Palay production cost falls below P14/kilo

MANILA, Philippines —  The average palay production cost last year dropped by almost 11 percent on an annual basis to below P14 per kilo, according to the Philippine Statistics Authority (PSA).

The PSA reported that the average cost to produce a kilo of palay last year stood at P13.38 per kilo, P1.6 lower than the P14.98 per kilo average in 2022.

The PSA said it recorded the highest production at P18.7 per kilo in Central Visayas while Central Luzon posted the least production cost at P11.6 per kilo.

The average production cost per hectare last year stood at P55,814, slightly higher than the P54,373 per hectare recorded in 2022.

“By region, the highest cost was recorded in Cagayan Valley at P72,255 per hectare. The lowest was reported in BARMM at P41,446 per hectare,” the PSA said.

Meanwhile, the average gross returns last year expanded by more than a quarter to about P82,847 per hectare from P65,209 per hectare in 2022, thanks to higher farmgate price of palay.

The average farmgate price of palay last year reached nearly P20 per kilo, more than P2.5 higher than the P17.45 per kilo recorded average price in 2022, based on PSA data.

As a result, palay farmers’ average net returns reached P27,033 per hectare,  more than double than the P10,836 per hectare profit they got in 2022, according to the PSA.

PSA said palay farmers earned P0.48 for every peso they invested last year compared to their net profit-cost ratio of P0.2 in 2022.

“Central Luzon recorded the highest net returns among regions at P50,198 per hectare. Northern Mindanao came next with P42,413 per hectare,” the PSA said.

The PSA recorded the highest net-profit cost ratio in Northern Mindanao at P0.44 followed by Central Luzon at P0.41. The lowest net-profit cost ratio was in Central Visayas at -P0.19 followed by Calabarzon at -P0.12.

The government targets to reduce average palay production cost to below P10 per kilo through the rice competitiveness enhancement fund (RCEF).

Pundits have earlier lamented that the RCEF was unable to make a significant dent in reducing farmers’ production costs. However, some experts noted that external factors such as skyrocketing of fertilizer prices due to the Ukraine-Russia war negated the gains of the RCEF.

The government is keen on extending the RCEF until 2031 as the measure is set to expire by the end of the year. The bill seeking to extend and improve the RCEF is currently waiting the signature of President Marcos so that it would be enacted into law.