The Federation of Free Farmers (FFF) expressed fears the National Food Authority (NFA) Council and the Department of Agriculture’s (DA) decision to unload nearly 4 million cavans of rice until next month could end up further depressing palay prices for farmers.
This developed as the Land Bank of the Philippines announced it was allotting P10 billion for a lending program that would assist local government units in purchasing palay produced by local farmers to help cushion the effects of the drop in the price of palay in some regions.
Raul Montemayor, FFF national manager, said while the objective of the move is good – to pull down the price of commercial rice in the market – the timing is problematic since the main harvest season is about to start.
“First of all, there is already a big glut in the market because of the large volume of cheap rice imported by private traders. This glut is the main reason why palay prices are going down. Flooding the market with NFA rice will just worsen the glut,” Montemayor said.
He pointed out a flooded market may further limit the entry of fresh harvests of farmers as the harvest season begins.
“NFA will not be able to absorb all of the stocks of farmers. Private traders will be the ones who will buy most of the palay and they will be forced to buy low because they will have to compete not only with the cheap imported price plus now also the P27 NFA rice. If the NFA rice is sold at P27 per kilo retail, the equivalent palay price will just be around P13 to 14 per kilo,” he warned.
Montemayor said there is no guarantee that retail prices will be pulled down if NFA rice is unloaded, citing the agency still has large stocks of imported rice up to now since retailers prefer to sell imported rice with better quality for higher profit.
FFF also advised the DA to look into reports that the NFA is milling locally procured palay into rice even if there are still large stocks of unsold imported rice.
Montemayor said the agency must first dispose the imported rice as these will deteriorate much faster than palay stocks that are supposed to be used for calamities and emergencies.
The group also said the proposal that NFA swaps its rice stocks with palay deliveries from farmer groups instead of unloading them in the market outright can be considered.
“Although this will still release additional rice into the market, at least farmers may be able to end up earning more by reselling the NFA rice instead of selling their palay to traders. At the same time, NFA’s imported stocks will immediately be replaced by palay stocks which have a longer storage life.
Also, it will not worsen the market glut because the rice that will be given to the farmers will be offset by an equivalent volume of palay that will stay stored in NFA bodegas,” Montemayor explained.
Meanwhile, the Land Bank of the Philippines has partnered with DA in rolling out a new lending program that would assist local government units in purchasing palay produced by local farmers to help cushion the effects of the drop in the price of palay in some regions.
The bank has earmarked P10-billion to fund the Palay ng Lalawigan Program to assist provincial, municipal and city governments of rice-producing areas nationwide to procure palay from small farmers at only 2 percent interest per annum.
“This is a direct response of the bank, together with the Department of Agriculture, to the call of the national government for a concerted effort of government agencies serving the agriculture sector to firm up its support for our palay farmers in the wake of the impact of lower palay prices,” Cecilia Borromeo, Landbank president and chief executive officer, said in a statement.
Under the program, provincial governments will buy local palay and may operate a socio-economic enterprise to assist the farmers whose incomes were adversely affected by the drop in the farmgate prices of palay.