MANILA, Philippines – The National Economic and Development Authority (NEDA) is throwing its support behind President Ferdinand Marcos Jr.’s move to impose price ceilings on rice across the Philippines, a measure frowned upon by economists.

In a statement on Sunday, September 3, Marcos’ economic team said the price ceiling came as the country is “facing difficult times” as extreme weather events, “adversely [impacting] the agriculture sector, particularly rice.” It also noted the implied manipulation of El Niño’s impact “to depict a shortage at this time.” 

“The imposition of a price ceiling on rice will address this issue in two ways: (1) it will immediately reduce the price of rice, and (2) it penalizes and consequently discourages hoarding, further decreasing the price of rice,” NEDA said.

Marcos on August 31, signed Executive Order No. 39 that sets the price ceiling at P41 per kilo for regular milled rice, and P45 per kilo for well-milled rice. The move was upon the recommendation of the Department of Agriculture, which he leads as secretary, and the Department of Trade and Industry. 

The price ceiling is set to take effect on Tuesday, September 5, and will remain until lifted by Marcos, who promised during the campaign that he will bring down the price of rice to P20. He told reporters on Friday, September 1, that government agencies expected to ensure that prices stay below the cap may be focusing efforts in Metro Manila where “the real problem” is. 

NEDA pointed out that the price ceiling is not an isolated approach on the issue, and that it goes hand in hand with the continued crackdown on hoarding and excessive profiteering, among others. 

“We are confident that the imposition of a price ceiling is only a temporary measure,” it said. “We expect the rice harvest to commence soon and anticipate that other initiatives will produce the desired result.”

Why a price ceiling is bad

The Foundation for Economic Freedom (FEF), however, urged the government to lift or reduce existing import tariffs on rice from 35% to 10%, which it said will have an immediate effect on lowering rice prices. 

In a statement on Saturday, the think tank said that Marcos’ Executive Order 39 will “harm Filipino consumers and farmers, and the entire economy” as it will drive away supply and fuel the black market, and that traders will use it to justify lowering the buying prices from farmers.  

“The price cap will harm the entire economy because it will not be effective in solving the demand-supply gap and arrest increasing food price inflation,” it said. “It will only aggravate the current tight rice supply situation into a full-blown rice crisis.” 

The Philippine government can restore the tariff rates when the situation stabilizes and the harvest season results in falling rice prices, FEF said.

DA’s rice monitoring data as of August 30 shows that local regular milled rice is priced for P42 to P55 per kilo, while imported regular milled rice sells for P43. Meanwhile, well-milled rice prices range from P47 to P56 for local rice, and P52 for imported rice. Prices at local markets situated in Metro Manila, however, reach more than P50.

Rice retailers who will be forced to sell their stocks at lower prices due to the price cap were told by Trade Undersecretary Agaton Uvero to “sacrifice” profits.

“Hinihingi ng pamahalaan ‘yung sakripisyo ng mga retailers, tumulong din sila (The government is asking the retailers’ sacrifice, they should help too),” Uvero said at the Saturday News Forum in Quezon City. – Rappler.com