Department of Agriculture Rejects Rice Price Cap Despite Inflation Surge

QUEZON CITY — The Department of Agriculture (DA) announced on Saturday that it will not recommend the imposition of a price ceiling or suggested retail price (SRP) for rice, even as the commodity’s inflation rate reached 24.4 percent in March, marking the highest increase since 2009. The decision comes in light of concerns about the potential long-term impact such measures could have.

According to Philippines News Agency, the DA believes that setting a price cap or SRP could have significant future repercussions. March's inflation rate for rice exceeded the 23.7 percent recorded in February. De Mesa attributed the sharp rise to a low base effect from March 2023, when rice prices ranged from PHP39 to PHP40 per kilogram. He anticipates that the high inflation rate will persist until July but expects it to decrease by August or September, aligning with the prices from the previous year, which neared PHP49.50.

Retail prices for rice have shown a slight decrease from PHP52 last month to approximately PHP50 to PHP49 currently. Despite the monthly decrease, prices remain higher compared to the previous year. In response to these challenges, the DA’s strategy focuses on enhancing rice production levels, reducing the costs of production, and minimizing post-harvest losses. De Mesa highlighted the Philippines' comparable productivity levels with Vietnam and Thailand, emphasizing the similarity in rice varieties and technology used. However, he pointed out that the Philippines faces higher production costs, with local costs reaching PHP12 to PHP14 per kilogram compared to Vietnam’s PHP6.

The Rice Tariffication Law has allocated PHP5 billion annually towards mechanization efforts to decrease labor costs. Additionally, the DA is optimizing rice variety selection to ensure efficient milling and improved rice recovery rates. Efforts are also underway to modernize the logistics chain, with a particular focus on improving the infrastructure of farm-to-market roads, including the development of small bridges connecting key production areas.