Philippine agriculture

Price cap on rice buys little time to solve ‘cancerous’ supply woe, says national scientist

Iya Gozum

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Price cap on rice buys little time to solve ‘cancerous’ supply woe, says national scientist

People line up to buy NFA rice sold at P25 per kilo during the last day of the Kadiwa ng Pangulo diskwento caravan at the Cebu Provincial Capitol grounds in Cebu City on February 28, 2023.

Jacqueline Hernandez/Rappler

Economist Raul Fabella says the stop-gap remedy doesn't address the country's rice supply problem as he stressed the need for new investments in food production

MANILA, Philippines – National scientist and economist Raul Fabella cautioned that setting a price cap on rice can only buy the government little time to solve the rice supply problem.

“[These remedies] only buy some time, but in the end, the problem would have swelled up,” Fabella said in a message to Rappler on Friday, September 1.

Once the solution proves ineffective over time, Fabella warned the government might find that the problem already turned “cancerous.”

President Ferdinand Marcos Jr. imposed a price ceiling on rice nationwide under Executive Order No. 39 dated August 31. The President was impelled to set a price cap as rice prices continue to increase up to P60/kilo. The price cap is set at P41 per kilo for regular milled rice and P45 per kilo for well-milled rice.

For Fabella, applying direct political remedies – like setting price ceilings – to economic shortfalls do not solve problems.

Department of Agriculture (DA) officials told a budget hearing last month that it would be difficult to meet the president’s goal to lower the price of rice to P20 per kilo as he had promised in the 2022 elections, and that a concrete plan on this has yet to be discussed with the chief executive.

Aside from the burden that a costly household staple brings, Filipinos are also faced with the impending impacts of El Niño on agriculture and food security.

Cartels and hoarders

EO 39 cited the Department of Agriculture (DA) and the Department of Trade and Industry’s report that alleged price manipulation of hoarders and cartels, among other factors, have led to the surge in prices.

In this light, farmers’ group Kilusang Magbubukid ng Pilipinas (KMP) said in a statement on Friday that the government should start taking “sincere” steps to stop “importers, traders, businessmen who have connections in the DA.”

Marcos earlier warned of alleged hoarders taking advantage of the lean months.

Last Tuesday, August 29, Customs Commissioner Bienvenido Rubio said they were “doubling down efforts” to hunt illegal importers of agricultural goods, specifically rice. Investigations, in collaboration with the Department of Justice, are still ongoing. There is no deadline set when these probes will conclude.

The Bureau of Customs (BOC) recently inspected warehouses in Balagtas and Bocaue towns in Bulacan, over alleged cases on smuggling and hoarding. They continue to do so following the President’s orders.

Improve supply

The government – from officials of the Department of Agriculture up to the President himself – has repeatedly assured the public that rice supply is sufficient even as prices rise.

However, the government is also dead set on importing rice in response to rising prices. But because of limitations set by the Rice Tariffication Law, the government cannot actually import but can only negotiate with other countries to make them sell rice through private importers.

KMP said the law should be repealed and that the mandate of directly securing rice supply should be returned to the National Food Authority (NFA).

The NFA can only buy rice if the government declares a state of emergency or calamity.

As Marcos, concurrent agriculture secretary, buys time to secure supply and go after hoarders, the long-term solution remains on improving supply.

Fabella suggested that new investments in food production – by consolidating large and industrial farms – is one way to solve the problem. –

[ANALYSIS] Brace yourselves for higher rice prices under Marcos

[ANALYSIS] Brace yourselves for higher rice prices under Marcos

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Iya Gozum

Iya Gozum covers the environment, agriculture, and science beats for Rappler.