News & Events

Strong demand pushes up rice trade to P200B

Manila Times, January 7, 2004

RICE trade in the Philippines is estimated to have reached P200 billion in 2003, as the unabated population growth pushed demand and high production cost drove its prices in the domestic market.

Government data showed that the average retail price of the staple food breached the P20-per-kilo level last year, while the country’s total rice requirement neared 10 billion kilos.

The Bureau of Agricultural Statistics (BAS) reported that as of the third quarter of 2003, the average retail price of rice amounted to P20.72 a kilo, higher by P1.52 or 8 percent than P19.20 a kilo in the same quarter of 1999.

On its part, the National Food Authority (NFA) reported that the retail prices of rice ranged from P16 to P27 a kilo in 2003.

In particular, the government food distribution arm said its own NFA rice was retailed the lowest at P16 per kilo. In the public markets, a kilo of regular milled rice was priced at P17.20; well milled rice, P19.03; premium rice, P21.99; and fancy variety rice, P26.87.

The NFA said the country’s daily rice requirement climbed to 26,400 metric tons or 26.4 million kilos last year. This translated to a total rice demand of 9.636 billion kilos for the whole of 2003.

The rice industry, which accounts for 3.5 percent of the gross domestic product (GDP), provides livelihood to 2.5-million farmers and millions of other people including machine operators, workers, millers, processors, buyers or middlemen, importers, distributors, wholesalers, retailers, vendors and peddlers.

Trade and distribution of the farm commodity increases its price by at least 25 percent. For example, the farmgate price of palay (unmilled rice) was only P9.78 a kilo in the third quarter last year while the wholesale price of milled rice reached P18.94 a kilo.

Since the country has an average milling recovery rate of 65 percent, the wholesale price of 65 kilos of milled rice is calculated at P1,231, higher than the farmgate price of 100 kilos of palay amounting to P978. This means that the price of rice escalates by P2.53 or 25 percent for every kilo during milling, transportation and wholesale trading.

Another P1.16 is added on every kilo of rice when it reaches the major retailers. The price picks up further as the commodity is peddled to the interiors of communities.

Militant groups claimed that large traders enrich themselves by exploiting the poor farmers. Traders reportedly purchase palay from farmers for as low as P6 a kilo, much lower than the P9.78-per-kilo farmgate price monitored by the BAS. At P6 per kilo of palay, farmers claimed that they were barely breaking even.

The NFA claimed that it is trying to push the farmgate price of palay by directly buying from the farmers. Its own data, however, showed that it was able to purchase only 5.7 million 50-kilo bags or two-thirds of its total domestic procurement target of 8.6 million bags for 2003,

The agency’s Farmers as Distributors and Farmers as Importers programs also failed to achieve their targets for the year.

Pablito M. Villegas, president and CEO of agricultural think tank Meganomics Specialists International Inc., estimated the cost of rice production in the Philippines at P4 to P7 per kilo or twice the cost in Vietnam.

Assistant Agriculture Secretary Segfredo R. Serrano attributed the high cost of rice production to the lack of agricultural support services like irrigation and drying facilities and farm-to-market roads in the countryside.

Cheaper rice from other countries enabled the NFA to sell them at P16 a kilo in the local market, even after paying a 50 percent tariff.

In 2003, the Philippines imported some 1.1 billion kilos of rice from Vietnam, Thailand, China and other rice-exporting countries.