Farmers face bankruptcy amid low farmgate prices

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Local rice farmers continue to face poverty due to feudal exploitation, lack of production support, low farmgate prices, and the regime’s all-out importation of cheaper rice.

They are facing severe hardships due to the declining farmgate price of palay. According to the Philippine Statistics Authority (PSA), palay farmgate price was only ₱17.14 up to ₱20.87 per kilo in the past five years. Farmers, however, said that prices have bottomed out to ₱7-₱10 per kilo in the past two years. These farmgate prices were recorded in Central Luzon which is the major producer of palay in the country.

Farmers have long demanded that farmgate prices of palay be raised to ₱20 per kilo to support local production. Despite the low farm­gate prices of palay, the average retail price of rice in the past five years was ₱42.59, which peaked to ₱45.18 in 2018.

Farmgate prices are pulled down further by the influx of imported rice after the enactment of the Rice Tariffication Law (RTL) in February 2019. During the same year, the country recorded the highest volume of imports which reached 3.131 million metric tons (MT) or five times higher than imports recorded in 2016. Imports remained high in 2020 and 2021. Contrary to claims by proponents of the RTL, the average retail price of rice in local markets only decreased by 1%.

Rice farmers are left with almost no income. The average cost of production per kilo of rice is estimated at ₱12.41. This is way higher than the cost of production in other rice-producing countries such as Vietnam (₱6.22 per kilo) and Thailand (₱8.86 per kilo).

The coverage of the regime’s free irrigation law is very limited. Despite being enacted in 2018, funds allocation for irrigation decreased over the years from ₱41.67 million in 2018, to ₱35.29 million in 2020.

Farmers are burdened further by increasing prices of fertilizer. The price of urea, commonly used by rice farmers, increased by 12.06% from 2016 to ₱1,046.44 in 2020. The prices of other types of fertilizers such as ammonium sulfate and diammonium phosphate have also increased by 8.32% and 7.57%, respectively.

More or less five and a half sacks of rice (1 sack = 50 kilos) are used per hectare of rice field. In sum, the cost of fertilizers utilized by farmers per hectare of rice field increased by ₱688-₱711.

Data by the PSA indicate that the “highest” palay production (19.44 million MT) in the country in recent years was recorded in 2020. Farmers, however, pointed out that this was primarily because of bigger volumes of rain and lower yield in previous years caused by El Niño. The total land area of palay land in the country shrank by 300,000 hectares from 4.81 million hectares in 2017 to 4.53 million hectares in 2020.

Floods and low farmgate prices

During the last cropping cycle last June, rice farmer Miguel spent ₱19,350 to buy fertilizer which he applied in his 3-hectare rice field. On top of this, he also spent ₱5,730 to buy herbicide and ₱4,324 for pesticide. He also spent an additional ₱16,200 to rent farming machinery and pay the wages of farmworkers whom he employed for harvesting.

He was further burdened by the destruction of about a fourth of his rice fields due to the typhoon which hit South Cotabato during that period. He was only able to harvest 170 sacks of palay (69.47 kilo per sack) in September. Eight percent of this or 13 sacks of palay was deducted from his output as payment for the harvester which they rented. Twelve sacks of palay were also reserved to be planted for the next cropping cycle.

Of his net harvest (145 sacks), 25% (36 sacks) will be paid to the landlord as land rent. He will also pay 18 sacks of palay to his financier and 12 sacks of palay to pay the debt incurred by his family over the planting season.

He will only be able to sell his produce at a farmgate price of ₱13.50 per kilo, which will be further pulled down by the trader who buys his produce with various deductions. Overall, Miguel will be left with a gross income of ₱70,134 which he will use to cover over ₱60,000 in production costs and pay other debts. He is left with a net profit of ₱10,134 which their family will spend to survive until the next harvest season.

Farmers face bankruptcy amid low farmgate prices