Farmers lose P40 B as palay prices drop

Local farmers lost P40 billion in the first half of the year due to the significant drop in palay prices following the entry of more cheap imported rice, according to the Federation of Free Farmers (FFF).

The group is now calling on the government to immediately take steps to curb the decline in palay prices following the enactment of the Rice Liberalization Law.

Data from the Philippine Statistics Authority shows that farmgate prices declined by 23 percent or P5.30 per kilogram to P17.85 from their peak in September 2018 of P23.15. The downtrend is expected to continue next month.

“With about two million hectares and eight million metric tons of palay harvested in the first semester, farm losses as a result of the drop in palay prices is estimated to have reached P40 billion as of the end of June 2019,” FFF national manager Raul Montemayor said.

“Around 1.8 million MT of rice imports have reportedly arrived in the country since January 2019, resulting in a glut that has forced local traders to reduce their buying prices from farmers in order to compete with imports,” he said.

FFF maintained that traders could not unload their stocks from the previous season due to the large volume of imported rice in the market, prompting them to either stop buying palay or buy them at much lower prices to cover for anticipated trading losses.

The organization urged the government to address the decline in farmgate prices instead of focusing on the P10 billion Rice Competitiveness Enhancement Fund (RCEF).

“Not a single centavo of the RCEF can be used to help farmers cope with falling palay prices. Because under the law, RCEF funds will be channeled directly to small research agencies instead,” Montemayor said.

“Farmers will start receiving help from RCEF only in the first semester of 2020 at the earliest. In the meantime, palay prices continue to fall, and this should be the government’s priority,” he said.

FFF said RCEF is actually small compared to the losses farmers stand to incur due to the flood of imports and would not be the saving grace that some legislators are projecting it to be.

“RCEF is intended to improve the competitiveness of rice farmers by reducing their costs of production and increasing their yields. This will not happen overnight, nor is success guaranteed,” Montemayor said.

Montemayor is urging the Department of Agriculture to immediately start the process for availing of trade remedies that will allow the government to legally impose additional tariffs on top of the regular 35 percent tariff for rice imports from Thailand and Vietnam.

These include general and special safeguard duties and anti-dumping duties that can be temporarily imposed to address market emergencies and unfair trade practices.

By raising tariffs, imports will become more expensive, thereby providing room for local traders to dispose of their stocks and buy again from farmers at higher prices.

Montemayor maintained that the imposition of remedial tariffs should not result in higher rice prices for consumers because of the large margin between the cost of imported rice and current retail prices.

Data from the Bureau of Customs showed that imported rice amounting to around P24 per kilo, inclusive of tariffs, is still being sold at P35 or higher at the retail level.

“At the moment, there is a lot of profiteering going on. Even if import prices go up because of the remedial tariffs, there is still room for retail prices to actually go down,” he said.