Alcala says high rice prices mainly due to soaring production costs

MANILA — Agriculture Secretary Proceso Alcala on Wednesday said that the high cost of producing palay is one of the major reasons to the high price of rice and that increasing the level of farm mechanization would be a key factor to achieve competitive prices for the staple.

Appearing before members of the House Committee on Appropriations to present the DA’s proposed P51.

7 billion budget for 2015, Alcala told lawmakers that the country has one of the highest production cost of palay in Asia because of farmers’ over reliance on manual labor.

He noted that while we are at the same level with China in terms of palay production cost – about P10 per kilo – Vietnam produces palay at only P5.40 per kilogram with Thailand just slightly higher than the latter.

“These two ASEAN countries are highly mechanized while majority of our farmers still rely on manual labor which is more costly,” Alcala explained.

“We also have much lower budgetary allocations for palay interventions compared to other Asian countries,” he added.

To address this, the Agriculture chief said his agency will be instituting interventions in the next two years that would lower production costs and make the price of the main staple competitive.

“These interventions include increasing farm mechanization, lowering the cost of credit and improving rural infrastructure to enhance productivity, connectivity and integration of production areas to markets,” Alcala told member of the House panel.

By 2016, he said that their target would be to produce 10 metric tons of palay per hectare at P5 per kilo in production cost.

In the meantime, Alcala said the current spikes in the price of rice in the market are to be blamed on traders who jacked up the purchase price of palay to about P20 to P21 per kilo.

In comparison, the National Food Authority (NFA) buys palay at only P17 or P18 per kilo.

“In doing this, the traders have prevented the NFA from replenishing its buffer stocks and its ability to stabilize the price of rice,” he said.

He said this was the main reason why the NFA is importing 800,000 metric tons (MT) of rice – with standby authority to import another 500,000 – from Vietnam.

“These importations would boost our buffer stocks and give back to the government its ability to sell NFA rice at P27 and P32 per kilo,” Alcala said.