The Market Monitor Minding the Nation's Business
By Rose de la Cruz
Last April 10, farmers’ group, Federation of Free Farmers voiced the peasants’ desire for a floor price for palay to save them from “severe drops” in farmgate prices.
It took the government over one month on May 20 to respond that it is studying the idea to ensure protection for the farmers.
FFF chair Leonardo Montemayor, Agriculture Secretary during President Estrada, told Rappler that buying prices of freshly harvested palay dropped at P12 to P14 per kilogram.
“If the government has imposed a maximum suggested retail price or MSRP for consumers, it should also protect farmers by requiring traders to buy palay from them at a minimum price,” Montemayor said.
The floor price will protect farmers across the board, as the National Food Authority (NFA) can only buy so much due to funding and storage constraints.. The NFA recently raised its buying price of palay from a range of P16 to P23 per kilo to P17 to P30.
DA spokesman Arnel de Mesa said the agency is open to the idea and is now discussing it.
But the official announcement from the palace came out only on May 20.
De Mesa said the average cost to produce one kilogram of palay is P13.50 based on data from the Philippine Rice Research Institute. He said that the cost of palay production ranges from P11.2 to P18 in Nueva Ecija, a disparity that affects farmgate prices. He concurred that a P20-floor price for a kilo of dry palay is reasonable.
Rappler said that as of February 2025, average farmgate prices of palay nationwide is at P20.68, citing the Philippine Statistics Authority.
The floor price scheme, patterned after practices in Indonesia and Thailand, will encourage farmers to plant rice in the next cropping season. “If our farmers are assured that their harvests will be sold profitably, they will be encouraged to plant more in the next cropping season,” de Mesa said.
The DA is currently tracking areas where farmgate prices are unusually low, with traders enjoying leverage over farmers because they control milling, storage, and transport. Competition from cheaper imported rice is also forcing them to hedge against being stuck with expensive inventories of domestic rice, Business World cited.
The DA is also studying the Price Act, the Anti-Agricultural Economic Sabotage Act, and other laws that could serve as the legal basis for imposing such a floor price.
The DA said it was looking into reports that traders are paying farmers as little as P13/lkg for their palay in Luzon.
The buying price set by the National Food Authority is between P18 and P24 per kilo for clean and dry palay.
The government projects palay harvest of 24.4 million metric-ton (MMT) due to favorable weather this year, with production volume hitting 4.7 MMT as of March, from 4.69 MMT the previous year..
The government is currently selling subsidized rice at P20/kg to vulnerable sectors like the poor and disabled persons but will soon expand it to the lower middle-income families, with the government planning to observe its impact on farmgate and retail prices. magsasaka (this is what the Secretary has been mentioning as the cropping intention, planting intention of our farmers).”
Areas to be prioritized for the floor prices are: Bataan, Cagayan, Allacapan, Kalinga, Nueva Vizcaya, Ifugao and Quirino in Cagayan Valley; Compostela Valley in Southern Mindanao; and Sultan Kudarat in Central Mindanao, which have the lowest traders’ price at P13.50/lg of palay, the PNA said.