P20/kg of rice is a “temporary” fix

I agree with the observation of IBON Foundation Inc.’s Sonny Africa about the rollout of P20 per kg of rice in the Visayas as just a “temporary fix” for which consumers have to be thankful, but that long term solutions like supporting small farmers are what is needed for food security and improving economic growth. 

This effectively reduces current retail prices for the poor from P45 to P20/kg, in keeping with the President’s campaign promise in 2022.

But then again, gratitude must go to the taxpayers who are shouldering the cost of subsidizing the P20/kg rice program, which observers view as a “political stunt” to push the administration’s senatorial candidates in the 2025 midterm polls on May 12. The subsidy does not come from the personal funds of the president or the sitting officials of the land, but taxes paid by all taxpayers.

In a statement, Ibon explained that bringing down the cost of rice to P20 per kilo from the prevailing cost of P45 per kilo will be made possible by the subsidy to be extended by national government and local government units.  

IBON noted that the P45 per kilo price of rice was obtained from the Philippine Statistics Authority (PSA), much higher than the P32 to P33 per kilo estimate of the Department of Agriculture (DA).

“The price difference, DA Secretary Francisco Tiu Laurel Jr. claimed, will be shouldered by the national government and local government units,” IBON said.

Africa told Business Mirror that about 85% of national and local government funds are from taxes.  

“The program set to be launched in the Visayas will sell at most 10 kilos per week per indigent or low-income family. The budget for the program is estimated at P3.5-4.5 billion,” it added.

IBON stressed that this latest rice program was merely a stop-gap measure and that the real solution is to increase rice production.

This can only happen if the NG and LGUs provide protection and subsidies for small farmers and the agriculture sector in general.

Rice and other food prices can be sustainably lowered but only with a long-term strategy of steady protection and subsidies for small farmers and Filipino agriculture,” it added.

IBON also estimated that the Visayas has 900,886 poor families based on the latest Listahanan 3. The budget to subsidize the cost would only be good for about 20 weeks or five months.

This would also exclude 4.1-M Visayan families who still have no choice but to continue paying for the normal expensive price for rice.

“Listahanan 3 identifies 5.6 million poor families nationwide. If the ‘P4.5 billion’ budget is for all of them they can be subsidized for a little over three weeks—about 22 days. But it’s not as if they’re the only needy Filipino families,” Ibon said.

IBON  quoting the Bangko Sentral ng Pilipinas (BSP) reported some 20.1 million households or 74.4 percent of all households without any savings.

IBON said the ‘P4.5 billion’ budget enables P20/kilo rice for just a little over six days or less than a week. This, Ibon said, is even less once logistical expenses are taken into consideration.

Africa said the program would be even more stretched if the subsidy budget were to cover 5.6 million poor families nationwide, or to include the 20.1 million households estimated by the central bank to have no savings. Another factor that could blow up costs is logistics, Africa said.

Laurel, who heads the NFA governing council, instructed NFA to begin transferring rice stocks to the Visayas. The rice for this initiative will come from the NFA’s reserves, which, as of last week, was at a five-year high of 378,157 metric tons — equivalent to 7.56 million bags of rice or equivalent to 10 days’ national consumption.

NFA warehouses in Iloilo currently hold the equivalent of 862,409 sacks of rice, the DA said.

It said the supplies in Mindoro are needed for areas with limited rice production such as Cebu, Negros Island, Samar, and Leyte.

“The additional stocks for the Visayas will mainly come from Mindoro Island, where the NFA inventory exceeds 830,000 bags of rice,” NFA Administrator Larry Lacson said.

He said transferring 40,000 sacks of rice from Mindoro to Cebu could take up to a month.

The subsidy for the lower-priced rice will be shared equally by the DA’s Food Terminal, Inc. and participating local government units (LGUs), the DA said, adding that Visayas had the highest poverty rate with Negros Island and the Eastern Visayas having rates of 22.6 and 20.3%, respectively.

“Initially expected to run only until December, the DA is now reviewing and fine tuning the plan following the directive of President Marcos to expand the initiative to the rest of the country and sustain it through 2028,” it added.

The DA reiterated that the initiative will also help clear space in NFA warehouses, allowing the grains agency to purchase more palay (unmilled rice) from farmers at higher prices.

IBON said the program compromises the NFA’s food security mission “at a time when it’s become even more important given the US-driven uncertainties in the global trading system.”

The FFF said farmers do not see major policy reversals after the midterm elections in May. “Every move is politically driven now, but mainly for short term impact,” he said.

Farmgate prices are at P16-17 per kilo of palay, P90 per kilo of chicken, and P230 per kilo of pork, he said via Viber.