Rice prices to soon go up despite projected buffer stock

·2 min read
A farmer removes weeds growing alongside with ride stalks at a ricefield in Naujan, Oriental Mindoro in Philippines, August 27, 2018. Picture taken August 27, 2018. REUTERS/Erik De Castro
A farmer removes weeds growing alongside with ride stalks at a ricefield in Naujan, Oriental Mindoro in Philippines, August 27, 2018. Picture taken August 27, 2018. REUTERS/Erik De Castro

Federation of Free Farmers national manager Raul Montemayor anticipated that rice prices are bound to increase by P4 to P5 per kilogram brought upon by India’s 20 percent increase in export taxes.

India banned broken rice exports and increased taxes on several rice varieties in an attempt to control domestic inflation, effective on September 9.

“The 20 percent export tax of India will raise their export price by about P4 per kilo,” Montemayor said. “Palay prices will have to increase by P3 per kilo for farmers to recover additional costs for fertilizer and fuel.”

Montemayor highlighted how the situation is aggravated by the prevailing market prices for rice and the weakening of the Philippine peso, which makes importation more expensive.

“It will definitely lead to higher import prices together with the peso depreciation,” he said. “This can raise domestic prices, to the disadvantage of consumers, but also allow farmers to recover from higher fertilizer, fuel and production costs.”

George Barcelon, Philippine Chamber of Commerce and Industry (PCCI) president, likened the effect of rice price increase to that of the sugar industry’s, which has yet to fully stabilize due to the shortage of sugar.

He added that the effect will likely ripple to other industries that make use of rice by-products.

“For poultry growers, they cannot go full-term. When they sell it for meat, the size of the animal will be smaller compared to what it was before,” Barcelon said.

This movement in price is expected despite the Philippines having a buffer stock of rice worth 1.43 million metric tons (MT) by the end of this month. Senator Imee Marcos pointed out that the Department of Agriculture (DA) need not import rice, considering the projected rice output levels.

“The Department of Agriculture has no reason to call for any more rice imports, which will only push down farmgate prices of palay,” she said. “Our farmers are doing a great job producing more than ample domestic supply.”

Mark Ernest Famatigan is a news writer who focuses on Philippine politics. He is an advocate for press freedom and regularly follows developments in the Philippine economy. The views expressed are his own.

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