The National Food Authority’s recent announcement that P4 billion can purchase 173,913 metric tons of palay at P23 per kilogram for wet palay bought directly from threshers, or P27 per kilogram for clean and dry palay, highlights a disconnect between government pronouncements and conditions in the agricultural sector.
While the announced buying price of P27 to P30 per kilogram suggests stronger support for farmers, the procurement volume represents only 1.7% of the expected 10 million metric tons of wet-season harvest.
At that scale, the intervention is unlikely to stabilize farmgate prices or significantly affect retail rice prices. Most farmers also lack dryers, trucks and storage facilities needed to meet the NFA’s clean-and-dry requirement, leaving many dependent on traders who buy palay at lower prices.
Palay prices in Tarlac are currently at about P17 per kilogram for fresh palay, below the stated breakeven level of P18 to P20 per kilogram.
Harvesting has only begun, and as volumes peak from mid-October through November, the increase in supply could push farmgate prices even lower.
Meanwhile, retail rice prices remain at P58 to P60 per kilogram, widening the gap between farmers’ earnings and consumers’ expenses.
The divergence illustrates the limitations of the NFA’s procurement program in bridging the farm-to-market chain, leaving both producers and consumers exposed to market pressures.
Policy failures and structural weaknesses
The NFA’s limited procurement capacity reflects broader problems in the rice sector.
Policy measures such as the Rice Tariffication Law have allowed import surges that, according to the report, pushed farmgate prices down to P10 to P12 per kilogram in previous seasons, well below production costs.
The expected benefit of cheaper imported rice has also not been fully reflected in consumer prices, with retail prices remaining high while farmers continue to face lower incomes.
The Inquirer analysis cited in the report states that the decline in rice output is not merely cyclical but is linked to policy, market and climate-related problems.
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Market conditions further compound the problem.
Small farmers who lack postharvest facilities are often forced to sell wet palay at lower prices to traders. The NFA’s requirement for clean and dry palay also limits the ability of many farmers to sell directly to the agency, reinforcing their dependence on middlemen.
This arrangement leaves many farmers unable to directly access government procurement support.
Climate resilience has also weakened.
Irrigation systems have come under pressure from El Niño, while land conversion continues to reduce productive agricultural areas.
The Inquirer analysis notes that rice accounts for 45% to 70% of Filipino calorie intake, making declining production and greater import dependence significant concerns for affordability and food security.
Questions over procurement capacity and government messaging
The gap between the NFA’s announced buying prices and its available procurement funds raises questions about the agency’s capacity to intervene meaningfully in the market.
The P4 billion allocation is far below the P130 billion procurement requirement cited in the report as necessary for meaningful price stabilization.
Announcing higher buying prices without sufficient logistical and fiscal capacity may create expectations among farmers that the government can purchase large volumes of palay at P27 to P30 per kilogram.
In practice, however, only a fraction of the harvest can be procured under the available budget.
The report argues that this gap may weaken farmer confidence and contribute to decisions to reduce rice cultivation because of unprofitable returns.
The way the program is communicated is also important.
Emphasizing buying prices without clearly explaining the volume that can actually be purchased may give an incomplete picture of the program’s reach.
Such messaging does not address structural pressures in the rice market, including climate-related yield declines, rising input costs and trader dominance.
Impact on farmers and consumers
For farmers, the immediate concern is continued pressure on incomes.
At P17 per kilogram for fresh palay, many are already selling below the stated breakeven level.
As the harvest peaks, additional supply could drive prices lower, increasing indebtedness and discouraging future planting.
Without expanded procurement, farmers are likely to remain dependent on traders, affecting the long-term viability of rice production.
For consumers, persistently high retail rice prices despite low farmgate prices point to inefficiencies in the value chain.
The difference between P17-per-kilogram palay and rice selling for as much as P60 per kilogram reflects the widening gap between producer and retail prices.
The NFA’s limited procurement capacity has little effect on retail prices, leaving households exposed to food inflation.
Policy options for reform
The report identifies several policy measures that could strengthen government intervention in the rice sector.
Scale up procurement funding. Increase the NFA’s budget to cover at least 20% of seasonal harvests to allow more significant market intervention.
Invest in postharvest infrastructure. Provide dryers, trucks and storage facilities so small farmers can meet procurement requirements and sell directly to the NFA.
Recalibrate import policy. Balance rice imports with domestic production requirements to support farmgate prices and domestic food production.
Protect rice lands and irrigation. Limit land conversion and rehabilitate irrigation systems to improve climate resilience.
Diversify calorie sources. Promote root crops, corn and vegetables to reduce dependence on rice and provide a buffer against climate-related disruptions.
Improve transparency in public communication. Align public announcements with actual fiscal and procurement capacity so farmers have a clearer understanding of the scale of government intervention.
Closing the gap between policy and implementation
The NFA’s announcement of P27 to P30 per kilogram buying prices, backed by a P4 billion procurement budget, highlights the gap between announced support prices and the actual scale of government intervention.
Taken together with the analysis cited in the report, policy decisions, import surges, trader dominance and climate-related pressures have combined to weaken the country’s rice sector.
Unless procurement capacity is expanded, postharvest infrastructure is improved and farmer confidence is restored, the impact of the P27-per-kilogram procurement program will remain limited.
The current situation in Tarlac, where fresh palay sells for about P17 per kilogram while retail rice remains at P58 to P60 per kilogram, illustrates the widening gap between producers and consumers.