The Market Monitor Minding the Nation's Business
The Makati Business Club urged the government to invest more in farm infrastructure like irrigation, drying and storage facilities than subsidizing rice, which would bring down rice prices to P20 per kilogram.
Infrastructure investment is more sustainable and efficient than subsidizing rice prices, MBC Chairman Edgar O. Chua told reporters emphasizing that the key is to reduce farmer reliance on middlemen, many of whom have been providing farmers with storage and inputs.
“Consumers pay a very high price (for rice). We pay almost double what other countries pay, and yet our farmers are getting a very low price for their produce,” Chua was quoted as saying.
“In between, there are so many middlemen that make a margin. And some of them are lending money, some of them are providing storage facilities, some of them are providing fertilizer, etc. (to farmers),” he added.
“So, what’s needed is to address the inefficiencies in the ecosystem.”
The DA’s P20/kg rice program– a goal set by President Marcos to himself during the campaign in 2022– has recently been expanded to parts of Luzon and Mindanao, after its initial rollout in selected Visayan provinces on May 1.
The DA hopes to provide subsidized rice to 14 million individuals by September and to keep the program running until the end of the President’s term in 2028.
The subsidy is shared by local government units (LGUs) and Food Terminal, Inc. (FTI).
Before the P20/kg program, the NFA was selling rice to LGUs at P33 per kilo under a food security emergency declared in late January. Under this arrangement, it lost about P12/kg.
With the price of NFA rice at P33 per kilo, FTI and the LGU will need to pay P6.50 each to close the P13 gap. For government-backed Kadiwa markets, the subsidy is fully paid by the FTI.
Resigned DA Secretary Francisco Tiu Laurel, Jr. has said that the FTI will spend P4.5 billion on rice procurement and a further P500 million on logistics and packaging, to be able to sell at P20/kg, for which the government loses P10 to P12 billion.
The DA said it was seeking a P10-billion budget for the FTI to sustain the P20/kg rice program in 2026.
If realized, this would be more than the current P5-billion allocation from the Office of the President’s contingency fund.
Chua said the MBC is confident that the DA could address systemic issues that keep rice prices high.
“We were pleasantly surprised that he has identified all these issues that are actually hounding our agricultural sector,” he said.
“What would be important would be the political will to address those issues and support from various sectors of society.” Rose de la Cruz