Farmers’ group blames trading speculation for low palay prices

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    The Federation of Free Farmers (FFF) blamed the decline in prices of palay to speculation by traders who take advantage of the unclear rice import policy of the Department of Agriculture (DA).

    “Many traders are playing safe and (are) buying low because they fear imports will continue to come in and flood the market again in the coming months,” said Raul Montemayor, FFF national manager.

    Montemayor said traders bought palay from farmers during the first half of the year at relatively high prices and were caught flatfooted by the massive inflow of imports in the second half of the year.

    Imports coming. Less than half of the 3.75 million tons of rice imports approved for January to September have entered the country. (File photo)

    He said many of them could not unload their stocks at a profit and some had to suspend their operations.

    Montemayor alleged traders leverage on the expected arrival volume of imports for the rest of the year.

    The DA through the Bureau of Plant Industry issued sanitary and phytosanitary import clearances (SPSICs) for 3.75 million tons of rice imports between January and September this year, higher than the 3 million tons of total rice importation in the entire 2019.

    However, Montemayor said only less than half of that volume have arrived due to the increase in international prices of rice in response to the pandemic and weather disturbances in Asia.

    The FFF said the DA has threatened importers with penalties if they did not use their SPSICs.

    This leaves farmers no choice to sell as the National Food Authority (NFA) does not have the budget to buy their palay.

    The FFF said NFA has a procurement budget of only P7 billion this year, enough to buy only the second semester palay output of Central Luzon and only 3.5 percent of the total palay harvest in the second half of the year nationwide.

    “The DA had repeatedly said the country has enough rice and would have comfortable buffer stocks but it did not explain that all of the surplus inventory would actually come from imports. So, when imports did not live up to expectations, it had to do something to pressure the importers to deliver. The problem now is that we already have a surplus at present, the main harvest is coming in and the importers might still bring in more stocks in the coming months. The anticipated surplus is what is driving palay prices down,” Montemayor said.

    Data from the Philippine Statistics Authority showed palay farmgate prices are averaging at P18.39 per kilograms (kg) in late August but field reports in September indicate that buying prices have gone down to as low as P16 per kg on a dry basis and from P11 to P13 per kg for freshly harvested palay.

    Traditionally, palay prices go up in September because of the scarce supply and go down during the peak harvest season in October and November

    The FFF also warned the DA’s Plant, Plant, Plant program will result in even more losses to farmers in the absence of a clear policy for managing rice imports.

    It said the low palay prices will put to waste all the money spent for seeds, fertilizer and machines to increase local production.

    From the P31 billion supplemental budget received by the DA this year amid the pandemic, P8.5 billion will be allotted for a rice resiliency project.