Rice prices to remain high until midyear — DA

A man arranges sacks of rice at a storage facility in Marikina City. — PHILIPPINE STAR/WALTER BOLLOZOS

By Luisa Maria Jacinta C. Jocson and Adrian H. Halili, Reporters

THE DEPARTMENT of Agriculture (DA) said on Wednesday that rice prices are expected to remain high until midyear, as the agriculture sector reels from the impact of the El Niño weather event.

At the same time, analysts warned elevated prices of the staple may add to inflationary pressures.

“Hopefully, prices go down during the second half of the year. But as of the moment, since there are still the lingering effects of El Niño, I don’t think it will go down,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. told reporters.

Agricultural damage caused by the El Niño has risen to P2.63 billion, affecting 54,203 farmers and 53,879 hectares of farmland, according to the DA.

“We expect that (agricultural damage) would increase. We are at the height of El Niño now. Hopefully, by the end of May, it will decrease,” Mr. Tiu Laurel said.

Rice was the most affected crop with 72,733 metric tons (MT) of damage, equivalent to P1.7 billion or about 65% of total agricultural losses.

“Rice is heavily water and rainfall dependent, so if the rice areas are affected (by El Niño) then it is a major issue. Also, if the drought hits at stages in the crop’s life when it most needs water then that worsens the issue,” Monetary Board member V. Bruce J. Tolentino said in a Viber message.

Federation of Free Farmers National Manager Raul Q. Montemayor said that agricultural damage from the El Niño may rise further. 

“Some crops that are still on the ground have already been affected by the lack of water and this will result in lower output and yields when these crops are harvested (assuming they survive),” he said in a Viber message.

The El Niño across the tropical Pacific Ocean is showing signs of weakening and is expected to persist until May, according to the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA).

“Based on reports from PAGASA, the El Niño decay started in March. We are expecting that by May, it will be gone. We can expect additional agricultural damage but not by a lot,” DA spokesperson Arnel V. de Mesa said in mixed English and Filipino in a phone call on Wednesday.

Latest PAGASA data showed that 24 provinces from Luzon and one in Visayas are experiencing meteorological drought; 16 provinces are under dry spells; and 10 reported dry conditions.

Provinces that are in a drought include Cagayan, Nueva Ecija, Isabela, Pangasinan, and Negros Occidental, which are among the top rice-producing provinces in the country. 

“Farmers will be able to replant only when the rains come, and the lingering effects of El Niño may delay the onset of rains by about a month (from its usual onset in May),” Mr. Montemayor said.

“Dam levels may also be too low to sustain irrigation to crops even if El Niño subsides. Lower output means less supply and could lead to higher food prices,” he added.

SCARCE WATER SUPPLYFormer Agriculture Undersecretary Fermin D. Adriano also noted the effect of scarce water supply on agriculture.

“Because of inadequate supply of water, local supply will not be enough and hence food prices might increase,” he said in a Viber message.

Rice inflation surged to 23.7% in February, its fastest pace since the 24.6% seen in February 2009.

Mr. Tolentino said it is difficult to forecast the full impact of the dry weather event on agriculture and food prices.

“The impact depends on exactly where the drought hits -—whether or not the areas affected are heavily agricultural or not, and at what growing stage the crop is,” he added.

However, he noted that rice prices in general have been elevated for some time now due to rising fertilizer prices, supply chain disruptions and India’s ban on exports.

As of April 2, the average retail price of local well-milled rice ranged from P48 to P55 per kilogram from P39 to P46 per kilogram a year ago. Regular milled rice also rose to P50 per kilogram from the P34 to P40 range a year earlier.

The Philippine Statistics Authority data showed the national average price for well milled rice was P56.95 per kilogram as of mid-March.

The highest retail price during the period was reported in the Central Visayas, with the average at P59.27 per kilogram.

The Ilocos Region, on the other hand, reported the lowest price for well milled rice at P52.89 per kilogram.

MORE IMPORTS?Meanwhile, Mr. Tiu Laurel said stocks may remain sufficient for the country’s rice requirements, due to the ongoing harvest season and continued purchase of palay or unmilled rice by the National Food Authority (NFA).

“Well, the NFA has already bought a certain amount… it’s harvest season, as we all know, (which) will continue until May. So, there’s enough stock,” he added.

Mr. Tiu Laurel said that rice imports have also been regularly arriving to bolster local supply.

Rice imports have reached 995,841 MT as of March 21, according to the Bureau of Plant Industry.

To help ease price pressures in the short term, the government should consider allowing more imports.

“In the medium term, pressure can ease if trade policies are stabilized, and tariff reductions made permanent.  Long term, the sustainable solution is improved domestic productivity through research and development,” Mr. Tolentino said.

The US Department of Agriculture projects Philippine rice imports to reach 4 million MT this year.