No solution in sight for falling palay prices

Not even the Rice Competitiveness Enhancement Fund (RCEF) may save farmers from the falling prices of palay.

In an interview, Socioeconomic Planning Undersecretary Rosemary Edillon said the RCEF program—a subsidy of P10 billion yearly for the rice industry—would not help in raising palay rates, adding that it might take at least three years before palay prices would stabilize.

The government’s latest price monitoring report showed that the farmgate price of palay further slid to P18.20 a kilogram during the third week of May, continuing the downward trend that started in January.

This is 13.7 percent lower from year-ago level, although economic managers stressed that last year was an “abnormal” period for the rice industry given the huge spike in rice prices.

“The expectation is that prices will stabilize at some point,” Edillon said, referring to the staple. “Right now, it’s still finding its price which depends on supply and demand … It would take some time to find that steady state because players are trying to find that balance under the new rice regime.”

She said importers were just beginning to look not just into the Philippine market but the world market for rice. This explains why big companies like the SM Group, Aboitiz’s food arm Pilmico, Puregold Price Club and AgriNurture Inc. have yet to start importing rice even after securing the required permits.

Asked whether the RCEF program of the government would help in pushing prices up, the official gave a firm no.

“Not even the funds [could help] because when the funds are disbursed, they will still need to go to the farmers. It may take three to five years before the price will stabilize,” she said.

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 their produce will be competitive against imports.
The fund is mandated by the new rice law and should run for the next six years starting this year, but this year’s allocation has yet to be released and disbursed.

Once the subsidy is exhausted, import duties from rice would be funneled into the RCEF to ensure the continuity of the fund’s life, which was estimated to hit billion a year.

Edillon said the economic agency was scheduled to meet on Tuesday to discuss an in-depth study on rice which the National Economic and Development Authority had commissioned.