MANILA, Philippines – Government-subsidized and imported rice have been pushing down prices of wet palay way below production costs, threatening to make farmers lose billions of pesos in income.
Wet palay prices have slid down to a P9.50 per kilo while production costs zoomed to P16 per kilo, according to Herculano "Joji" Co, resident of the Philippine Confederation of Grains Associations (Philcongrains).
What makes the problem worse is that massive importations of rice by the National Food Authority (NFA) have edged out the grain bought by millers at higher prices.
Co fears a glut in the market since many traders could not release their stocks without incurring losses. Most of these stocks were bought from as low as P11 per kilo to P14 per kilo and converting them to rice would add up P3 per kilo for drying, not to mention other costs like trucking and distribution.
The long-time Philcongrains president stressed that traditionally, the conversion rate for palay is 50 percent, and the retail cost is double the purchase price.
Thus, for grain bought at P12.50 per kilo, the price in the market would be double, or P25 per kilo.
Market under NFA control
Co explained that the situation is grim for many millers since they bought high before the NFA bombarded the market with 2.3 million metric tons of rice at subsidized prices.
He noted that at this stage, the rice market, which is not dominated by any single miller, is now practically controlled by the NFA, estimating that the loss-making agency may have 6 percent of the supply at any time.
"The problem of farmers will be compounded, many millers would lose money and the NFA would incur more deficits as they get deeply involved on the supply side," Co explained.
Since the lean months are practically ending, the problem for millers is how to make good use of the rice stocks that they have and talk among traders is whether they can venture into making rice wine, poprice, or any other rice byproduct in order to recoup their losses.
KMP blames imports
On the other hand, the Kilusang Magbubukid ng Pilipinas (KMP) blasted the Department of Agriculture (DA) for following an import-led rice sufficiency program, noting that the low prices of rice would force many farmers to abandon the crop and turn to export commodities and put the country's food security in peril.
KMP stressed that NFA is committed to lose more than P40 billion for subsidized rice importations when many farmers have had sufficient stocks since April even as the food agency had not purchased up to 10 percent of the annual national output as mandated by its charter.
Recently, the NFA vowed to buy 500,000 metric tons from farmers, more than 13 times the volume of local procurement last year, but it came after the agency announced that 400,000 metric tons of imported rice will be coming in late this year.
Millers and traders in Pangasinan have already demanded the resignation of top NFA officials for failure to buy palay from farmers and for insisting on importing rice from Vietnam.
Last year, the country produced only 16.24 million metric tons of palay but President Gloria Macapagal Arroyo wants the figure to rise to 17.32 million metric tons this year and 19.77 million metric tons in 2010, and for the Philippines to achieve 100 percent rice sufficiency by 2013, a three-year retreat from previous projections.
Government says the dry crop of palay reached the target of 7.1 million metric tons set by the Department of Agriculture (DA) for this year but the succeeding harvests may not be as big as fertilizer use by farmers has been cut drastically by 30 percent. - GMANews.TV
Wet palay prices have slid down to a P9.50 per kilo while production costs zoomed to P16 per kilo, according to Herculano "Joji" Co, resident of the Philippine Confederation of Grains Associations (Philcongrains).
What makes the problem worse is that massive importations of rice by the National Food Authority (NFA) have edged out the grain bought by millers at higher prices.
Co fears a glut in the market since many traders could not release their stocks without incurring losses. Most of these stocks were bought from as low as P11 per kilo to P14 per kilo and converting them to rice would add up P3 per kilo for drying, not to mention other costs like trucking and distribution.
The long-time Philcongrains president stressed that traditionally, the conversion rate for palay is 50 percent, and the retail cost is double the purchase price.
Thus, for grain bought at P12.50 per kilo, the price in the market would be double, or P25 per kilo.
Market under NFA control
Co explained that the situation is grim for many millers since they bought high before the NFA bombarded the market with 2.3 million metric tons of rice at subsidized prices.
He noted that at this stage, the rice market, which is not dominated by any single miller, is now practically controlled by the NFA, estimating that the loss-making agency may have 6 percent of the supply at any time.
"The problem of farmers will be compounded, many millers would lose money and the NFA would incur more deficits as they get deeply involved on the supply side," Co explained.
Since the lean months are practically ending, the problem for millers is how to make good use of the rice stocks that they have and talk among traders is whether they can venture into making rice wine, poprice, or any other rice byproduct in order to recoup their losses.
KMP blames imports
On the other hand, the Kilusang Magbubukid ng Pilipinas (KMP) blasted the Department of Agriculture (DA) for following an import-led rice sufficiency program, noting that the low prices of rice would force many farmers to abandon the crop and turn to export commodities and put the country's food security in peril.
KMP stressed that NFA is committed to lose more than P40 billion for subsidized rice importations when many farmers have had sufficient stocks since April even as the food agency had not purchased up to 10 percent of the annual national output as mandated by its charter.
Recently, the NFA vowed to buy 500,000 metric tons from farmers, more than 13 times the volume of local procurement last year, but it came after the agency announced that 400,000 metric tons of imported rice will be coming in late this year.
Millers and traders in Pangasinan have already demanded the resignation of top NFA officials for failure to buy palay from farmers and for insisting on importing rice from Vietnam.
Last year, the country produced only 16.24 million metric tons of palay but President Gloria Macapagal Arroyo wants the figure to rise to 17.32 million metric tons this year and 19.77 million metric tons in 2010, and for the Philippines to achieve 100 percent rice sufficiency by 2013, a three-year retreat from previous projections.
Government says the dry crop of palay reached the target of 7.1 million metric tons set by the Department of Agriculture (DA) for this year but the succeeding harvests may not be as big as fertilizer use by farmers has been cut drastically by 30 percent. - GMANews.TV
