TO prevent any impact of price ceilings, including rice hoarding and shortages, an economist-lawmaker said the price ceiling should be higher than the equilibrium price.
House Committee on Ways and Means Chairman Joey Sarte Salceda made the statement following the issuance of Executive Order (EO) No. 39, which sets the price ceiling on rice in the whole country.
“There is some arbitrage and undue padding of margins in the sector, and a rice price ceiling will help put a stop to that behavior,” pointed out Salceda.
He said a rice price ceiling is a signal to those who wish to do price speculation that there is little profit in doing that.
“In that sense, it will help prevent hoarding. But price ceilings can have negative second-round effects, such as shortages,” he said.
“If we want to avoid any shortage, the price ceiling should be higher than the equilibrium price,” he added.
Earlier, President Ferdinand R. Marcos Jr. urged Filipinos to report violators of Executive Order 39, which sets the mandated price ceiling of regular milled rice at PP41.00 per kilogram and for well-milled rice, P45.00 per kilogram.
To avoid shortages, Salceda said the Department of Agriculture must ensure that there is indeed enough supply in the market across all geographical areas.
“Our monitoring of supply must not merely be at the aggregate national level. If you impose a price ceiling but some areas have less rice than they need, you will see supply problems in the rice-deficit areas. So, supply monitoring must also be localized, and some augmentation must take place in rice-deficient areas,” he said.
“I also suggested last year that we pay a premium to our partners for the right to buy rice at a slightly higher price than the current world price, but at a price that is already fixed regardless of any potential further increase in the future.
That helps put an end to unwarranted price speculation in the global market, since we are one of the world’s largest importers of rice,” he said.
Ultimately, Salceda said, rice prices will fall when India rescinds its rice export ban.
“But it highlights how our rice policy must remain focused on enhancing domestic yields. If we are able to produce yields at Vietnam levels [5.6 tons per hectare] from our current level [4.1 tons per hectare], we can close our domestic supply shortage and be less sensitive to movements in the world market,” he added.
Clarification
While he agrees with the President’s imposition of a price ceiling for rice, Albay Rep. Edcel Lagman said clarification should be made on the price cap of imported rice unless it falls under the subject rice varieties.
He said the price ceilings must be accompanied by several measures to address the impact on farmers and other stakeholders.
Lagman said the government should provide subsidies to farmers to maintain a viable farmgate price of palay, saying the subsidy is geared towards reducing the cost of production, from pre-planting, planting, harvesting, milling, transport, and trading of palay.
He said the Rice Competitiveness Enhancement Fund (RCEF) under the Rice Tariffication Act, or RA No. 11203, must be immediately and fully implemented for the benefit and welfare of farmers and their families and organizations.
Also, Lagman batted for government-to-government negotiations for the importation of rice in order to get the lowest cost of importation by authorized private importers.
“Rice retailers must be granted access to facilities at minimal interest rates and with minimum collateral requirements to help them in the procurement of rice,” he added.
According to Lagman, the campaign against rice smuggling and cartelization must be fully intensified with the immediate apprehension, prosecution, and conviction, once warranted, of malefactors.
He said the role of middlemen in the rice trade must be strictly limited and monitored.
House backing
Meanwhile, Speaker Ferdinand Martin G. Romualdez said the chamber strongly backs EO39.
“We won’t stop until the President is successful in achieving his targets. We’re very serious about it. And we’re not going to stop here in Luzon; we’ll go to Visayas and Mindanao. We’re going to hit every region,” Romualdez said, referring to the joint raid conducted by the Bureau of Customs and the House on rice warehouses in Bulacan.
“If we find out that people are importing, hoarding, and profiteering, we’re going to raid, and Customs will just seize it and give it to DSWD, Kadiwa, and the DA for sale at a much lower price point,” he added.
The Speaker, meanwhile, acknowledged the gesture of the Philippine Rice Industry Stakeholders’ Movement (PRISM) to make available to the public rice at P38 a kilo, but he also noted that the target of recent raids in Bulacan rice warehouses suspected of hoarding and smuggling were members of the group.
He said the group could show their sincerity by helping the government unmask the “bad eggs,” or members suspected of involvement in unscrupulous trade practices.
“We will call them in. We will be the ones to talk to them on our terms. If we have to detain them until they tell us the truth, we will do that. And if we have to make sure they’re out of the business of smuggling, profiteering, or hoarding, we’ll get them out,” Romualdez said.
Noting that rice imports, particularly from Vietnam, constitute only 18 percent of the total rice consumption in the country, Romualdez said traders cannot justify price hikes in the local market by citing world market prices.
While it’s completely understandable for traders to earn profits from the rice trade, Romualdez said they should not be too greedy, warning that the government is willing to undertake even more drastic measures to regulate importation to prevent abuses by profiteers.
Rice price cap must exceed equilibrium price–Salceda
Source: News Paper Radio
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