PLANTERS lost at least P61.77 billion due to the continuous drop in the farm-gate price of unhusked rice, which hastened in recent months when imports rose significantly, according to a policy brief prepared by the Philippine Rice Research Institute (PhilRice).
The plight of local planters may even worsen as their losses could balloon to nearly P130 billion if prevailing farm-gate prices will continue to fall below production cost, the PhilRice paper added.
Given the losses incurred by rice planters, the paper noted that the P10-billion Rice Competitiveness Enhancement Fund (RCEF) created by Republic Act (RA) 11203 may be insufficient to offset farmers’ losses.
“Prices of local palay have declined substantially after the initial implementation of [the law]. The virtually unbridled importation of rice is dampening local palay prices and robbing the income of rice farmers,” the PhilRice paper read.
The surge in rice imports driven by the opening up of the domestic market has been identified by industry stakeholders as the culprit to the double-digit decline in palay prices.
Industry groups like the Federation of Free Farmers (FFF) earlier estimated that rice planters have already incurred losses of at least P40 billion. The group projected that losses could reach as much as P60 billion due to the decline in farm-gate prices.
The PhilRice paper titled “How to make farmers winners under the rice tariffication regime,” which was published recently, was authored by Alice B. Mataia and Aerone Philippe G. Bautista.
The paper is one of the policy advocate materials of PhilRice under its Rice Science for Decision-Makers publication. PhilRice is an attached agency of the Department of Agriculture.
Trends and patterns
Philrice said the 1.8 million metric tons (MMT) rice imported from January to June alone had already exceeded the country’s “normal” annual import volumes. “[This] consequently pulled down the price of rice and, quite significantly, palay.” The paper said that, “while [the law] helped lower inflation and eased the public’s access to affordable rice, it also appears that rice farmers’ real income significantly plunged by P12,869 per hectare.”
PhilRice said palay prices, in real terms, have fallen from January to August this year. This was contrary to the price trend observed in the same period last year and “did not follow production seasonality” wherein prices are low during peak harvest months and are high during lean season, the agency noted.
In real terms, PhilRice said the national average price of palay in August was at P14.87 per kilogram, which was P3.24 lower than the P18.11 per kg recorded last year.
“Given the average yield of 3,972 kg per hectare, the P3.24 per kg decline in real price of dry palay from August 2018 to August 2019 translates to a lost income of P12,869 per hectare, thus, national level income loss is at P61.77 billion, rendering RCEF funding seemingly insufficient to offset it,” the paper read.
The PhilRice paper painted a bleaker future for rice planters this harvest season as there could be “possible collusion among traders to further lower prices of fresh palay to P10 per kg to P12 per kg.”
This, it said, “will further exacerbate the situation with farmers earning just enough to break even or even lose, earning less than their cost of production.”
At the national level, total income losses of farmers “are estimated at P61.77 billion, escalating to P86.39 billion or P129.548 billion during the peak harvest season if prices further drop to P12 per kg or P10 per kg, respectively,” it added.
Due to this, PhilRice said the national government should supplement the P10-billion annual RCEF and carry out “immediate measures to cushion the adverse effects of the law on rice farmers’ income.”