups being monitored by the agency all posted double-digit year-on-year growth rates.
For regular-milled rice, there was an increase of P10.05 per kilo or 25.4 percent. In January, regular milled rice prices averaged P49.65 per kilo, higher than the P39.6 per kilo posted in January last year.
In December 2023, regular-milled rice prices averaged P48.48 per kilo. This was P1.17 or 2.4 percent lower than the January 2024 average price for this rice subgroup.
In terms of well-milled rice, there was an increase of P11 per kilo or 25 percent to P54.91 per kilo in January 2024 from the P43.92 per kilo in January 2023.
Compared to December 2023, well-milled prices in January 2024 were higher by P1.09 per kilo or 2 percent than the average price of P53.82 per kilo.
For special rice, Mapa said, the average price in January was P63.9 per kilo, P10.14 more or an increase of 18.9 percent from the P53.76 per kilo posted in January 2023.
Mapa also said the average price of special rice in January 2024 was higher by P0.82 per kilo or 1.3 percent than the P63.08 per kilo average in December 2023.
The National Statistician explained that based on the trade data, rice prices remain elevated in the world market. This has also affected the domestic price of rice.
Mapa also noted there are base effects since rice inflation was low between January and July 2023. It peaked in August last year and continued to increase in September 2023.
“Parang may mababang base ang pinagalingan ng presyo ng bigas. So, ang aming kalkulasyon ay, patuloy itong tataas in terms of inflation rate simply because the base is relatively low in 2023,” Mapa said.
Monetary Board Member Bruce J. Tolentino agreed with this observation, saying that domestic prices of rice are still increasing due to a combination of international and domestic factors.
Tolentino said among the international factors are India’s ban on rice exports, which reduced the global supply of rice as well as the continued impact of high fertilizer prices due to the war in Ukraine.
Based on the 2022 production estimates of the PSA, fertilizer costs averaged P10,649 per hectare, the highest cash cost of palay production.
This was followed by hired labor at P10,199 per hectare and pesticides, P2,478 per hectare. The cash costs of palay production reached an average of P30,573 per hectare.
However, this is only a fraction of the total costs, which reached an average of P54,373 per hectare. This left the cost per kilogram of rice to only P14.98 per kilo in 2022.
“World price remains high. It is not the amount of imports that drive price, it is the cost of producing the last units of rice,” Philippine Institute for Development Studies Senior Research Fellow Roehlano Briones said.
“It is because the cost is high that we still import a lot…[it] will continue as long as El Niño and high world price persist,” he added.
Apart from this, Tolentino said, the country’s population continues to grow and this increases the need for food.
He noted that the Social Weather Stations surveys have shown that “a significant proportion of the population is hungry.”
However, Tolentino said the record increase in rice production shows the positive impact of investments in interventions that raise productivity, such as seeds and farmer capacity.
He added that raising the rate of productivity could help the country meet the higher need for food by a growing population.
“Domestically, while the most recent harvest has been record breaking, there is significant unmet demand for rice among the population,” Tolentino said.
“Domestic stock levels have also been on the low side because of tight controls on import permits [Sanitary and Phytosanitary Import Clearance] implemented in 2022 up to the first half of 2023,” he explained.
Ateneo de Manila University economist Leonardo Lanzona said the government should have allowed higher rice imports to prevent the surge in rice prices in January.
Lanzona said the government decided to allow less rice imports to enter the domestic market toward the end of the year to allow domestic production to be absorbed by the market.
However, this backfired as rice prices remained elevated. Rice imports comprised 20 to 25 percent of the country’s rice supply.
“The government should have allowed greater imports in order to reduce retail prices. In the end, this only means that government has failed to establish an adequate distribution system that could decreased prices since the farm gate rice prices are quite low, suggesting higher domestic production,” Lanzona said.
In the end, the increase in rice prices caused great suffering especially for the poor, particularly rice farmers who also consume rice.
Rice has a significant share in the Consumer Price Index (CPI). For All Income Households, rice has a weight of 8.87 percent and is even higher at 17.87 percent for the Bottom 30 percent of income households.
“Since poor farmers are also consumers of rice due to their low outputs, they experienced a ‘double-whammy’ from the government’s inability to improve the distribution of rice,” Lanzona said.
High domestic rice output
Earlier, PSA data showed local planters managed to increase their output of rice and corn—the country’s staple crops—despite higher input costs.
Figures released by the PSA showed that palay or unmilled rice production in 2023 reached a record 20.06 million metric tons (MMT). Output last year was 1.56 percent higher than the 19.756 MMT recorded in 2022.
Data from the statistics agency showed that rice output in 2023 was boosted by irrigated farmlands, which produced 15.279 MMT, 2.2 percent higher than the 2022 volume of 14.938 MMT.
In contrast, the output of rain-fed farms fell to 4.779 MMT from the previous year’s 4.817 MMT.
Image credits: Nonie Reyes