PRESIDENT Marcos Jr.’s decision to lift the price ceiling on rice was made “at the right time” as the country starts its main harvest of palay, with some pundits claiming that the measure was “successful” in curbing “market collusion.”
However, some economists pointed out that the lifting of the price ceiling prevented further domestic rice market distortions due to the sudden government intervention.
Agriculture Undersecretary for Rice Leocadio S. Sebastian said the one-month price ceiling was “successful” in “dampening” collusion among price speculators deemed responsible for pushing prices to “unreasonable” levels.
“The price cap was successful in dampening the collusion among price speculators that was pushing prices unreasonably high towards the end of August. This was despite the sufficiency of supply from local production and imports,” Sebastian told the BusinessMirror.
“The lifting of the price cap is timely because we are now at the peak of harvest season and we are expecting a bountiful harvest,” Sebastian added.
Agriculture Undersecretary for Policy, Planning and Regulations Mercedita A. Sombilla concurred with Sebastian, emphasizing that the price cap measure “stopped further manipulation” of domestic prices that was “creating fears of rice shortage” in the country despite abundant supply.
“The low inventory stocks is a usual pattern that comes during the third quarter. The good for 1.5 days stocks of [National Food Authority] was not properly understood since NFA is no longer responsible for keeping the country’s stocks but only stocks for calamities – it added to the apprehension,” Sombilla told the BusinessMirror.
Sombilla pointed out that the timing of the lifting of the price ceiling bodes well with the drop in export prices of rice from Thailand and Vietnam.
“There should be no apprehension on global supply,” she said, while noting that the Department of Agriculture will continue to “closely” monitor the price movement of rice in the domestic market.
“The government is ready to continue to provide targeted support,” she added.
However, Roehlano M. Briones, senior research fellow at the Philippine Institute for Development Studies, pointed out that the price ceiling forced rice retailers to “hide” or “reclassify” their stocks to circumvent the mandated price cap.
Under Marcos’s Executive Order 39, the price ceiling only covered regular-milled and well-milled rice, thereby exempting premium and special grade rice from the measure.
“Regular milled rice is being hidden or being reclassified as premium or special rice. What is being sold as regular milled rice is the poorest quality rice that traders and retailers are left with, which could be older stocks that they want to get rid of,” Briones told the BusinessMirror.
“I believe these are being passed off as regular milled rice. And if there is well-milled rice that they want to dispose of, they would rather wait for the price ceiling to be lifted so that they can sell it at uncontrolled regular prices,” Briones added.
Because of this situation, rice consumers were left to choose between a poor quality rice or a more expensive premium grade rice.
“What is left in the market is the expensive staple labelled as premium rice priced between P50 to P60 per kilogram. You cannot see regular milled rice, and if there is, mangitim-ngitim pa,” he said. “I do not know if you call that consequence as effective.”
‘Bad signal’
Associate Professor Cielo D. Magno of the UP School of Economics emphasized that the imposition of the price ceiling on rice was an “inappropriate market control” in the first place that “sent bad signals to investors.”
Magno explained that the state should not “unnecessarily intervene” in the market if it would just do more harm than good.
“It was an inappropriate policy that was recklessly implemented. It shows that the government can and will control the market and sacrifice the welfare of sellers even without concrete evidence it is beneficial to consumers,” she told the BusinessMirror.
“Government should not unnecessarily intervene in the market if it will result in more inefficiencies,” she added.
Samahang Industriya ng Agrikultura (Sinag) supported the lifting of the price ceiling, but urged the Marcos Jr. administration to use the full power of the law in convicting hoarders, profiteers and smugglers, which it blamed for the recent spike in local rice prices.
“Hanggang ngayon, zero conviction pa rin sa hoarders, profiteers at smugglers. Yun ang habulin at pagka-abalahan nila [Until now, it’s zero conviction for hoarders, profiteers and smugglers. They should focus on running after these],” the group said in a statement.
