Palay prices continue to drop

MANILA, Philippines — Local farmers are facing a drop in palay (unhusked rice) farmgate prices just as the harvest season nears as rice importation patterns have become unpredictable amid the lack of government’s clear policy.

The Federation of Free Farmers (FFF) is blaming anew the unabated entry and speculative behavior of traders arising from the lack of a clear rice import policy from the Department of Agriculture for the drop in palay farmgate prices.

FFF national manager Raul Montemayor said traders are playing safe and buying low because they fear that imports would continue to come in and flood the market again in the coming months.

“Last year, they bought palay from farmers during the first half of the year at relatively high prices and were caught flat footed by the massive inflow of imports in the second half of the year. Many of them could not unload their stocks at a profit and some had to suspend their operations,” Montemayor said.

Data shows that palay prices have been on a downward trend, averaging P18.39 per kilogram in late August, five percent below from their peak in May.

Latest field reports also indicate that buying prices have gone down to as low as P16 per kilo on a dry basis, and from P11 to P13 per kilo for wet or freshly harvested palay.

The FFF noted that the decline in farmgate prices is surprising considering that imports from January to August totaled only 1.66 million metric tons, or about 25 percent compared to last year.

“Palay buying prices usually go up in September because of the scarce supply of palay and then go down only during the peak harvest season in October and November,” Montemayor said.

Despite the excessive imports last year, which was close to three million MT, the DA still issued sanitary and phytosanitary import clearances for 3.75 million MT of rice imports.

However, less than half of the allowed volume has entered the country so far, mainly due to the increase in international prices of rice due to the pandemic and weather disturbances in the region.

This led the DA to threaten importers with penalties if they did not use their SPSICs.