President Marcos optimistic cost of rice will stabilize

President Marcos is pleased  that  prices of milled rice are dropping, which would provide a relief on inflation that has stayed on the upside in several months this year and caused growth to slow down a bit.

In a news release, Malacanang said  President Marcos is optimistic that the cost of rice would stabilize consistent with current prices in Southeast Asia. 

He noted that rice prices seem to be consistent again with other ASEAN countries like Thailand and Vietnam, which are both suppliers of the staple grain in the world market.

Rice was the Philippines’ top inflation driver, contributing 1.3 percentage points to inflation. Inflation further decelerated to 14.7 percent, but prices remained elevated.

President Marcos’ views, however, differ with that of the  Federation of Free Farmers, which expressed concerned about the drop in palay (unmilled rice) prices at the start of harvest season because of the impending arrival of cheap imported rice.

The FFF claimed freshly- harvested palay is being bought from farmers in Nueva Ecija, Pangasinan, Mindoro Occidental, Sultan Kudarat and North Cotabato from P21 to P23 per kilogram (kg) and as low as P16.50/kg in some parts of Nueva Ecija.

“Traders are afraid the fresh harvests will coincide with the arrival of cheap imports, which will result in oversupply. So they play safe by buying low from farmers,” FFF National Manager Raul Montemayor said in a statement.

Tariffs on rice imports fell to 15 percent from the previous 35 percent, as mandated by President Ferdinand Marcos Jr.’s Executive Order 62 to help manage food inflation caused by the rising retail cost of rice in the past months, reported the Manila Times..

The FFF rebutted that the retail price of rice has since decreased by an average of only P0.40/kg, or 0.5 percent, as opposed to the promised drop of P6 to P7/kg.

Agriculture Secretary Francisco Tiu Laurel, Jr. earlier said retail rice prices are projected to start declining in October due to the import tariff cut. The full impact, Tiu Laurel added, may be felt in January 2025.

The FFF disputed claims that the retail market’s slow reaction to the tariff cut was due to traders selling their rice stocks bought at higher prices in previous months.

“It does not make sense for traders to hold on to cheap stocks imported with a 15-percent tariff while retail prices are still high. They are, in fact, maximizing their profits now instead of passing on their tariff savings to consumers,” Montemayor said.

The FFF estimates the government lost P3.4 billion in customs duties from 581,000 tons of dutiable imports due to tariff reductions in July and August, the newspaper reported.

The Department of Agriculture should focus on helping farmers cope with La Niña and the anticipated drop in palay prices, said the FFF.

The landed cost of the imported rice declined by 15 percent, or around P7 per kilogram, as of mid-September, following the implementation of reduced tariffs under Executive Order 62, series of 2024.

Finance Secretary Ralph Recto projected in a briefing following the sectoral meeting at the palace that inflation would likely fall to 2.5 percent by the end of September.

Average inflation for the period January to August 2024 reached 3.6 percent, within the government’s target of 3.0 percent to 4.0 percent for the year.

Authorities reported that food inflation decelerated from 6.4 percent in July 2024 to 3.9 percent in August, with slower inflation in rice, meat, bread, other cereals and ready-made food products. Deflation was recorded in fish, vegetables and sugar. Rose de la Cruz