Philippines imposes rice price cap to curb 'alarming' retail price rise

The Philippine Department of Agriculture said the above ceiling prices are all lower than the domestic market prices as of August 30.

On September 1, the Office of the President of the Philippines said that the country has set a ceiling price for rice in the domestic retail market. (Illustration photo)

On September 1, the Office of the President of the Philippines said that the country has set a ceiling price for rice in the domestic retail market.

Specifically, the Philippines set the ceiling price for regular milled rice at 41 pesos per kilogram (equivalent to about 0.72 USD per kilogram). Meanwhile, the price of well-milled rice was set at 45 pesos per kilogram (equivalent to about 0.79 USD per kilogram). These ceiling prices are effective until further decision by the president. The Philippine Department of Agriculture said that the above ceiling prices are all lower than the selling prices in the domestic market as of August 30.

This is a measure to stabilize the prices of staple goods of this Southeast Asian country when retail prices increase at an "alarming" rate due to the impact of domestic and foreign events.

The decision to impose a price cap was made after recognizing rampant illegal price manipulation in the Philippines, such as hoarding by traders and collusion among rice producers and processors, the Office of the President said in a statement.

In addition, global events such as India’s ban on rice exports and fluctuations in oil prices have also caused retail rice prices in the Southeast Asian country to increase at an “alarming” rate. Last August, domestic retail rice prices continued to rise. The selling price of some types of rice in the market around the capital Manila increased by up to 25%.

The Philippines is one of the world's largest grain importers. In the second half of 2023, the Philippines' rice supply is estimated to reach 10.15 million tons, of which 7.2 million tons will be domestically harvested. According to Nikkei Asia , about 90% of the Philippines' rice imports in 2022 will come from Vietnam.

Earlier this week, Philippine President Ferdinand Marcos Jr. ordered authorities to step up efforts to curb rice hoarding and step up measures to curb inflation, which has been driven largely by surging rice prices. Inflation in the Philippines hit 4.2% in July 2023, the highest since 2019.

This is the first time Philippine President Ferdinand Marcos Jr. has imposed a price cap on domestic rice since taking office in June 2022. On September 1, Nikkei Asia quoted senior economist Nicholas Antonio Mapa of the Manila branch of multinational bank ING as saying that the decision to impose a price cap on rice is not a long-term solution to "cool down" rice prices as well as the sharp increase in food prices. Expert Mapa argued that this measure could cause supply and demand problems, possibly leading to underground trading or the black market.

According to Leonardo Lanzona, an economist at the Ateneo De Manila University (Philippines), the decision to impose a price ceiling could cause huge losses to both farmers and traders in the country. This expert argued that previous price ceilings had caused greater losses to the government. Meanwhile, price ceilings also reduce production output, thereby reducing supply in the market.

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