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| On September 1, the Office of the President of the Philippines said that the country has set a ceiling price for rice in the domestic retail market. (Illustration photo) |
On September 1, the Office of the President of the Philippines said that the country has set a ceiling price for rice in the domestic retail market.
Specifically, the Philippines set the ceiling price for regular milled rice at 41 pesos per kilogram (equivalent to about 0.72 USD/kg). Meanwhile, the price of well-milled rice was set at 45 pesos per kilogram (equivalent to about 0.79 USD/kg). These ceiling prices are effective until further decision by the president. The Philippine Department of Agriculture said that the above ceiling prices are all lower than the domestic market prices as of August 30.
This is a measure to stabilize the prices of the Southeast Asian country's staple goods when retail prices have increased at an "alarming" rate due to the impact of domestic and foreign events.
The decision to impose a price cap was made after recognizing widespread illegal price manipulation in the Philippines, such as hoarding by traders and collusion among rice producers and processors, the Presidential Office said in a statement.
In addition, global events such as India’s ban on rice exports and fluctuations in oil prices have also caused retail rice prices in the Southeast Asian country to increase at an “alarming” rate. Domestic retail rice prices continued to rise in August, with some rice varieties in the markets around the capital Manila rising by as much as 25%.
The Philippines is one of the world's largest grain importers. In the second half of 2023, the Philippines' rice supply is estimated to reach 10.15 million tons, of which 7.2 million tons will be domestically harvested. According to Nikkei Asia , about 90% of the Philippines' rice imports in 2022 will come from Vietnam.
Earlier this week, Philippine President Ferdinand Marcos Jr. ordered authorities to step up efforts to stamp out rice hoarding and step up measures to curb inflation, which has been driven largely by surging rice prices. Inflation in the Philippines hit 4.2% in July 2023, the highest since 2019.
This is the first time Philippine President Ferdinand Marcos Jr. has imposed a price cap on domestic rice since taking office in June 2022. On September 1, Nikkei Asia quoted Nicholas Antonio Mapa, senior economist at the Manila branch of multinational bank ING, as saying that the decision to impose a price cap on rice is not a long-term solution to "cool down" rice prices as well as the sharp increase in food prices. Expert Mapa argued that this measure could cause supply and demand problems, which could lead to underground trading or black markets.
According to Leonardo Lanzona, an economist at the Ateneo De Manila University in the Philippines, the decision to impose a price cap could cause huge losses to both farmers and traders in the country. This expert argued that previous price caps had caused greater losses to the government. Meanwhile, price caps also reduce production output, thereby reducing supply in the market.
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