Middlemen to blame for wide discrepancy in rice prices – DOF

MANILA, Philippines — The Department of Finance (DOF) yesterday blamed the wide discrepancy between the farmgate price and retail price of regular milled rice in some regions on hoarders of imported rice.

Finance Undersecretary Karl Kendrick Chua said the price discrepancy in some regions starting in October indicated a problem in the “middle supply chain” referring to traders who have kept their imported rice stocks in warehouses to drive retail prices up despite abundant supply.

“The palay (unhusked rice) price is still falling, but the retail price is not falling as fast so there’s a growing disconnect,” Chua said citing data from the Philippine Statistics Authority (PSA).

The gap between the per kilo retail price of regular milled rice and farmgate price of dry palay is widest in the provinces of Iloilo with P29.75, Zamboanga del Norte with P28.50, Negros Occidental with P28.01, Kalinga P25.33, and Bulacan P25.25.

The average gap is around P22, as average retail price is P37.51 per kilo compared to dry palay farmgate average price of P15.71 per kilo.

The government is closely monitoring possible distortions in the market, particularly the widening gap between farmgate prices for paddy and rice retail prices in specific provinces.

Both the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) have formed strike teams to look into possible smuggling and hoarding activities, and non-compliance with tax and business regulations.

Last Oct. 3, the DOF and BIR raided unregistered warehouses in Bulacan and discovered more than 250,000 sacks of imported rice from Vietnam and Myanmar, among other commodities. To date, the companies involved have not produced import documents.

DOF assistant secretary and spokesperson Antonio Lambino said the agency received reports that some traders reserve warehouse space without storing anything, putting pressure on the farmers to sell at very low prices because the farmers now don’t have anywhere to put their harvest.

 The anti-smuggling and anti-hoarding activities are expected to intensify as the Department of Agriculture and the Philippine Competition Commission (PCC) jointly investigate possible collusion in the domestic rice market, alongside enforcement of tax and customs regulations by the DOF, BIR, and BOC.

Finance Secretary Carlos Dominguez yesterday reiterated the Duterte administration’s unwavering commitment to the twin goals of helping the country’s rice farmers become more globally competitive and providing Filipino families with access to affordable rice.

Dominguez said the price of rice has declined by an average of more than P8 per kilo since the passage of Republic Act 11203 or the Rice Tariffication Act eight months ago.

“This is particularly helpful for low income households that spend around a fifth of their budgets on rice alone,” he added.

This price reduction is well within the economic team’s estimate of a P7 to P10 drop in retail prices was reported  to Congress and the public last year,” Dominguez said.

Latest data from the PSA showed the price of dry palay declined to P15.71 per kilo in the second week of October from the average of P17.23 per kilo between 2015 and 2017.

 This translates to an average loss for farmers of about P1.52 per kilo.

Dominguez said farmgate prices fell by as much as P5.63 per kilo, while palay prices actually rose by P3.75 per kilo.

Provinces with the biggest drop in dry palay price per kilo relative to the normal period are Bulacan with P5.63, Compostela Valley with P5.20, Pampanga with P4.60, Ilocos Norte with P4.38, and Agusan del Norte with P4.37.

“The government is constantly monitoring location-specific prices so that interventions are designed and deployed on an evidence-based and targeted manner,” Dominguez said.

 The measures include both expanded assistance to farmers and intensified enforcement of regulations against abusive trading practices.”

 Various government agencies, agriculture-focused financial institutions, and local governments have implemented urgent measures to support farmers and will continue to do so in the coming months.