FARMERS belonging to various militant farmers’ organizations are seeking the increase in the government’s buying price of unhusked rice or palay from P17 per kilo to P20 per kilo to help them cope with the skyrocketing cost of production brought by the unabated oil price hikes.

In a joint manifesto, participants to the National Rice Farmers’ Conference held at the University of the Philippines in Diliman, Quezon City said the farm-gate price of palay is “too low” to even cover production costs, citing the unabated increase in the price of pump gasoline.

“While farmers shoulder the rising costs of production, palay prices remain very low. The farm-gate prices of palay cannot even help us recover from the skyrocketing costs of production,” KMP secretary general Danilo Ramos said.

He said the survival of resource-poor farmers depends on the decision of Aquino Administration to cause an increase in the buying price of palay, noting that millers and rice traders continue to take advantage of the limited resources of the National Food Authority (NFA) to buy palay directly from the farmers.

The group estimates that there are currently 2.7 million rice farmers and another 1.7 million Filipinos – including rice millers and traders – who depend on the estimated P800-billion rice industry.

A study conducted by KMP revealed that one hectare of a rice paddy requires a rotobator and hand tractor that consumes at least 600 liters of gasoline for every cropping.

Gasoline-operated irrigation pumps consume at least 150 liters per cropping.

These machineries, he said, are necessary in doing business for farmers.

“At P55 per liter, this means each rice farmer shoulders P41,250 for gasoline alone.  And every P1 increase in the price of gasoline means an added P750 production cost for the rotovator, hand tractor, and irrigation pump alone for a one-hectare rice land,” he said.

Ramos said that “including land rent, fertilizers, pesticides, and machinery rentals, the cost of production would shoot up to a minimum of P75,000 per hectare.”

“At an average harvest of 80 cavans or 40,000 kilos per hectare, each rice farmer spends P18.75 per kilo of palay while unscrupulous rice traders only buy palay at the average price of P12 per kilo nationwide. This explains why rice farmers are deep in debt and run to loan sharks,” Ramos said.

Ramos said it is unfortunate that the NFA cannot influence farm-gate prices because it only buys less than two percent of the country’s total rice production.

Worse, he said, the budget of the food agency is being used for the massive importation of rice.

“What we’re asking for is only for survival, for every rice farmer to live and plant for next cropping season,” Ramos said.

Meanwhile, the government is studying other incentives it can offer to palay farmers to entice them to sell their produce to the NFA, an official of the agency said on Tuesday.

“Among the things that are under consideration are monetary incentives and the implementation of simpler procedures [for buying palay],” said Gilbert Lauengco, special assistant to the NFA administrator in a telephone interview.

Lauengco, however, said that the food agency under the Department of Agriculture (DA) is not considering the increase in the support price for unmilled rice currently pegged at P17 per kilogram.

Apart from buying palay at P17 per kilo, the NFA also gives a total incentive of P0.70 per kilo to farmers. Of this amount, P0.20 represents the Cooperative Development Incentive Fee, P0.20 delivery fee and P0.20 as drying fee.

The Philippine government raised its buying price for unmilled rice in 2008, when it was confronted with a global rice crisis. This was done to encourage more farmers to plant more palay.

The NFA’s purchase of unmilled rice from farmers helps avert any drastic reductions in the farmgate price of palay, especially during harvest.

Some farmers have earlier complained that the food agency implements “stringent guidelines” in buying palay from them, particularly with regard to the moisture content of the unmilled rice.

As for the total volume of palay which the government will buy from farmers in 2012, Lauengco said the NFA is sticking to the original target of 1.2 million metric tons (MMT). He said, however, that the government is currently evaluating the figure to determine whether it has the budget to buy the entire volume for this year.

NFA administrator Angelito T. Banayo and Lauengco revealed that the NFA is still awaiting the nod of the Fiscal Incentives Review Board (FIRB) under the Finance department for the Tax Expenditure Subsidy (TES). The TES allows the food agency to import rice effectively at zero duty.

“We hope to get the approval this week. We have stressed the urgency of having it approved as soon as possible,” said Lauengco.

He said the agency will fast-track the publication of the guidelines as well as the conduct of the bidding once it gets the nod of the FIRB.

“We need to have [all the imported rice] delivered before the start of the lean months,” he said.

The inter-agency NFA Council approved the importation of 500,000 metric tons (MT) of imported rice for 2012. The private sector was tasked to bring in all the volume of imported rice this year but the NFA will serve as “clearinghouse” for the imports.  

Traders will have to pay NFA a “service fee” for the use of the agency’s TES.