MANILA, Philippines -- The National Food Authority (NFA) will buy more palay next year -- equivalent to 10 percent of total production, worth P17 billion -- to influence commercial millers to increase their buying price, and in effect, encourage farmers to increase production.

This year, the government is targeting to buy 250,000 metric tons of palay, or about 2.5 percent of total production, at P17 per kilo. Next year, the government plans to buy one million metric tons of palay, still at P17 per kilo, Press Secretary Jesus Dureza said.

Commercial millers buy palay at P12 to P14 per kilo, and with the government buying only 2.5 percent of total production, it cannot influence millers to raise their buying price, Dureza said.

The decision was arrived at during a Cabinet meeting in Malacañang on Tuesday, wherein President Gloria Macapagal-Arroyo and Agriculture Secretary Arthur Yap met with farmers and industry players.

"The government will have to increase its volume of buying palay. There is a consensus that the benchmark, if you want to influence the price in the marketplace, you must have at least 10 percent buying [of the total supply]," Dureza told a news conference at the Palace.

"That's the reason for the intervention. The government wants to balance, keeping the price not so low, still affordable, but still encouraging our farmers," he said.

Dureza said the NFA will continue to sell subsidized rice at P18.25 per kilo, but only to the poorest of the poor, who have access cards from the Department of Social Welfare and Development (DSWD).