Rice retailers groaning under new price caps

By: the Inquirer staff September 02,2023 - 04:01 PM

AFFORDABLE COMMODITIES In this photo taken on March 8, President Marcos launches a Kadiwa outlet at the Trade Union Congress of the Philippines compound in Quezon City to sell basic food items at lower prices. On Friday, to make rice more affordable, he ordered price caps of P41 and P45 per kilo of regular milled and well-milled rice following an “alarming” increase in prices. —NIÑO JESUS ORBETA

AFFORDABLE COMMODITIES In this photo taken on March 8, President Marcos launches a Kadiwa outlet at the Trade Union Congress of the Philippines compound in Quezon City to sell basic food items at lower prices. On Friday, to make rice more affordable, he ordered price caps of P41 and P45 per kilo of regular milled and well-milled rice following an “alarming” increase in prices. —NIÑO JESUS ORBETA

Small rice merchants said they expected significant losses that could even force them out of business from the sudden imposition of the price ceilings on the staple ordered by President Marcos on Friday.

Rice retailers in Bulacan, Oriental Mindoro, Leyte and Cebu interviewed by the Inquirer said that the government should have given them more time to sell their existing stocks which they had bought at prices higher than the ceilings mandated by the President.

“If we just follow the order, we would lose money and we might have to close down,” said Imelda Dy, who has been a rice retailer at the public market in Tacloban City for 40 years.

Her lowest-priced rice was selling for P50 per kilogram, including a P5 markup. She got it from her supplier at P2,250 per 50-kilo sack.

Economic strain

Dy said she would lose P500 per sack if she sold it at P45 per kilo, one of the caps mandated by the President.

Executive Order No. 39 sets a price ceiling of P45 per kilo for well-milled rice and P41 per kilo for regular milled rice.

“The current surge in retail prices of rice in the country has resulted in a considerable economic strain on Filipinos, particularly those who are underprivileged and marginalized,” the President said in his order, which was issued on Thursday.

EO 39 invoked Republic Act No. 7581, or the Price Act, which gives the President authority, upon the recommendation of the Price Coordinating Council, to impose a price ceiling on any basic commodity due to the “prevalence or widespread acts of illegal price manipulation” or when the prices of prime commodities rise to “unreasonable levels.”

First since 1995

The order is the first price ceiling imposed on rice since July 1995 when the price council set a ceiling on basic commodities in Metro Manila to protect consumers against artificial cost increases that may be caused by the foot-and-mouth disease that was then afflicting livestock. The price cap on rice at that time was P16.10 per kilo on special rice and P14.10 on ordinary rice.

The new price caps, recommended by price council members of the Department of Agriculture (DA) and Department of Trade and Industry (DTI), will remain “in full force unless lifted by the President.”

Erwin Gok-ong, who has been selling rice for more than 40 years in Cebu City, said that while a price cap on rice would protect consumers, the government should also consider the plight of retailers.

Gok-ong pointed out that retailers like him would incur substantial losses if the price cap were enforced immediately. “The impact will be significant. I’m also worried that some retailers might go out of business,” he said.

Caught off guard

Arlene Agas, who has been selling rice in Cebu’s Minglanilla town for more than 10 years, pointed out that she was just a small rice retailer making small profits. Implementing the price cap would put small merchants like her at risk, she said.

A group of rice traders and retailers in Bulacan said they were caught off guard by the announcement and expected that many of them would be unable to cope with the price ceilings.

Rodrigo Sulit, 55, vice president of the Intercity Rice Mill Association in Balagtas town, was uncertain what the impact of the price ceilings would be on the group’s 75 members.

“We’re still meeting with authorities, including our local government officials, to help us understand this move,” Sulit said.

In Calapan City, Oriental Mindoro, rice seller and store owner Sarah Miraples, 50, said that if the price cap were implemented, she would surely lose money.

“We buy a kilo of rice from the rice mill at P52, so our loss will be P7 per kilo,” said Miraples, a resident of Barangay Suqui.

The President urged the public to report rice retailers selling above the mandated price ceilings.

Speaking to reporters traveling with him to Palawan on Friday, Mr. Marcos said the rice prices were “not so bad outside of Metro Manila, that’s why maybe we will be focusing our efforts in Metro Manila.”

The DA’s price monitoring as of Aug. 28, showed that local regular milled rice in markets in the National Capital Region ranged from P42 to P55 per kilo while local well-milled rice was selling for P48 to P56 per kilo.

According to the EO, the country’s rice supply is “stable” and “sufficient” due to rice imports and an expected surplus in local production.

However, there had been widespread illegal price manipulation through hoarding “by opportunistic traders and collusion among industry cartels” during the lean season.

In addition, certain global events, such as Russia’s invasion of Ukraine, India’s ban on rice exports and the unpredictable global oil prices, caused “an alarming increase in the retail prices of this basic commodity.”

‘Timely, necessary’

The National Economic and Development Authority reported that the rice inflation rate increased from 1 percent in January 2022 to 4.2 percent in July 2023 due to the rising demand and tight supply as other countries beefed up their own rice supplies in anticipation of El Niño. Speaker Martin Romualdez said the price caps were “a timely and necessary intervention.”

In a meeting with members of the Philippine Rice Industry Stakeholders’ Movement (PRISM) on Friday, Romualdez warned rice traders that the government would come down hard on hoarders and smugglers.He urged members of the group to “unmask bad eggs” in their ranks.

“If you want to be part of the solution, you are with us, we will help you, we’re going to support you. But if you’re part of the problem, we will root you out,” Romualdez said.

Critics of the President’s move, however, said that this would not solve the problem of high rice prices and would only harm small retailers and rice farmers, who might be forced to sell their crops under more depressed prices.

Peasant groups were alarmed by the President’s action.

“This could potentially result in a significant drop in the price of palay, because the rule of thumb is that the retail price should be twice the farm-gate price. This could lead to a decrease of up to P20 per kilogram for rice,” Amihan National Federation of Peasant Women said in a statement.

Rafael Mariano, chair of Kilusang Magbubukid ng Pilipinas and a former agrarian reform secretary, said small retailers and local farmers rather than hoarders who manipulate the price of rice will carry the brunt of any financial losses.

“The (government) allowed price of rice to soar without price controls or ceilings. They allowed market forces, the cartels, hoarders and profiteers to manipulate prices,” Mariano said.

Sen. Francis Escudero questioned the basis for invoking the presidential power to impose price ceilings in the absence of an emergency or widespread profiteering, hoarding or price manipulation as the government claimed.“Is there (such a situation)?” he asked. “Or are prices just really high because of lack of supply or higher cost of inputs? If there is, why hasn’t government arrested and/or sued anyone for such acts, which are illegal?”Review of tariff law

According to the senator, the government should first recognize the problems besetting the country’s rice industry to help it craft solutions.

He said the government should set aside more funds for agriculture, noting that the administration’s proposed budget of P255 billion for flood control programs in 2024 was way bigger that the planned allocation of P181 billion for the DA.

“(This policy) will not cut it,” Escudero said. “Government should put its money where its mouth is if we are to rid of this perennial problem.”

Sen. Risa Hontiveros said the President’s move underscored the need to review the rice tariffication law, which Congress approved in 2019 supposedly to help bring down the price of rice by removing the restrictions on rice importation.Resorting to price caps is “a lazy solution” to curb price hikes, she said.

“Price controls are ‘cures’ that could be even worse than the disease. Is this the prescription of the economists in Malacañang or their spin doctors?” Hontiveros said.

‘Desperate move’

The Makabayan bloc dismissed the President’s efforts as a public relations stunt.

“This is a desperate move to quell the people’s mounting frustration over his failure to deliver his campaign promise. He was the one who said it will be P20 per kilo of rice,” said House Assistant Minority Leader Rep. Arlene Brosas. —WITH REPORTS FROM NESTOR CORRALES, JULIE M. AURELIO, MARLON RAMOS, ABBY BOISER, JOEY A. GABIETA, NESTLE SEMILLA, CARMELA REYES-ESTROPE, MADONNA T. VIROLA AND INQUIRER RESEARCH


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TAGS: Bongbong Marcos, merchants, price caps, rice

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