The government may lift the price caps imposed on regular and well-milled rice after two weeks and allow market forces to determine the right pricing for the staple, the Department of Trade and Industry (DTI) said Monday.
At the same time, Finance Secretary Benjamin Diokno, who was quoted earlier as saying he was shocked by the announcement of price ceilings on Sept. 1, said the economic team fully supports the decision of President Ferdinand Marcos Jr. to impose them.
“Executive Order No. 39 was issued by the President as the chief executive and the concurrent secretary of the Department of Agriculture. EO 39 serves as a lifeline, extending much-needed relief to Filipinos grappling with the high rice prices,” Diokno said.
Diokno, who was also quoted as saying the economic team was not consulted before the price caps were imposed, said they now viewed EO 39 as an “essential stop-gap measure.”
Under EO No. 39, the mandated price of regular milled rice was set at P41.00 per kilogram while well-milled rice is at P45.00 per kilogram.
However, complaints by rice resellers who said they bought rice at a higher price than the caps sent the government scrambling to provide subsidies to cover their losses.
Diokno said the imposition of a price cap on rice was geared at addressing non-competitive practices by some market players and discouraging hoarding, thereby reducing the price of rice.
But he said that while EO 39 could be proven effective in the near term, it should not persist for an extended period.
Trade Secretary Alfredo Pascual said it was a bit early to lift the price caps since they had only been in place for six days or since Sept. 5.
“So maybe within two weeks, we should be able to see whether we can lift the price cap already,” he said, noting that the wet season cropping, with an estimated production of 5 million metric tons (MT).
He said the rice cropping season which started in early September and may peak by mid-September to October will replenish the country’s domestic supply of the staple and possibly lower the prices for rice varieties intended for the mass market and low-income families.
Pascual assured the public that the country has enough rice, with one-and-a-half to two months’ worth of inventory for regular and well-milled rice.
He added that the sudden spike in rice prices was speculative, considering there was no shortage.
“We were thinking that the traders are using the ban in India and Vietnam to create an issue on local supply and from there, they can raise the prices,” Pascual said.
The increasing cost of farm inputs such as fertilizers and pesticides added to rising rice prices.
Should the price of farm inputs remain steady, the price of affordable rice should be at P30 per kilogram or even less, Pascual said.
He said the buying price of palay should be kept at P22 per kilo as a support to farmers.
The President on Monday emphasized the role technology would play in ensuring a stable supply of rice in the country.
“There’s necessary work to be done for us to be able to… take the new technology from the laboratory to the rice field. And that is where we now come in,” the President said.
The President made his remarks during the unveiling of the 2023 Mariano Marcos State University (MMSU) – Philippine Rice Research Institute (PhilRice) rice paddy art.
“That’s what the DA will do. We will take the best technology, especially in these times.”
President Marcos said the government will develop the technologies needed to boost the country’s agricultural productivity and bring those new products to market.
The Palace said the prices of rice and palay are expected to stabilize as the harvest season begins this month.
Citing projections gathered by the Philippine Rice Information System as of mid-August, Press Secretary Cheloy Garafil said Sunday that palay yields could reach up to 2 million MT by the end of September and 3 million MT in October.
This data was presented by Agriculture Undersecretary Leocadio Sebastian to President Marcos in a report, Garafil said.
Sebastian said they expect to produce more than 11 million metric tons of palay until December.
“Barring strong typhoons in the remaining months of the year, we hope to hit the 20-million MT level for 2023 national palay output,” the Palace release quoted him as saying.
Meanwhile, Senator Risa Hontiveros said a proposal to reduce tariffs on imported rice to zero during the harvest season would be a disaster for farmers.
She warned against opening the import floodgates during harvest season, saying this would leave local farmers on the losing end again.
Even worse, she pointed out that the proposal doesn’t mention a national calamity that would authorize a role for the government in the importation.
Hontiveros said the zero tariff proposal of Diokno also does not say that the importation will only be for the National Food Authority’s buffer stock.
This means that the importation will be done by the private sector.
“This goes against the administration’s goal of importing rice from Vietnam through government-to-government trade,” she said.
Furthermore, she said the government should focus on helping the National Food Authority heed the law and spend the P7-billion budget to buy buffer stock from local farmers to ensure sufficient rice supply up to the lean season even when El Nino hits the country.
Senator Aquilino Pimentel III, meanwhile, said it is better to reduce or eliminate tariffs first before even entertaining the idea of a price cap.
He said it is also better to go after the hoarders and price fixers before even entertaining the idea of a price cap.
Pimentel said the assistance used to soften the impact of the price caps on small rice retailers should have been given instead to the NFA to replenish its stock by buying from local farmers.