The Federation of Free Farmers (FFF) scored the Department of Agriculture (DA) for implying that its interventions had been responsible for the current increase in palay farmgate prices.
In a recent press release, the DA reported that palay prices averaged Php 19.91 per kilo in the last week of April 2020, surpassing the Php 19 per kilo buying price of the National Food Authority (NFA). This price level is the highest so far following the continuous decline in farmgate prices after the passage of the Rice Tariffication Law (RTL) in February 2019 and the entry of over 3 million tons of rice imports last year.
In the same press statement, DA Secretary William Dar claimed that the efforts of the Department to provide “immediate support mechanisms to help small rice farmers adjust [to tariffication]” had yielded “initial good results”.
Raul Montemayor, FFF National Manager, however questioned the DA’s claim, noting that both palay output and planted area declined in 2019 compared to 2018 as farmers scaled down their production in response to plunging palay prices due to imports. Reports from the Philippine Statistics Authority (PSA) showed that the value of palay production dropped by Php 80 billion in 2019, approximating the losses incurred by farmers as a result of depressed prices. Latest PSA reports indicate a similar decline in harvest volume, hectarage and value of production in the first quarter of 2020 despite the provision of free certified seeds and other support to farmers under the Rice Competitiveness Enhancement Fund (RCEF).
The FFF added that the recent rise in palay prices cannot be attributed to DA’s programs, considering that palay prices in 2019 were on a continuous decline despite the efforts of the National Food Authority (NFA) and local government units to prop up prices.
“The current rise in palay prices is almost exclusively due to the COVID pandemic, which has made it more difficult and expensive to import rice. At the same time, there was an increased demand for rice to support households affected by the lockdowns. DA had very little to do with this.”, explained Montemayor.
“In fact, what DA should be held accountable for is the decline in palay prices in 2019, its approval of clearances for imports well in excess of the country’s requirements, and its refusal to impose safeguard duties on imports despite clear evidence that the surge in rice imports was causing significant injury to millions of small rice farmers.”, explained Montemayor.
The FFF also expressed bewilderment over Secretary Dar’s claim that the higher palay prices at present “could be a manifestation of the normalization of the rice industry” following the “transition from quantitative restriction to a tariffed trade regime” under the RTL.
“What happened to palay prices is far from normal because prices would have remained low and imports would have continued to come in if not for the COVID pandemic. It is absurd to make it appear that the RTL was in any way responsible for the rise in palay prices.”, said Montemayor.
The FFF again cautioned the DA against overimportation, noting that the agency has already issued sanitary import clearances for over 2.7 million metric tons of rice imports so far this year. “Even though COVID has tempered the inflow of imports for now, there is nothing to stop private traders from bringing in large volumes again if the opportunity arises. This could again create a glut in the market and depress palay prices during the wet harvest season later this year.”, warned Montemayor.
The FFF noted that the DA projection of a 3.3 million ton rice surplus by the end of 2020 could not be considered a major accomplishment since it is actually premised on the arrival of over 2 million tons of rice imports.