FPA suggests SRP, MRP for fertilizer products
PRESIDENT Ferdinand “Bongbong” R. Marcos Jr. may consider imposing a maximum retail price (MRP) on fertilizer products sold in the domestic market to arrest skyrocketing prices of the planting input, state-run regulators revealed.
In an assessment report, the Fertilizer and Pesticide Authority (FPA) recommended that the government institutionalize a suggested retail price (SRP) and MRP on fertilizer products.
The report, prepared by FPA Deputy Executive Director Myer Mula and Kimberly Coronado, an economist at FPA, indicated that the implementation of the SRP and MRP must be done in partnership with the Department of Agriculture (DA) and Department of Trade and Industry (DTI).
The agriculture secretary, a Cabinet position concurrently held by Marcos Jr., is the de facto chairman of the FPA board.
The report showed that the FPA can impose such price control mechanisms as a regulator under the provisions of Presidential Decree (PD) 1144, Series of 1977.
PD 1144, signed and issued by the late President Ferdinand E. Marcos Sr., established the FPA and outlined its powers and functions, including the regulatory control over the wholesale and retail prices of fertilizers sold in the domestic market.
Under PD 1144, the FPA has the power and function to “determine and set the volume and prices of both wholesale and retail of fertilizer and fertilizer inputs.”
Furthermore, the state-run agency attached to the DA can “control and regulate all marketing companies, whether importer, indentor, wholesaler or retailer by controlling and regulating prices, terms, mark-ups, distribution channels, promotion, storage and other marketing factors in the domestic fertilizer market,” based on PD 1144.
“To do all such things as may be necessary to maintain an adequate supply of fertilizers to the domestic market at reasonable prices while maintaining the long-term viability of the industry,” PD 1144 read.
The report proposed that the SRP and MRP should be based on the location where the fertilizers are locally sold.
“The adoption of the Calculation of Fertilizer Price Matrix at Various Cost Levels should be the basis for DA and DTI to impose the SRP and MRP for every import entry,” the report titled “Philippine fertilizer price outlook: A reality for farmers and fishers” read.
Latest FPA data as of June 24 showed that the price of major fertilizer products nationwide continues to increase.
FPA data showed that the price of urea (prilled) rose more than double year-on-year to P2,839.59 per 50-kilogram bag while Di-ammonium Phosphate (DAP) fertilizer has reached an unprecedented price level of P3,331.10 per 50-kilogram bag.
Price matrix
THE report’s proposed fertilizer price matrix contains the estimated calculation of fertilizer prices at various price levels from landed cost, importers’ price, distributors’ price, and retail price of the planting input.
For example, if the import price of fertilizer is at $1,000 metric ton, it will translate to a landed cost of about P2,500 per 50-kilogram bag with its importer’s price to distributor at P2,799 per 50-kilogram bag. The same fertilizer will have a distributors’ price to the dealer of about P3,128 per 50-kilogram bag and eventually have a retail tag (dealers’ price to farmers) of P3,483 per 50-kilogram bag, according to the price matrix.
The report recommended that the regional dealers’ prices of fertilizer should be based on the source of origin of the fertilizer and its corresponding logistical costs as calculated under the proposed price matrix.
The report also proposed that the government pursue bilateral agreement with fertilizer-producing countries to secure cheaper planting inputs.
The report also proposed the inclusion of batch and lot number in the packaging and bags of imported fertilizer to determine their country of origin and landed costs.
“Importing companies are urged to coordinate and order bulk imports from certain countries, if possible, to avail of lower prices and discounts and save freight costs,” it read.
“Fertilizers imported at lower prices and less cost will result in cheaper fertilizers available for farmers in the market,” it added.
The FPA report also disclosed that there is a need to improve the agency’s price monitoring mechanism to cover prices of the planting input from imports until the retail level.
“The improvement of monitoring of fertilizer imports should require more information from the importers to aid in better record keeping and estimation of actual prices. This will result in more accurate data and help improve price studies in the future,” it said.