Rice retailers to defy price caps to avoid losses
TACLOBAN CITY, Leyte, Philippines — Retailers on Saturday said they would defy President Ferdinand Marcos Jr.’s order setting price ceilings on rice effective Sept. 5.
A day earlier when the directive was announced, it met immediate opposition from small merchants.
“As far as we are concerned, no, we will not comply,” said Frederic Dy, president of the 300-strong Grains Retailers’ Confederation of the Philippines (Grecon) in Eastern Visayas.
“How can we recover our losses? They should give us a leeway and not give us a deadline,” he said. “Most of us bought our supplies before the issuance of the rice cap order and doing so would lead to losses.”
But he added that the decision not to follow the order was purely for business reasons.
Executive Order No. 39 sets a price ceiling of P45 per kilogram for well-milled rice and P41 per kilogram for regular milled rice.
Need two weeks
Marcos said the move was in response to the “current surge” in rice prices, resulting in “considerable economic strain on Filipinos, particularly those who are underprivileged and marginalized.”
The EO said the price ceilings would take effect immediately upon its publication in the Official Gazette. The EO was published in the Gazette on Friday morning, accompanied by an announcement.
However, the Office of the Executive Secretary “clarified” only around 15 hours later on Friday night, that the price caps were to take effect on Tuesday
Dy and other retailers in Bohol said they needed at least two weeks to dispose of their present supplies.
But he noted that their stocks were not selling as fast as they used to after rice prices went up.
Some consumers had cut down on the amount of rice they normally purchased by at least half, he added.
Dy said they got their cheapest rice at P2,400 per 50-kilogram bag from their suppliers. To sell the rice at cost without markup would mean selling it at P48 per kilogram.
But to sell it at P45 per kilogram as ordered by the president would mean losing P3 per kilogram or selling it at P2,250 per 50-kilogram bag — or a loss of P150 per bag.
That amount does not include the cost of transporting the rice from the supplier to the store, he said.
“Now, this is no longer business,” said Dy who owns a stall at the main public market in Tacloban.
He said they were all caught by surprise by the president’s order.
“They could have issued that directive as early as February when the prices of rice were skyrocketing. At that time, we sought government interventions like price ceiling,” Dy said.
“So, it’s really wrong timing as it’s now harvest season which means there will be more supply of rice in the market that would result in lower prices,” he added.
Dy said they hoped that the President would give them more time to dispose of their stocks that they bought at higher prices to allow them to recover their expenses.
He added that the national government should also conduct a thorough inventory of rice warehouses across the country to find out if there was really a rice shortage or just rice hoarding by some unscrupulous rice millers.
“The government should run after them and not to us ordinary retailers,” Dy said.
In Bohol, which is considered the rice bowl of Central Visayas, rice remained expensive and retailers opposed caps on prices since they bought their stocks at higher prices.
The price of rice in Bohol has risen four times by up to P2 to P4 per kilogram in recent days.
‘What else can I do?’
In some markets in Bohol’s capital Tagbilaran City, the cheapest rice was sold at P46 per kilogram and at P57 to P60 per kilogram elsewhere.
Locally produced regular milled rice went up from P54 to P65 a kilogram on Saturday. Local well-milled rice was selling for P54 to P60 a kilogram, while local premium rice was P55 to P57 per kilogram. Prices of special rice ranged from P50 to P57 a kilogram.
Meanwhile, imported regular milled rice retailed from P54 to P58 a kilogram, much higher than last year’s P37; imported well-milled rice was being priced at P40 to P46 per kilogram.
Instead of rice, some residents bought corn grits at P48 to P49 per kilogram on Saturday, up from P42 last week.
The “pilit” (glutinous) rice now costs at least P90 per kilogram.
“It’s really more expensive. That’s why we only eat corn because it’s not yet that expensive,” said local resident Curly Melgar.
Another resident said their earnings were not catching up with rising prices.
“But what else can I do? Everything is expensive and I don’t have a job. I only rely on my pension,” Concepcion Sacasan, 65, told Inquirer as she bought 2 kilograms of rice at P54 per kilogram.
The price caps will remain until lifted by the president. The EO included instructions to the Department of Agriculture and the Department of Trade and Industry to provide unspecified “assistance to affected retailers.”
The EO did not specify penalties for violators of the order, which was issued by the president under the authority of the Price Act.
But Trade Assistant Secretary Agaton Uvero on Saturday warned hoarders and profiteers that under the law, a person who commits illegal price manipulation of prime commodities would face five years of imprisonment and a fine of not more than P2 million.
The government could also seize his rice stocks, he added.
House ways and means committee chair Rep. Joey Salceda warned that price caps “can have negative second round effects, such as shortages.”
“If we want to avoid any shortage, the price ceiling must be higher than equilibrium price,” the lawmaker and economist said.
Salceda said the equilibrium price now was “around that area” of the price caps, but the market dynamics of supply in the regions should be monitored. “If you impose a price ceiling but some areas have less rice than they need, you will see supply problems in the rice-deficit areas,” he said, adding that “some augmentation” should be made in those places.
Salceda said the price ceiling was a “signal” to price speculators that they would be making only a “little profit.”
“In that sense, it will help prevent hoarding,” he said.
According to Salceda, raising domestic rice production will prevent local shortages and make the country “less sensitive” to movements in the world market.
Albay Rep. Edcel Lagman said the EO should be implemented along with measures to lower production costs for farmers. There must also be a crackdown on the rice cartel and smugglers, he said.
Lagman added that the Rice Competitiveness Enhancement Fund under the rice tariffication law must be immediately and fully implemented to benefit the farmers.
The opposition lawmaker said government-to-government negotiations would lower the cost of imported rice and should be undertaken.
The Alliance of Concerned Consumers in the Philippines (Accop) said it supported the price caps.
“The P41 and P45 ceilings are acceptable, it still helps our consumers, but if the government could still lower it, we will be thankful,” Accop convenor Ritchie Horario told the Inquirer.
But another consumer group, Rights Action Philippines (RAP), was worried that the price caps may lead to the bigger problem of retailers holding on to their stocks to avoid selling at a loss.
“We all want prices to go down. But because of the (executive order), the government is using its police powers, and some sectors are trampled in its way,” said RAP media relations officer Ferdie Ferido.
“It would be good if this will target cartels and hoarders. But this will affect first the retailers who have spent capital,” he said, adding that the move could also lead to traders low-balling farm-gate prices.
Ferido said that the government should address rice production problems, such as shrinking agricultural lands, outdated farming methods, and dwindling interest in farm work among the youth.