The Department of Agriculture (DA) anticipates a P6 to P7 per kilogram (kg) drop in rice prices once the government successfully enforces the proposed tariff cuts to 15 percent from 35 percent.
“We are confident that this substantial reduction in tariff will finally be felt by Filipino consumers,” said Agriculture assistant secretary Arnel de Mesa in a Zoom briefing Wednesday.
The DA anticipates a price decrease by August, coinciding with the expected arrival of imported rice from Vietnam within the next 3 to 4 weeks. With a landed cost of P46-P47 per kilo and additional expenses factored in, the retail price of imported rice is projected to reach around P52 per kilo.
De Mesa assured farmers that the P10 billion Rice Competitiveness Enhancement Fund (RCEF) allocated for them will remain unaffected, since the tariff-related support is mandated by law and is a fixed amount.
He also explained that while the National Food Authority’s (NFA) participation in the local rice market is limited, its buying activities influence palay (un-milled rice) prices.
Currently, elevated palay prices are attributed to recent NFA purchases, which often set the benchmark for traders in the market.
Despite rice imports constituting roughly 20 percent of the Philippines’ total rice inventory, the DA is continuously working to reduce import costs.
Local rice production remains a significant contributor, with milled rice output reaching 13.5 million metric tons (MT) from the 20 million MT palay harvest in 2023. This harvest marked a record high, exceeding the previous record of 19.96 million MT set in 2021.
While the final figures for the 2024 harvest are yet to be determined, some concerns have been raised. The DA acknowledges the potential for a slight decrease due to El Niño weather conditions that affected farms in the first quarter of the year.
However, estimates based on standing crops as of February 2024 suggest a possible increase in palay production for the January-March period compared to the same period in 2023.
On this note, Agriculture secretary Francisco Tiu Laurel met with rice stakeholders to find ways to reduce the cost of rice.
“President Ferdinand Marcos, Jr. wants more affordable rice prices to ease the financial strain on consumers, particularly the poor, as well as relieve price pressures that have kept inflation elevated and interest rates high,” he said.
Global grain prices have been raised since India banned the export of non-basmati rice in July last year and worries over supply constraints due to El Nino.
The weaker peso has also lifted the price of imported rice. The domestic market has not been spared, and higher grain prices bolstered inflation above the central bank’s target range, forcing the monetary authority to keep key interest rates high.
The government has started trial selling of rice at P29 a kilo in selected KADIWA centers.
Meanwhile, the Philippine Statistics Authority (PSA) agrees with the DA’s prediction that cost of rice would drop by P6 to P7 per kilo due to a recent reduction in the tariff rate for imported rice.
PSA chief and National Statistician Claire Dennis Mapa said the board of the National Economic and Development Authority (NEDA) approval of a reduced rice tariff will lead to lower rice prices.
Mapa also said the drop in rice prices would have a large impact on inflation for rice and overall inflation.
Rice inflation stood at 23 percent in May, slightly lower than the 23.9 percent in April 2024.
Mapa said rice contributed 1.7 percentage points to the 3.9 percent inflation rate in May. In May 2023, inflation rate was higher at 6.1 percent.
The May inflation figure brought the national average inflation from January to May 2024 to 3.5 percent or within the government’s target of 2 percent to 4 percent.
The NEDA Board earlier agreed to reduce the duty rate on rice to 15 percent for both in-quota and out-quota rates from 35 percent until 2028.
“This decision aims to lower the price of rice further and make it more affordable. Based on the latest inflation report of the PSA in the past three months, rice contributed about two percentage points (or over 50 percent) to the headline inflation,” Balisacan said.
“Reducing rice tariffs is expected to bring down rice prices for consumers while supporting domestic production through tariff cover and increased budgetary support to improve agricultural productivity, especially as global rice prices remain elevated,” he added.
Balisacan said the upward price pressures for rice are driven by the effects of the El Niño phenomenon that are felt worldwide, as well as increasing demand given our steadily growing population and economy.
Speaker Ferdinand Martin G. Romualdez on Wednesday lauded the decision of President Ferdinand Marcos Jr. to cut the tariff for imported rice from 35 percent to just 15 percent.
“The import levy reduction and the direct sale of imported rice by the government through its Kadiwa centers should bring down the retail price of rice substantially, especially for consumers,” Romualdez said.
He said the effort to reduce rice prices is consistent with the Marcos administration’s goal of making the staple available and affordable.
The leader of the 308-strong House of Representatives said rice farmers should not worry about the assistance they receive from the government, which are funded from the Rice Competitiveness Enhancement Fund set up under Republic Act 11203, or the Rice Tariffication Law.
He added that official data showed that as of last month, the fund had accumulated P16 billion from import tariff collections.
“This means that the government has enough funds to help farmers, while it is trying to bring down rice prices through the import tariff cut and direct Kadiwa sales,” he stressed.
The House leader pointed out that the House advocacy of returning the rice importation mandate of the NFA is also meant to make the staple reasonably priced.
However, the rice importation mandate bill remains pending in the Senate.
“We should find a long-term solution to the rice price issue,” he said.
As this developed, Deputy Minority Leader and Basilan Rep. Mujiv Hataman has welcomed a Palace decision to reduce tariff rates on rice as a means to tame inflation and arrest the continuing rise of the prices of basic commodities.
“For me, rice is supposed to be somewhat of a great equalizer. This is a Filipino staple. Both the rich and the poor should have rice on their tables. But in our time, poor Filipino families can no longer afford the price of rice and other food,” Hataman expressed.
“This is why we welcome the executive order being prepared to reduce the tariff rates on rice and other commodities, as this also aims to reduce the price of rice in the market,” he added.
