MANILA, Philippines – After the declaration of a food security emergency on rice, the Department of Agriculture (DA) expects rice buffer stocks from the National Food Authority (NFA) to be sold at P35 per kilo. But is this enough to make private traders lower their prices?
Under a food emergency, the NFA can release rice buffer stocks — usually reserved for distribution during calamities — which the DA can then sell to local government units, government-owned and -controlled corporations, and Kadiwa stores.
The NFA carries the well-milled variety of rice. Around 300,000 metric tons are currently stored in their warehouses, and 150,000 metric tons are set to be released within six months if the food emergency lasts until then.
The government hopes that releasing NFA rice at a lower retail price will affect retail prices in the market. As of February 1, local well-milled rice was being sold at P40 to P50 per kilo.
Consumers may find NFA rice at P35 per kilo in the market within the week or next week, said DA Assistant Secretary Genevieve Guevarra. Local governments that the government is striking agreements with for the distribution of NFA rice include Metro Manila cities and Cavite.
NFA warehouses are currently overwhelmed and there is an urgent need to make space for the new stocks as palay harvest season comes around.
“The harvest season is about to start and we really have to release the stocks of NFA so we can create more space to accommodate the incoming palay deliveries from the farmers,” said Untiveros in a mix of Filipino and English during a press briefing on Tuesday, February 4.
Clik here to view.
Will private traders follow?
Since the DA will be selling at P33 per kilo so retail prices will be pegged at P35 per kilo, the government is set to lose P12 to P15 per kilo, according to NFA Manager for Operations Roy Untiveros.
That’s a total loss of around P1.8 billion to P2.25 billion for the 150,000 metric tons of rice to be released. Will private traders follow suit?
“I don’t think private traders will agree to lose money,” said Raul Montemayor, national manager of the Federation of Free Farmers Cooperative, in a response to Rappler.
“If they cannot match the P35 [per kilo] NFA price [which is most probable], they might just decide to stick to their own [higher] prices and try to differentiate their stocks from those of NFA,” said Montemayor.
The effect of cheaper NFA rice — which the government is betting on to influence retail prices of other rice varieties — will thus have less impact.
“Private retailers will give up some of their consumers who shift to NFA rice, but maintain other consumers and supply them with better quality or different rice grades at higher prices,” Montemayor added.
The declaration of a food emergency is not enough, according to former senator Francis “Kiko” Pangilinan. The measure should be paired with an “intensified campaign” against smugglers and traders exploiting the situation.
“Kung deklarasyon lang at hindi naman hahabulin ang nagsasamantala, hindi binabantayan itong sistema ng pag-import, hindi sasampahan ng kaso itong mga nagsasamantalang trader, deklarasyon lang iyan,” Pangilinan said in a DZBB Super Radyo interview on Tuesday.
(If they won’t go after those taking advantage of the situation, does not monitor the import system, and won’t press charges against exploitative traders, that’s just a declaration.)
Pangilinan was the presidential assistant for food security under the Aquino administration from 2014 to 2015. The former senator said that when they sold NFA rice at P32 per kilo and went after traders and some NFA officials in 2014, there was a P3 per kilo decrease in retail prices a year later.
Until when will there be a food emergency?
The department circular that Agriculture Secretary Francisco Tiu Laurel Jr. issued on Monday, said that the food emergency will remain in force until he decides otherwise.
The National Price Coordinating Council (NPCC) found that there was an extraordinary increase in prices of rice. The NPCC, chaired by the Department of Trade and Industry (DTI) chief, then recommended to the DA to declare a food emergency.
“There is an extraordinary increase in price of rice when rice inflation has exceeded the upper bound target for food inflation and reached double digits,” said DTI Assistant Secretary Aga Uvero on Tuesday.
But the goal is to revert prices back to July 2023 levels, when local well-milled rice sold for P45 per kilo and regular-milled variety sold for P41 per kilo.
“Ang pinagbabasehan kasi ‘yung July 2023 na tumaas at never — halos hindi na bumaba,” Uvero said. “So, continuing ‘yung price increase.”
(We’re basing this on the July 2023 level when rice price increased and never — almost didn’t decline since. There’s a continuing price increase.)
Uvero referred to the resolution from the NPCC, saying that “such a condition is considered to remain in place while rice prices have not returned close to their levels prior to the breach of the food inflation targets which happened in July 2023.”
In 2023, rice inflation rose to a 14-year high of 19.6% in December. In the same year, President Ferdinand Marcos Jr. set a price cap nationwide, which he lifted a month later.
Clik here to view.
– Rappler.com