Rice price challenge
By NIdz Godino
United Nations' Food and Agriculture Organization (FAO) said global rice market has been rattled by extraordinary developments led to rice prices soaring to record high levels in nearly 12 years. According to data from All Rice Price Index for July 2.8 percent increase, reaching 129.7 points. Compared to the same period last year, this figure represents 19.7 percent surge, reaching highest nominal value since September 2011.
One of the main reasons being reported is India's decision to impose 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 global level, triggering rapid price escalation.
Likewise, it has been reported adverse weather conditions threaten rice production. Climate change has made weather patterns increasingly unpredictable, with potentially devastating effect on crop yields. Ongoing El Niño is also casting a shadow of uncertainty over rice-producing regions, and this effectively means for countries where rice is staple food, rising prices could also result in threat to food security.
Philippines is one such nation experiencing alarmingly steady increase in rice prices. Data from Department of Agriculture's (DA) Bantay Presyo shows 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 statement, advocacy group Bantay Bigas recorded P10 increase in markets they were monitoring.
In order to address alarmingly steady surge in rice prices and consequently help ease economic strain this has brought upon Filipinos, President Ferdinand Marcos Jr. has ordered countrywide implementation of mandated price ceiling on rice. Through Executive Order (EO) 39, in effect Sept. 5, price cap for regular milled rice will be set at P41 per kilogram, while well-milled rice will be capped at P45/kilogram.
Cap on food staple were collaboratively recommended by price council members of DA and Department of Trade and Industry (DTI) and are intended to remain in force unless lifted by the President, as endorsed by both DA and DTI. This follows reports of robust and stable rice supplies, owing to recent imports and anticipation of surplus from domestic production.
Additionally, National Economic and Development Authority (NEDA), in statement, said price ceiling could further decrease price of rice as it penalizes and consequently discourages illicit price manipulation driven by hoarding and collusion.
While government's actions are intended to alleviate rice price crisis, these were met with resistance from some rice retailers. Grains Retailers' Confederation of the Philippines in Eastern Visayas, for instance, expressed concerns about immediate implementation of price ceilings, citing need for more time to sell their existing rice stocks purchased at higher prices.
Foundation for Economic Freedom (FEF) is likewise suggesting alternative approach of temporarily reducing or lifting import tariffs on rice to address rising prices rather than imposing price ceilings. FEF contends price cap could discourage supply, fuel black market, and harm both consumers and farmers.
In recent interview, House Deputy Speaker Ralph Recto strongly advocated for reevaluation of government's agricultural strategy and adopting more welcoming approach to private sector investments. Amidst backdrop of DA's proposal for P108.5 billion budget for next year, Recto underscores imperative for mechanization and increased private sector participation in agricultural sector.
Although agriculture has exhibited some growth in first half of the year, it remains outpaced by Filipino population's demands. Recto underscored pivotal role of corporate farming and private investments in modernizing agriculture sector to ensure sustained growth and food security.
Efforts to decrease country's dependence on food imports and simultaneously bolster agricultural sector's development while creating livelihood opportunities for local farmers should be amplified. Noteworthy in this regard is Metro Pacific Investments Corporation (MPIC), under leadership of Manuel Pangilinan or MVP, which has ventured into agribusiness by investing in dairy and coconut product manufacturing enterprises. MPIC acquired substantial 34.76 percent stake in Axelum Resources Corp. for P5.32 billion, positioning itself as key player in coconut product manufacturing industry. This strategic move aims to benefit marginalized farmers and support agricultural growth, all the while making significant contribution to country's food security.
Cooperation with international partners also plays pivotal role in this endeavor. Philippines is strengthening its agricultural ties with United States, with eight US agricultural firms scheduled to visit Davao this month. US firms are actively exploring investment and trade prospects in the region, recognizing Davao's significance as key producer of Philippine agricultural exports.
Collaboration with China is also gaining momentum, with joint action plan for 2023 to 2025 signed between DA and China's Ministry of Agriculture and Rural Affairs. Both nations are enthusiastic about opportunities for investment and partnership within agricultural sector to further solidify agricultural relations.
As country grapples with rice price crisis and other issues in the sector, it is reassuring to know there are measures in place meant to stabilize prices, ensure food security, and modernize agricultural industry. Collaborative efforts with private sector and international partners hold potential for significant agricultural advancements that will benefit Filipinos and nation's economy. Path forward involves striking balance between immediate relief measures and sustainable, long-term strategies.
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