Oil price pushes rice prices up

MANILA, Philippines—The rising price of oil has pushed the costs of farm production, putting rice farmers at a disadvantage, progressive farm groups said Tuesday as they asked the Department of Agriculture to increase the buying price for unmilled rice.

Participants of the National Rice Farmers’ Conference organized by the peasant groups Kilusang Magbubukid ng Pilipinas (KMP), Amihan–National Federation of Peasant Women, and the party-list group Anakpawis, said the National Food Authority (NFA) should increase the buying prices of palay (unmilled rice) to P20 per kilo, citing the higher costs of production brought by the unabated oil price hikes.

At present, the NFA, which is tasked to ensure the stability of price and supply of rice, the main staple of the country, buys unmilled rice from farmers at P17 per kilo.

KMP secretary general Danilo Ramos said that “while farmers shoulder the rising costs of production, palay prices remain very low. Farmgate prices of palay cannot even help us recover from the skyrocketing costs of production.”

He noted that a P3 increase in the government’s price would be “just and reasonable.”

According to the group’s computation, a one hectare rice land that uses a tractor and rotovator consumes an estimated 600 liters of gasoline for every cropping. Gasoline-operated irrigation pumps consume at least 150 liters per cropping.

“At P55 per liter, this means each rice farmers shoulder P41,250 for gasoline alone,” Ramos said. “And for every P1 increase in the price of gasoline means an added P750 production cost for the  rotovator, hand tractor, and irrigation pump alone for a one-hectare rice land.”

Ramos said that “including land rent, fertilizers, pesticides, and machinery rentals, the costs of production would shoot up to a minimum of P75,000 production costs per hectare.”

“At an average harvest of 80 cavans or 4,000 kilos per hectare, each rice farmer spends P18.75 per kilo of palay while unscrupulous rice traders only buy palay at the average price of P12.00 per kilo nationwide. This explains why rice farmers are deep in debt and run to loan sharks,” Ramos said.

Last year, the NFA brought 280,382 metric tons (MT) of palay from Filipino farmers. The total volume of local palay bought by the grains agency from farmers was lower than the 870,000 MT domestic palay procurement target initially set by the government for 2011.  Officials blamed the insufficient budget for the rice procurement program, which aims to encourage farmers to plant more of the staple, for the shortfall.

KMP urged the NFA to purchase more rice from Filipino growers to influence the farmgate prices that traders and middlemen follow.

“Unfortunately, the NFA cannot influence prices at the farmgate because it only buys less than two percent of the country’s total rice production. What is more insulting is that the NFA budget is being used to the massive importation of rice that further pulls down local palay prices instead of buying our local produce,” says Ramos.

For 2012, the NFA was tasked to buy 1.2 million metric tons (MMT) of palay from farmers. But NFA Administrator Angelito Banayo said the P4-billion subsidy budget for it would be insufficient.

To buy 1.2 million MT of unmilled rice from Filipino farmers, the NFA would need around P20.4 billion.