Last week I wrote about the economic difficulties of farmers who are able to sell their palay (unmilled rice) at only twelve pesos per kilo. I will delve on this some more.
Yesterday, a friend said he sold his palay just a few days earlier at 13 pesos per kilo. It was not enough to pay for his cost of production and he cannot set aside an amount for his next planting season. In short, he lost several thousand pesos.
There are two questions worth asking here. One is: what are the key factors that contribute to the low price of palay in Leyte?
The other is: what can be done to increase the price?
It looks like the government is a victim of its own policies. It implemted Executive Order No. 62 in July 2024 which reduced import tariffs from 35 percent to 15 percent. What did this lead to? A surge in rice imports by private importers. How did this affect the farmer? It drove down the price of locally produced rice.
I got information from the Department of Agriculture that the imports were made when farmers were starting to harvest their rice production.
The law of supplty and demand dictates that when there is a huge supply that is far above the quantity demanded there will be a significant reduction in price. This is elementary. And it is exactly what happened. So from a break-even price of 17 pesos per kilo, the price is now at 12, sometimes even 10 pesos per kilo of palay.
There is another reason. The National Food Authority buys only 4 percent of the current production, far below what many experts suggest: 20 percent. This limited scale of procurement leaves farmers with no alternative but to sell to rice traders who are too well aware of the limited buying of the NFA and therefore buy very low.
There is another reason: low moisture content of palay due to the past rainy season and inadequate number of dryers.
Here is one more: The election limits the ability of the government to provide fundng for subsidies to reduce the financial problems of rice farmers.
I will discuss the measures that will solve this problem in next week’s issue.
However, it is clear at this point that government planners misirably and with serious neglect failed to antiicipate this situation; when it has the tools to solve it to nip it at the bud and the problem has not grown to monstrous proportions resulting in hunger in the coutrysides.
For exsmple, there is a 2019 law that allows local government units to provide price subsides. Why did Leyte not implement it by setting aside sufficient funding and wharehousing?
A lot of people have told me that the provincial government of Leyte currently gives priority to health programs and not on agriculture, despite suggestions from the Department of Agriculture.
Why is that so? Makes us wonder. If you ask a farmer he will confirm that there is money in agriculture with the proper and timely assistance from the government.
Is there money in health? in the purchase of grossly overpriced medicines and medical supplies? There seems to be money here, lots of it, possibly millions, enough to finance an election. Otherwise, it will not be a first priority before everything else. Simple logic.
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