Nationwide price caps for rice set

Metro Manila (CNN Philippines, September 1) — Malacañang has issued an executive order setting price ceilings for rice across the country after the government detected a price surge.

In a statement released Friday, the Presidential Communications Office said Executive Order (EO) No. 39 signed by Executive Secretary Lucas Bersamin on Aug. 31 mandates the price ceiling for regular milled rice at ₱41.00 per kilo and for well-milled rice at ₱45.00 per kilo. 

The decision came after a joint recommendation made by the Department of Agriculture (DA) and the Department of Trade and Industry (DTI) due to "the current surge in retail prices of rice in the country, which resulted in a considerable economic strain on Filipinos, particularly the underprivileged and marginalized."

DTI Secretary Fred Pascual said in a separate statement that “[t]he imposition of this price ceiling is aimed at protecting Filipino consumers from unjust or unfair sales practices.”

In a sectoral meeting with President Ferdinand Marcos Jr. on Aug. 29, the DA presented its estimated rice supply for the second semester at 10.15 million metric tons (MMT). Of this volume, 2.53 MMT is the ending stock from the first semester, 7.20 MMT is the expected yield from local production, and 0.41 MMT is imported rice. The total supply would be enough for the current 7.76 MMT demand and will yield an ending stock of 2.39 MMT that will last up to 64 days, it noted.

Despite the steady supply, the DA and DTI warned of alleged illegal price manipulation, such as hoarding and collusion among industry players, as well as global events like the ongoing Russia-Ukraine conflict, India's ban on rice exportation, and the unpredictability of oil prices in the world market. These are some of the factors noted to have pushed up the retail prices of the staple grain.

As of Aug. 28, the DA said a kilo of local regular milled rice in National Capital Region (NCR) markets ranged from P42.00 to P55.00 while local well-milled rice costs P48.00 to P56.00 per kilo.

According to the National Economic and Development Authority, rice inflation rate also increased from 1% in January 2022 to 4.2% in July 2023 “which could be attributed to the rising demand and tight supply due to, among others, efforts of other countries to buffer their supply in anticipation of El Niño and the above-mentioned international developments.”

In an ambush interview, Marcos said efforts will be focused in the National Capital Region where the problem is rampant. The lead agencies in the implementation of the order are the DA, DTI, the Department of the Interior and Local Government (DILG), and the Department of Justice (DOJ).

Marcos — who is also agriculture secretary  — directed the DA and DTI to ensure proper implementation of the price caps and to keep an eye on and investigate abnormal price movements. Assistance should also be given to affected retailers in coordination with the DILG

The Bureau of Customs was also told to intensify efforts against hoarding and illegal importation of rice. Meanwhile, the Philippine Competition Commission, in coordination with the DA and the DTI, were ordered to implement measures against cartels to maintain fair market competition.

"The mandated price ceilings shall remain in full force and effect unless lifted by the President upon the recommendation of the Price Coordinating Council or the DA and the DTI," the executive order said.

In a statement, House Speaker Martin Romualdez said the lower chamber supports the president’s decision to set price caps for rice.

“The imposition of price ceilings on this staple food is a timely and necessary intervention to shield our fellow countrymen from the undue economic burden caused by unwarranted surges in rice prices,” he added.

He also said the House will intensify efforts to investigate alleged hoarding and price manipulation of agricultural commodities.

Jayson Cainglet, executive director of the Samahang Industriya Ng Agrikultura (SINAG), also lauded the chief executive’s move, noting that the price increases in the past weeks have no basis as “there was/is no rice shortage in the country.”

Ineffective?

However, Federation of Free Farmers chairman Leonardo Montemayor, a former DA chief, believes the price caps will not work. He noted that the “cause of high prices is the extremely limited supply of rice, aggravated by elevated prices of imported rice.”

Former Senator Kiko Pangilinan also pointed out that such price ceilings do not work in the long run. He said on X (formerly Twitter) that “[w]ith a rice price cap, tendency is traders will hesitate to buy palay from our farmers for fear of losing money due to the cap.”

“Farmers will suffer. Imports as a means of addressing the shortfall in production is iffy too due to the unprecedented high world market rice prices. Traders will also hesitate to release current stock because of the cap and if at all they will only release in increments rather than the usual bulk releases,” he added.

“If this happens, supply will be greatly affected and prices will shoot up. Rice caps must include other immediate interventions,” he also said.

Pangilinan listed areas where the government should focus on, like recognizing that this is only a temporary measure and that it will only work if additional interventions are undertaken, going after unscrupulous traders/profiteers, and providing immediate assistance to farmers, to name a few.

Senator Risa Hontiveros also doesn't believe the price control is the proper cure, saying if there are hoarders jacking up the prices, then they should be caught.

She noted, however, that even without hoarders, the costs of the basic commodity will still rise due to lack of government subsidy for fertilizers, as well as insurance for farmers affected by flooding, among other reasons.

“Hiniling ko noon sa Senado na repasuhin ang Rice Tariffication Law (RTL)," the lawmaker added. "Dahil sa nakaraang taon ay inipit ang pag-issue ng permits para sa importasyon ng bigas at hindi nakaipon ng buffer stock ang NFA (National Food Authority) — kontra sa utos ng RTL. Bukod sa RTL, kailangang repasuhin din ang pamamalakad sa DA at NFA."

[Translation: I previously asked the Senate to review the Rice Tarriffication Law. In the past year, the issuance of permits for rice importation was blocked and the NFA didn’t have enough buffer stock — which is against the RTL. Aside from the RTL, there is also a need to review the management of DA and NFA.]