HIGH rice prices may have no basis at this time, given the low price of rice in the international market, according to a former agriculture secretary.
In a briefing on Monday, House Deputy Speaker Arthur C. Yap, who was agriculture chief during the Arroyo presidency, said international rice prices are currently at $350 to $400 per metric ton (MT), which could translate to as much as P30 to 35 per kilo.
This includes profits, but when costs of traders and retailers are taken into consideration, this could go up by another P10 per kilo. This will lead to a retail price of only around P45 per kilo, way below the prevailing market prices.
“Dagdagan na lang natin ng P10 siguro, so that’s about 40, then you add your costs, sabihin mo nang 45 [We can just add maybe P10 so that’s about 40, then you add your costs; say this leads to a cost of P45]. As I said, the price of rice is P50-P55, so you do the math. I’m no expert in telling you right now the trading costs, I am not speculating on the trading costs,”Yap said.
The high rice prices have become so prohibitive that many poor Filipinos, especially those in southern Philippines, are enduring long queues just to get access to cheaper rice from the NFA.
However, based on data from the Philippine Statistics Authority (PSA), rice in NFA warehouses is only good for 3.75 days at 114,180 MT.
Low buying price
During a Committee of Appropriations Hearing on Monday, NFA Council Farmer Sector Representative Edwin Y. Paraluman explained that the reason for the short supply is that NFA could not buy rice from Filipino farmers.
This is because of the very low buying price for palay. Paraluman said the last time the government increased rice prices was 10 years ago when the support price was raised to P17 from P11.
In the past four years, Paraluman said, the farmers have been requesting for higher buying prices. He said the farmers are only asking for a P5 increase, from P17 to P22.
While this proposed price is still below the P24 buying price being used by private traders and millers when dealing with farmers, this will allow some farmers to have some room for profit while being able to help the government boost its buffer stock.
“Okay lang naman sa amin mag-deliver because we are enjoying the buying price of the private sector, but what will happen kung walang buffer stock ang National Food Authority like what is happening now. Closed ’yung Malaysia, wala nang bigas sa Zambasulta, ginutom sila ngayon kasi nasanay sila. Eh what more if Vietnam and Thailand, kakapusin ang China, uubusin ang bigas ng Thailand, ano bibilhin ng Pilipinas? Siyempre tatakbo sa magsasaka. Kailangan tulungan ng magsasaka itaas [ang presyo]
[It’s okay if we do not deliver because we are enjoying the buying price of the private sector but what will happen if the NFA has no buffer stock like what is happening now? Malaysia is closed, there’s no rice in Zambasulta, which has caused them hunger. What more if Vietnam and Thailand will see a drop in their stocks. If China buys all of Thailand’s rice, what will the Philippines buy? Of course it will come running to the farmers. There is really a need to increase [buying prices],” Paraluman said.
One of the possible solutions, Paraluman said, is to strengthen the NFA and transform it into its own department. This will allow the NFA to formulate rice policies and prevent the NFA’s debts from swelling.
The NFA’s debts have increased, according to NFA Administrator Jason Y. Aquino, because of its buy high, sell low policy. While the NFA imports rice and buys it for P29 a kilo, it only sells NFA rice at P25 per kilo.
Aquino said the lack of rice that can be bought from farmers has also led to the use of P6.1 billion of its funds—for palay procurement —last year to pay off its debts to
the Development Bank of the Philippines and the Land Bank of the Philippines.
Fate of NFA
Ultimately, Yap said, the question on rice prices redounds to discussing the fate of the NFA. This means finally deciding whether the Philippines believes it should still have a buffer stock or not.
“[What is] very critical right now is to consider the future of this agency. We must be on the same page on whether we need it or not. If we believe that we have to maintain buffer stocks when the typhoons come, when calamities happen and take their toll on our farm lands, then I believe we must instead find solutions on how to keep NFA going,” Yap said.
Yap, who was also a former administrator of the NFA, told the BusinessMirror that it is not advisable to abolish the NFA at this time.
Yap said if there is really a need to abolish the NFA, it cannot be done immediately. Once the Tariffication Act has been passed and is already working smoothly, that’s the only time the country should consider placing a “sunset provision” on the NFA.
“All I know is we all have to be on the same page when it comes to food security and buffer stocks,” Yap said.
As far back as 2011, Budget Secretary Benjamin E. Diokno had said the overhaul of the NFA will not cause any increase in rice prices. However, he said that abolishing the NFA would have been a better proposal for Congress.
Diokno has been among the strongest endorsers of the notion to abolish the NFA, saying it will encourage local producers, particularly rice farmers, to produce more and for the government to import less.
He explained in a previous forum that if the government is serious in its goal to achieve self-sufficiency, it must invest in rice production by improving irrigation facilities and helping farmers plant more through proper training and similar efforts.