PCC sees ‘dual setback’ in rice import bans

The Philippine Competition Commission sees a ‘dual setback’ arising from imposing rice import bans if it is proven that traders and wholesalers are involved in importing the grain.

PCC Director Carlos Juan Paolo Vega said the import freeze could pose an uptick in retail rice prices while farmers might remain at the mercy of those holding power over rice supply.

He explained that the effect of Executive Order 93, which banned the entry of imported rice for 60 days, would depend on whether intermediate agents like wholesalers, millers, and traders have any incentive to offer a higher buying price to farmers, reported Business Mirror.

“If these intermediate agents possess some degree of buyer power, farmers and palay aggregators may still face unfavorable prices,” Vega informed the hearing of the Committee on Agriculture and Food.

“What we might have then is a situation where we end up with a dual setback, where both consumers and farmers do not benefit,” he added.

Thus, those in the middle of the value chain would reap most of the policy’s gains, he said.

“Consumers might eventually bear the brunt of higher prices without the farmers necessarily benefiting from them.”

Vega then called on the government to verify the extent of vertical integration among importers and determine whether the companies involved in the rice trade are independent of each other.

“So, are the importers also the ones involved in the wholesale trade, or are they also the main ones buying palay from the farmers? […] Even though they appear to be different companies, are they in essence controlled by just a few entities?”

“We believe that understanding the real structure of this market can shed more light on the issues,” he said.

However, the PCC director noted that the impact of the import ban might not yet reflect in the market due to the delay in the transmission of farmgate price data, which the government should take into account.

“We strongly believe that this policy should consider both effects downstream, alongside benefits to the farmers, and as well the degree of effective competition among middlemen and the importers,” Vega said.

The import suspension, that started on September 1, was initially imposed to help farmers recover from falling palay prices triggered by a surge in cheaper imported rice.

DA Secretary Francisco Tiu Laurel Jr. confirmed that the government will extend the rice import ban until December 31, 2025.