Philcongrains justifies increased rice prices

  • 11 December 2014, Thursday

Source: The Daily Tribune
8 Dec 2014

The Philippine Confederation of Grains Associations (Philcongrains) disputed the claim that the rice sufficiency program is to blame for higher prices of staple grains.

Herculano Co, the long-time president of Philcongrains, has refuted this claim, saying the issue is palay prices which are based on the production cost plus a return on investment (RoI) for farmers, and the higher cost can be traced to the increasing prices of farm inputs.

Ealrier, a study claimed that while the world prices of rice have been going down in 2013 and 2014, the price of rice in the country was rising.
It was disputed by Co, insisting that the rice trade is 90 percent local trade and only 5 percent of the global output is sold in the international market.

He stressed that with smuggled rice filtering into the market, “these illicit traders earn a windfall since they sell at market prices or a little less even if they do not pay tariff and have less risks than local traders.

They are the ones who profit from the purported low price of Vietnam rice.

The study conducted by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (Searca) on the smuggling of rice and other commodities “showed that when trade was liberalized, the entry of hot rice skyrocketed, prompting calls for the government to go hard against smugglers since they are killing local food producers.”

Out of this huge market share, small farmers contribute more than 70 percent of the yield, an indication that local trade is the norm for the rice industry.

The millers group also said that facts that rice is a highly unique food product since one cannot dictate prices and the eating qualities of different populations.

For one, some cultures prefer glutinous rice appropriate for their chopsticks while other demand aromatic rice strains to satisfy their needs.

In the Philippine case, the rice variety preferred in the North is not necessarily the same one liked in the South, where millions actually mix rice with corn for a more nutritious blend, he added.

Also, the energy prices practically account for 20 percent of every kilo of rice, and then the rising price of farm labor, the rent for equipment, post-harvest facilities and milling.

With these things even before the palay grows, farmers have to spend for land preparation, irrigation and in entire, it is only in the Philippines where farmers pay for irrigation service, pesticides, herbicides and other farm inputs.

Co said it is fairly easy for economists to accuse the rice self-sufficiency program of causing increases in rice prices based on the prices alone without taking into consideration the total production cost.

He stressed that Asian domestic markets prefer locally-produced rice and no economist in the planet can change that fact.
To the consumers, there is no sense in waiting for cheap Vietnam rice when rice from Isabela, Cagayan and Central Luzon are available.

The country has imported tons of Vietnam rice apprently to make sure there is enough supply for the consumers even if the government is saying that they have already reached more than 90 percent rice sufficiency.
Co stressed that the claim about the annual 6.33 percent increase in rice prices is not exactly correct since the current palay farmgate price is actually low, and this translates to lower rice prices.