By Vonn Andrei E. Villamiel
THE Department of Agriculture (DA) said the proposed Rice Industry and Consumer Empowerment (RICE) Act is being configured to arrest low farmgate prices of palay (unmilled rice), though analysts warned that its impact will ultimately depend on how much of the harvest the government buys, as well as tariff adjustments.
The proposed RICE Act, currently pending in Congress as House Bill No. 1 and Senate Bill No. 1618, seeks to restore and expand the regulatory powers of the National Food Authority (NFA), which had been significantly reduced under Republic Act No. 11203 or the Rice Tariffication Law of 2019.
Under the bill, the NFA would be allowed to directly sell rice to the public, a major expansion of its current role of holding rice reserves for release during emergencies. The NFA would be permitted to sell up to a quarter of its total inventory each month, with the NFA Council authorized to increase this limit as needed.
The expanded powers are intended to enable the NFA to purchase more palay, thereby providing rice traders competition in purchasing the palay harvest while also reducing price volatility.
“The RICE Act needs to be passed so that… the P8 to P10 palay farmgate price won’t happen again,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. told reporters at a briefing in December.
Palay farmgate prices were last at that level in mid-2025, well below the estimated production cost of around P14 per kilo.
The decline in prices was attributed to the oversupply of cheap imported rice, leading the government to halt rice imports between September and December.
Aside from expanded palay procurement, the bill also empowers the NFA to set and implement floor prices for palay at the national, regional, and provincial levels, providing a minimum price at which rice traders may buy from farmers.
“(The floor price policy should take) into consideration the cost of production, prevailing market prices, reasonable margins for farmers, welfare of both farmers and consumers, and other relevant factors and conditions,” according to the bill’s House version.
Proposed penalties for violating the floor price include the suspension or revocation of licenses or trading permits, as well as fines of up to P2 million and/or imprisonment for up to two years.
While the proposed legislation is expected to expand the government’s role in the rice market and help raise palay prices, an analyst said its effectiveness will depend on the scale of procurement.
“Even if legislation is passed, if palay procurement remains at P9 billion, or (even) P14 billion, you can only procure 2% to 3% of the total harvest,” Jayson H. Cainglet, executive director of the Samahang Industriya ng Agrikultura, told BusinessWorld via Viber.
He said the government would need to increase the procurement budget to around P45 billion, which would allow it to purchase 10% of the harvest and establish a significant presence in the market.
Raul Q. Montemayor, national manager of the Federation of Free Farmers, said, however that intervention at such scale could be costly in terms of subsidies, government manpower and facilities.
He said government interventions should be limited to extreme or emergency situations, when rice prices exceed a set trigger level or palay prices fall below a certain threshold.
“Within the normal range, the government’s role should be limited to monitoring, buffer stock management, and preventing price manipulation, hoarding and profiteering,” Mr. Montemayor told BusinessWorld via Viber.
Meanwhile, Mr. Cainglet warned that private traders are unlikely to comply with the NFA floor price if imported rice remains cheap.
“You cannot force private traders to buy palay at P23 per kilo if the landed cost of imported rice remains below P30 per kilo. They will simply stop buying palay if it means taking a loss,” he said.
Both analysts agreed that tariff-setting and import management remain crucial for ensuring that domestic producers can compete.
“Bottom line still: revert rice import tariffs to 35% (ASEAN) and 50% (non-ASEAN) as the starting point for any tariff tweaks,” Mr. Cainglet said.
Mr. Montemayor said tariffs should be a tool for managing supply, noting that shortages or gluts are the main drivers of price volatility.
He also warned that the proposed RICE Act could be used primarily as an inflation-containment tool, potentially at the expense of farmers.
“Based on recent acts of the Executive, such as the lowering of tariffs, disposal of cheap (P20) subsidized rice, and import bans that actually allow traders to continue importing, we are afraid that the powers given to the DA through the RICE Act will more often than not be used to tame inflation even if this is at the expense of farmers,” he said.