The rice price challenge

The global rice market has been rattled by extraordinary developments that led to rice prices soaring to record high levels in nearly 12 years. According to data from the United Nations’ Food and Agriculture Organization (FAO), the All Rice Price Index for July witnessed a 2.8 percent increase, reaching 129.7 points. Compared to the same period last year, this figure represents a 19.7 percent surge, reaching the highest nominal value since September 2011.

One of the main reasons being reported is India’s decision to impose a ban on rice exports in the country’s bid to secure domestic food supplies. Since India is regarded as one of the world’s largest rice producers and exporters, this measure disrupted trade on a global level, triggering a rapid price escalation.

Likewise, it has been reported that adverse weather conditions threaten rice production. Climate change has made weather patterns increasingly unpredictable, with potentially devastating effect on crop yields. The ongoing El Niño is also casting a shadow of uncertainty over rice-producing regions, and this effectively means that for countries where rice is a staple food, rising prices could also result in threat to food security.

The Philippines is one such nation experiencing the alarmingly steady increase in rice prices. Data from Department of Agriculture’s (DA) Bantay Presyo shows that as of Sept. 1, local commercial rice price ranged from P42 to P57 for regular and well-milled rice, and P48 to P65 for special and premium variants. Imported commercial rice, meanwhile, ranges from P43 to P65 for special, premium, and well-milled rice. In a statement, advocacy group Bantay Bigas said that they recorded a P10 increase in the markets they were monitoring.

In order to address the alarmingly steady surge in rice prices and consequently help ease the economic strain this has brought upon the Filipinos, President Marcos has ordered the countrywide implementation of a mandated price ceiling on rice. Through Executive Order (EO) 39, which took effect Sept. 5, the price cap for regular milled rice will be set at P41 per kilogram, while well-milled rice will be capped at P45/kilogram.

The cap on the food staple were collaboratively recommended by the price council members of the DA and the Department of Trade and Industry (DTI) and are intended to remain in force unless lifted by the President, as endorsed by both the DA and the DTI. This follows reports of robust and stable rice supplies, owing to recent imports and the anticipation of a surplus from domestic production.

Additionally, the National Economic and Development Authority (NEDA), in a statement, said that the price ceiling could further decrease price of rice as it penalizes and consequently discourages illicit price manipulation driven by hoarding and collusion.

While the government’s actions are intended to alleviate the rice price crisis, these were met with resistance from some rice retailers. The Grains Retailers’ Confederation of the Philippines in Eastern Visayas, for instance, expressed concerns about the immediate implementation of price ceilings, citing the need for more time to sell their existing rice stocks purchased at higher prices.

The Foundation for Economic Freedom (FEF) is likewise suggesting an alternative approach of temporarily reducing or lifting import tariffs on rice to address rising prices rather than imposing price ceilings. FEF contends that the price cap could discourage supply, fuel the black market, and harm both consumers and farmers.

In a recent interview, House Deputy Speaker Ralph Recto strongly advocated for a reevaluation of the government’s agricultural strategy and adopting a more welcoming approach to private sector investments. Amidst the backdrop of the DA’s proposal for a P108.5 billion budget for next year, Recto underscores the imperative for mechanization and increased private sector participation in the agricultural sector.

Although agriculture has exhibited some growth in the first half of the year, it remains outpaced by the Filipino population’s demands. Recto underscored the pivotal role of corporate farming and private investments in modernizing the agriculture sector to ensure sustained growth and food security.

Efforts to decrease the country’s dependence on food imports and simultaneously bolster the agricultural sector’s development while creating livelihood opportunities for local farmers should be amplified. Noteworthy in this regard is the Metro Pacific Investments Corporation (MPIC), under the leadership of Manuel V. Pangilinan or MVP, which has ventured into agribusiness by investing in dairy and coconut product manufacturing enterprises. MPIC acquired a substantial 34.76 percent stake in Axelum Resources Corp. for P5.32 billion, positioning itself as a key player in the coconut product manufacturing industry. This strategic move aims to benefit marginalized farmers and support agricultural growth, all the while making a significant contribution to the country’s food security.

Cooperation with international partners also plays a pivotal role in this endeavor. The Philippines is strengthening its agricultural ties with the United States, with eight US agricultural firms scheduled to visit Davao this month. The US firms are actively exploring investment and trade prospects in the region, recognizing Davao’s significance as a key producer of Philippine agricultural exports.

Collaboration with China is also gaining momentum, with a joint action plan for 2023 to 2025 signed between the DA and China’s Ministry of Agriculture and Rural Affairs. Both nations are enthusiastic about opportunities for investment and partnership within the agricultural sector to further solidify agricultural relations.

As the country grapples with the rice price crisis and other issues in the sector, it is reassuring to know that there are measures in place meant to stabilize prices, ensure food security, and modernize the agricultural industry. Collaborative efforts with private sector and international partners hold potential for significant agricultural advancements that will benefit Filipinos and the nation’s economy. The path forward involves striking a balance between immediate relief measures and sustainable, long-term strategies.