MIDDLE SUPPLY CHAIN PROBLEM: DOF suspects rice hoarding

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    An official from the Department of Finance (DOF) suspects hoarding as the possible reason for the wide discrepancy between the farmgate price and the retail price of regular milled rice in some regions starting in October

    According to Karl Kendrick Chua, DOF undersecretary, such discrepancy
    in prices could only indicate a “problem in the middle supply chain.”

    Chua said in a statement traders could have kept their imported rice stocks in warehouses to drive retail prices up despite abundant supply.

    But Carlos Dominguez, DOF secretary, said government will not halt the importation of rice and that the grant of unconditional cash transfers to affected farmers was approved in the last Cabinet meeting.

    The DOF said the government is closely monitoring possible distortions in the market, particularly the widening gap between farm gate prices for paddy and rice retail prices in specific provinces.

    The DOF said the gap between the per kilo retail price of regular milled rice and farmgate price of dry palay is widest in the provinces of Iloilo (P29.75), Zamboanga del Norte (P28.50), Negros Occidental (P28.01), Kalinga (P25.33) and Bulacan (P25.25).

    The average gap is around P22, as average retail price is P37.51 per kilo compared to dry palay farmgate average price of P15.71 per kilo.

    Both the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) have formed strike teams to look into possible smuggling and hoarding activities, and non-compliance with tax and business regulations.

    “The palay price is still falling but the retail price is not falling as fast so there’s a growing disconnect,” Chua said during a recent DOF Executive Committee (Execom) meeting.

    During the Execom meeting, Antonio Lambino II, DOF assistant secretary, also said the department has received reports that some traders reserve warehouse space without storing anything in them, “so that they can put pressure on the farmers to sell at very low prices because the farmers now don’t have anywhere to put their harvest.”

    The DOF said anti-smuggling and anti-hoarding activities are expected to intensify as the Department of Agriculture and the Philippine Competition Commission jointly investigate possible collusion in the domestic rice market, alongside enforcement of tax and customs regulations by the DOF, BIR and BOC

    Last October 3, 2019, the DOF and BIR raided unregistered warehouses in Bulacan and discovered more than 250,000 sacks of imported rice from Vietnam and Myanmar, among other commodities. To date, the companies involved have not produced import documents.