The country’s leading economic minds on Tuesday said the price caps on the rice staple are temporary measures designed to combat cartelization, hoarding and other forms of price manipulation that serve the purposes of only a few vested interests.
This was emphasized by Finance Secretary Benjamin Diokno who reiterated that Executive Order 39, which has spawned far more speculation than facts, is an ad hoc measure against price manipulation.
“Price control works only in the near term. If allowed to linger for longer, it leads to some unwanted consequences,” Diokno, the academician who became central bank governor and who now wears the hat of a public finance chief, said.
This developed in the wake of the latest price survey outcome in which inflation, or the rate of change in prices, unexpectedly rose to 5.3 percent in August when the consensus was for the rate to ease a bit lower to around 4.6 percent. The forecast by some leading analysts was for inflation averaging no more than 4.7 percent.
“Price control works only in the near term. If allowed to linger for longer, it leads to some unwanted consequences.”
Finance Secretary Benjamin Diokno
Instead, the Philippine Statistics Authority reported that food inflation from a 16-month low of 4.7 percent went north, with food prices rising the most in five months to 8.1 percent from only 6.3 percent in July.
Diokno ruled out the price caps under EO 39 in place for the long haul, saying such will cause rice supply to disappear and for farm output to fall “as farmers are discouraged from planting and importers refuse to import because the suggested domestic retail price is lower than the implied landed cost of imports.”
Joey Salceda of Albay, a legislator by profession but an economist at heart who happens to chair the House ways and means committee, said rice, corn and flour prices influence the direction food inflation takes in any given month.
“Apart from the ongoing Russia-Ukraine conflict, which has driven world prices of grain upward to historic levels, the Indian export ban on rice has disrupted global rice supply. Next to China, we are the world’s largest importer of rice, so it was bound to affect us first,” he notes.
But he argues that the Philippines as a rice-importing country “also gives us some power over the global price dynamic.”
“And President Marcos’s EO 39 was a good initial step in signaling that we will not tolerate price manipulation in the global rice trade. The spot price of rice has also normalized to pre-export ban levels, and the price of rice in contracts should follow this downward trend. As I have said, this indicates the President’s gambit with EO 39 achieved its desired initial effect,” Salceda said.
“Moving forward, we should work with our trading partners to ensure that they honor their contracts. The ASEAN summit is an opportunity for PBBM to push for a regional consensus that we will not restrict each other’s rice supply.
“I also expect the downward trend in the year-on-year inflation rate to resume this September and towards the end of the year,” Salceda said.
Over at the Department of Agriculture, officials said EO 39, while temporary, will stay in place indefinitely for as long as the measure is needed.
Glenn Panganiban, Bureau of Plant Industry (BPI) director, said the agency will monitor prices weekly to verify price stability as basis for the lifting of the ad hoc measure.
The DA’s Agribusiness and Marketing Assistance Service (AMAS) is tasked with monitoring prices in markets while the BPI monitors registered rice warehouses.
Panganiban said that efforts are under way ensuring rice prices do not rise even with the EO lifted, including continued monitoring and dialogue with retailers, traders and importers.
Among the pain points closely monitored is the re-branding of well-milled and regular milled rice as special rice to avoid the price cap. He appealed for the public to report such cases to penalize abusers.
Price cap penalties under include jail time of five to 15 years and a fine of up to P2 million for price manipulation.
Price ceiling violations mean up to 10 years in jail and a fine up to P1 million based on court decision.
Panganiban said the ceiling on regular and well-milled rice at P41 and P45 per kilo was based on a nationwide survey and monitoring of the national rice program.
In the National Capital Region on Monday when the price caps took effect, the price per kilo of imported rice ranged from P53 to P65 for the special variety, P52 to P56 for premium, P45 for well milled and P43 for regular milled.
For local rice, the special variety ranged from P54 to P62 per kilo; premium from P49 to P60 per kilo; well-milled from P45 to P53 per kilo; and regular milled from P41 to P52 per kilo.
