Rice price hikes to remain steady at below 5% — NFA

The National Food Authority (NFA) is projecting that the increase in rice prices will remain steady at below five percent and help ease the country’s overall inflation rate until end of the year.

NFA Administrator Gregorio Y. Tan Jr. said that despite the successive spike in oil prices, the rate of increase in rice prices has been on a downtrend in the last eight months from a high of 8.3 percent in October 2005 to 4.1 percent last May.

"Managing the rice price is expected to moderate the total consumer price index/inflation rate," said Tan.

He said that while NFA only buys an average of three percent of total rice production, its market presence especially in rice distribution is significantly tempering rice inflation and prevents rice traders from getting away with runaway rice prices especially during the lean rice months from July to September.

This year, NFA is allocating as much as P4 billion for rice procurement but this could be adjusted depending on requirements of consumers, especially in critical areas.

"Our injection of rice stocks, especially in vulnerable or remote areas is stabilizing the price of rice and keeping it at an affordable level by maintaining sufficient inventory for food security, having stocks ready for distribution and ensuring the timely infusion of rice in the market preempts any rice price spiral," said Tan.

Rice has a significant share in the consumer and food basket at 9.3 and 18.7 percent each, respectively.

Tan stressed that when the price of rice goes up, it triggers high inflation.

He said that the NFA expects to exceed its targeted rice distribution volume for the second quarter as demand for government rice continues to remain high.

"There has been a marked increase in demand for NFA rice in the last five months. This is expected to further increase in the coming months especially during the start of the lean period in July," said Tan.

He said the NFA is already positioned to facilitate distribution among the regions and provinces prone to isolation especially during the rainy months.

Tan noted that on a monthly basis, from January until May, actual NFA rice distribution surpassed 100 percent of the target.

Tan said the uptrend in palay farmgate price among others, triggered the demand for NFA rice.

"The price of palay remained high even during the summer harvest, and this also kept the price of commercial rice relatively high," he added.

Consumers on the other hand, he said, are looking for reasonably-priced quality rice. NFA rice is priced at P18 per kilo for the well-milled variety which is lower by P3-P5 per kg than the regular and well-milled commercial rice in the market.

"Unlike commercial rice price which fluctuates depending on the source of supply and the corresponding transport cost, NFA rice is uniformly priced nationwide," said Tan.