Prices of palay and rice continued to fall for the fourth consecutive month as the local market prepared for the arrival of more imported rice.
Meanwhile, farmers reeling from low prices await the disbursement of the Rice Competitiveness Enhancement Fund (RCEF), which should aid them in the transition toward the deregulation of rice trade.
According to the Philippine Statistics Authority, the average farm-gate price of palay further slid to P18.37 a kilo in April from P20.71 last year, down 11.3 percent.
Similarly, the average retail prices of regular milled and well-milled rice declined to P39.15 and P43.52 a kilo, respectively, from P40.03 and P43.77 last year.
Industry sources said the market was slowly adjusting to the expected arrival of more imported rice this year after the government allowed the unimpeded entry of the staple to tame prices.
Farmers are seen to bear the birthing pains of the new policy, especially with the slow disbursement of the annual P10-billion subsidy intended for the sector’s development.
In some regions, palay prices have declined to P14 a kilo, with no indications of when the downward trend will stop.
While farmers may choose to sell their produce to the National Food Authority at P20.70 a kilo, the agency’s absorptive capacity is only 2 percent of the country’s palay production.
The RCEF is intended to cushion rice farmers from the blows of liberalization by subsidizing them with machinery and seeds and by providing credit and training to ensure that they become competitive against more affordable imported rice.
But until now, only P1 billion of the P10-billion subsidy has been funneled to the Agricultural Credit Policy Council, which was created in 1986 by virtue of Executive Order No. 113 to assist the Department of Agriculture (DA) in synchronizing all credit policies and programs in support of the latter’s priority programs.
Economic Planning Assistant Secretary Mercedita Sombilla said another P5 billion would be released by the third quarter of the year, while the remaining P4 billion is still being contested as to whether or not it should be pulled out from the DA’s own rice fund.
A report made by the Global Agricultural Information Network said the benefits of the new rice law would be realized only after two years and only if the government’s interventions would be effective.
The deregulation of rice trade is seen to cut retail prices in half over the next few years while lowering the cost of producing rice and provide fresh revenue to the national government in the form of tariffs.