Inefficiencies in rice processing and costs associated with middlemen are the reasons why prices of the staple grain shot up to almost double the farmgate level, according to the umbrella group Samahang Industriya ng Agrikultura (Sinag).
This means that palay, which farmers sell for P21 to P22 a kilogram, will cost consumers P37 to P40 a kilo once it reaches the retail store in the form of well-milled rice.
Jojie Co of the Philippine Confederation of Grains Associations, a member of Sinag, said in a briefing Wednesday night that most rice mills in the country are running at efficiency levels of 60 percent.
The rice mills, which he described as a throwback to the 1940s, “turn out only 60 cavans of milled rice” from 100 cavans of palay.
“In fact, the milled rice that the Philippines import fills in for the volume lost in the milling process,” he said.
According to the Philippine Center for Post-Harvest Development and Mechanization or PhilMech, an agency supervised by the Department of Agriculture (DA), laboratory tests show that the best milling facilities can recover 68 to 72 cavans of rice from 100 cavans of palay.
However, of the 25,372 rice mills in the country, 24,420 are single-pass mills that have a recovery rate of 50-55 percent.
Based on PhilMech’s post-harvest inventory survey done in 2008, there are only 48 compact rice mills that can recover 60 percent at best, and 904 multi-pass mills with a recovery rate of 65-70 percent.
Most rice farmers, Co said, sell individually to middlemen instead of consolidating volumes through cooperatives that sell directly to millers.
“There are very few successful cooperatives in the country, and so farmers sell at their own small volumes,” he said, adding that the average rice farm holding is 1.5 hectare to 2 hectares.
Co said that, if this is the case, bulk of the difference between farmgate palay prices and retail milled rice prices go to the middle men.
Part of the DA’s efforts to address the situation is to establish modern integrated rice mills, which include warehouses, mechanical dryers and other support facilities.
There are still only a few such facilities, the newest one being the P32.2-million rice processing center in Sto. Niño, South Cotabato.