NFA proposal to raise buying price for palay rejected

Government economic planners have rejected the proposal of the National Food Authority (NFA) to raise its buying price for palay.

The rice regulator said the hike was needed to stabilize the price and supply of the country’s staple food.

National Economic and Development Authority (Neda) Assistant Secretary Mercedita Sombilla, who is part of the food security committee tasked to study the proposal, said the recommended price hike of P5 per kilo “would really lead to relatively huge price inflation.”

This means increasing the agency’s support price for local farmers will eventually lead to higher retail prices of essential food items.

“This is going to be detrimental, especially to poor marginal households. We in the food security committee did not approve the request… because based on our analysis, this would impact on food price inflation. Rice is actually 10 percent of a Filipino’s total consumer index,” Sombilla said.

NFA currently buys clean and dry palay at P17 a kilogram (kg), with additional incentives of P0.20 to P0.50 per kg for delivery, P0.20 per kg for drying, and P0.30 per kg for palay sold by farmers’ organizations and cooperatives.

While the buying price for palay sometimes goes up, Sombilla said that based on Neda’s monitoring, the trend is that it only increases by P1 on the average, adding that this even “fluctuates so it’s not permanent.”

But industry group Samahang Industriya ng Agrikultura (Sinag) said the support price of the agency was last adjusted in 2009.

“The retail prices of rice have surely increased over those nine years, but the farm-gate prices did not. Producers are always on the losing end,” the group said.

Sinag reiterated that with the expected increase in the prices of commodities because of the Tax Reform for Acceleration and Inclusion (TRAIN) law, the production costs of farmers will increase, too.

“Our farmers use tractors and other machinery too, and these equipment require petroleum which will also increase under the TRAIN law. This is already a justification for the hike,” Sinag said.

But despite the committee’s decision, the NFA will likely proceed with its request to increase the buying price for palay, said Sombilla.

The NFA proposed the hike in October last year, and was reviewed by officials of key agencies such as Neda and the Bangko Sentral ng Pilipinas.