By Adrian H. Halili, Reporter
THE National Food Authority’s (NFA) new system for setting the purchase price for palay (unmilled rice) is supporting farmers as farmgate prices for the grain fall, analysts said.
University of Asia and the Pacific (UA&P) Center for Food and Agribusiness Executive Director Marie Annette Galvez-Dacul said that the government’s new price scheme is a relief to farmers struggling with weak prices offered by private traders.
The NFA set its buying price for palay at P23 to P25 per kilogram for the wet-season harvest.
“However, it may not fully cover rising expenses, especially for those affected by adverse weather,” Ms. Dacul said via Viber.
The average farmgate price for palay was P22.43 per kilogram in September, according to the Philippine Statistics Authority.
“It’s important to note that the NFA has limited procurement funds… and once these are used up, things will shift to a buyer’s market,” she added.
The NFA said last week that its procurement budget for unmilled rice for the remainder of the year has been set at P9 billion. Most of the allotment will go to meeting its palay inventory goals for the wet season.
The NFA is targeting palay inventory of 435,000 MT by the end of the year. It is required to maintain a rice reserve equivalent to about nine days’ demand.
“P23-35 per kilo is okay with farmers given that production cost is P16-17 per kilo,” Samahang Industriya ng Agrikultura Executive Director Jayson H. Cainglet said via Viber.
The DA has said that the new palay buying scheme will aid the government in taming rice prices.
“The NFA must procure at least 10% of the harvest to force traders into lowering their buying prices,” Mr. Cainglet said.
UA&P’s Ms. Dacul said traders might adjust their prices to stay competitive with the NFA’s new buying price.
“But not all may follow suit, as this will depend on factors like supply levels and the quality of palay,” she added.