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Many economists are skeptical about the supposed advantages of implementing a cap on rice prices.


Written by Kyle Aristophere T. Atienza, a journalist.

Experts in economics are urging for a thorough evaluation of the actual impact of the recently imposed price limit on rice, as they observe that the cost of this essential good has continued to stay high.

In September, the rate of inflation for consumer prices increased to 6.1%, with rice prices experiencing a two-digit rise.

According to Geny F. Lapina, a faculty member at the Department of Agricultural and Applied Economics at the University of the Philippines Los Baños, the costs of premium and special rice have not significantly decreased and have generally maintained their previous levels throughout the entire month of September, despite the implementation of price ceilings.

Starting on September 5th and ending on October 4th, a price limit of P41 per kilo for regular milled rice and P45 for well-milled rice was put in place.

According to Mr. Lapina, it is necessary to inspect the quality of rice being sold in markets.

He contended that price limits may have made rice more accessible, particularly for those with limited resources, but the rice’s quality could be questionable.

The Philippine Institute for Development Studies previously cautioned that the imposition of a price limit could have negative consequences for consumers as it may result in the production of substandard rice and the alteration of rice classifications.

According to Mr. Lapina, there is an anticipation among different parties that prices, particularly at the agricultural level, will decrease during the harvest period from October to November.

According to him, in this situation, there will be a larger amount of goods available in the market, causing prices to decrease. He mentioned that the price cap did not result in a decrease in retail prices, especially since it only applied to regular and well-milled rice.

The president of the Philippine Chamber of Agriculture and Food, Inc., Danilo V. Fausto, pointed out that 60% of the country’s total palay harvest typically occurs in the last two quarters of the year, according to data.

He stated in a Viber message that the decline in rice costs was primarily due to the continuous harvesting of palay.

The day before Mr. Marcos removed the price limit, Bureau of Plant Industry Director Glenn F. Panganiban stated at a briefing in the Palace that there had been a noticeable drop in rice prices. He credited this to the price ceiling and improvements in local rice production.

According to a conversation on Facebook Messenger, ex-Finance Undersecretary Cielo D. Magno pointed out that rice prices remained high in the previous month, despite the imposed limit, as shown in the inflation data for September.

In September, the inflation rate for rice increased to 17.9%, up from 8.7% in August. This is the highest inflation rate for rice since March 2009, when it was at 22.9%.

According to Leonardo A. Lanzona, an economics professor at Ateneo de Manila University, there needs to be a thorough evaluation of the waste and lost opportunities incurred by investing resources into a program with no direction.

He stated through a chat on Facebook Messenger that there is a need to confirm reports of rationing and ongoing hoarding.

He expressed disappointment that the government did not use data to make their policy decision. He believed that if data was considered, it would show that the natural wet season harvest would be sufficient to maintain low rice prices, without resorting to artificial decreases through extensive subsidies to retailers and farmers.

Mr. Marcos has accused individuals who engage in economic sabotage, such as hoarders and smugglers, for the significant increase in the price of goods.

According to Mr. Lanzona, cartels, hoarders, and smugglers hold power only when production is low and distribution is disorganized. He observed that the agricultural industry has become less efficient under the current administration.

The main concern is why individuals who hoard and illegally transport goods have gained more influence under this current administration than in past administrations.

According to Roy S. Kempis, a former professor at Pampanga State Agricultural University, the government’s report of decreased rice prices cannot be solely credited to the price cap.

In a message sent through Viber, he mentioned the need to take into account various factors, such as the potential decrease in prices due to the beginning of the harvest season in certain regions and the ongoing importation or release of previously imported rice stored in Philippine warehouses.

He stated that the price limit probably hindered retailers from purchasing rice at or above the set limit from wholesalers, traders, and rice millers. This eliminates the motivation to engage in “buy low, sell high” practices.

The primary reason for the rise in rice prices is the limited supply, according to Raul Q. Montemayor, the national director of the Federation of Free Farmers. He pointed out that even during the dry season harvest from March to May, the buying prices for palay were already on the rise.

According to a message sent via Viber, traders were expecting limited supply and expensive costs in the lean months of July to September. While there may have been some stockpiling and price fixing happening, these actions were merely responses and not the main reason for the price hikes.

Therefore, implementing a price limit was not an effective solution as it failed to resolve the issue of limited supply.

According to Philip Arnold “Randy” P. Tuaño, dean of the Ateneo School of Government, the Philippine government should explore the possibility of reducing rice tariffs in light of the expected continued rise in global prices. This was communicated through a Messenger chat.

Currently, it is important to guarantee that the income from tariffs on imported rice is used to improve the productivity of farmers, according to his statement. He also suggested that the government should strengthen the connections between rice producers and nearby communities to increase supply.