Rice crisis in the Philippines
An economist from the University of the Philippines believes that the implementation of a price ceiling will eventually lead to a shortage of rice in the country.
UP School of Economics assistant professor JC Punongbayan said Thursday, September 7, that this creates an imbalance as demand goes up, while supply comes down.
“Kapag mayroon talagang price ceiling, and the actual market price is higher than the price ceiling, we can expect shortages to occur,” Punongbayan said.
“It’s a recipe for disaster talaga kasi mahihirapan na rin tayo mag-produce domestically, mahihirapan din tayo mag-import,” he added.
He also said price ceilings will affect not just traders, but also farmers.
“‘Pag mababa presyo, mayroon ding pressure na baka baratin sila ng traders, millers, etc. at kapag nagpatuloypa ito, mawawala incentives para sa producers na magbenta ng bigas,” he added.
Executive Order 39
On September 5, 2023, President Marcos signed an executive order (EO39) that mandates a price ceiling for regular milled rice at P41 per kilo and well-milled rice at P45 per kilo. Rice is the Philippines’ “most critical problem,” Marcos says.
EO 39 serves as the strongest weapon to date of the Marcos administration to protect consumers against hoarders, rice cartels, and illegal price manipulators. It mandates a coordinated effort among various agencies to ensure the strict implementation of the mandated price ceilings by intensifying the fight against hoarding and illegal importation of rice and taking measures against cartels to ensure fair market competition and uphold consumer welfare and protection.
Cash assistance to small rice retailers
The Department of Social Welfare and Development (DSWD) through Secretary Rex Gatchalian said it is ready to provide cash assistance to small rice retailers who may incur losses because of EO39, which sets a price ceiling on regular and well-milled rice. Qualified recipients will receive one-time financial aid amounting to a maximum of PHP15,000, he said.
He said the DSWD is just waiting for the list of qualified small rice retailers, which will be provided by the Department of Trade and Industry (DTI) and the Department of Agriculture (DA).
The Grain Retailers Confederation of the Philippines (GRECON) held an emergency meeting upon the effectivity of EO39 to air grievances to the DTI.
They said the P15,000 cash aid to be given by the DSWD is not enough to cover their losses.
“Hindi talaga natin kakayanin yung PHP15,000. ‘Yun naman, kung ganoon ang tulong, makakabawas na rin sa gastusin, kaso hindi aabot lalo na sa retailers na maliliit, two, three days lang po yon,” said Grecon spokesperson Orly Manuntag.
Department of Agriculture Spokesperson Willie Ann Angsiy, meanwhile, said they have monitored high compliance with the measure.
“So far, nakita naman natin na 90 per cent compliance or at least partial compliance rate ang nakita natin. For us that’s really good progress. Inaacknowledge naman na tatamaan sila dito, apektado ang kita nila,” she said.
In a statement, the Federation of Filipino Chinese Chambers of Commerce & Industry, Inc. (FFCCCII) said the order would “never work.”
FFCCCII President Cecelio Pedro said the prices are based on supply and demand. “Pag mababa ang presyo, hindi magpo-produce. Kung nalulugi sila, hindi sila magbebenta ng rice. eh di lalong wala. Kung mataas naman,what’s the use of price control kung masyadong mataas ang price control?” said Pedro.
Sources: ABS-CBN News, PNA