Philippines imposes ceiling on domestic rice prices

The Philippines - Vietnam's largest rice consumer - has imposed a ceiling on domestic rice prices as retail prices have increased "alarmingly" and speculation has emerged.

On August 31, Philippine President Ferdinand Marcos Jr. issued a decree stipulating that the price of regular milled rice here can only be sold at a maximum of 41 pesos (0.72 USD) per kilogram. Meanwhile, the price of highly milled rice is capped at 45 pesos. The decree takes effect immediately.

Previously, these two types of rice were sold here at 34% and 24% higher prices, respectively, according to data from the Philippine Department of Agriculture .

The rapid rise in rice prices could accelerate inflation here, after hitting a 16-month low in July. Rice now accounts for 9% of the basket of goods used to calculate inflation in the country. The central bank of the Philippines estimated that inflation accelerated last month for the first time in seven months, due to higher fuel and rice prices.

In 2018, soaring rice prices due to a shortage fueled inflation in the Philippines, forcing the country to raise interest rates. Last month, rice prices in Asia hit a 15-year high after India, the world’s largest rice exporter, banned the sale of many varieties of the grain abroad.

The Department of Agriculture and Trade also noted "rampant price manipulation, such as hoarding by colluding traders and businesses," the presidential office said in a statement. The Russia-Ukraine conflict, India's rice export ban and unpredictable global oil prices have also increased retail rice prices here.

The Philippines Department of Agriculture estimates that the country's rice supply in the second half of the year will reach 10.15 million tons, enough to meet current demand of 7.76 million tons.

The Philippine president also asked the police to coordinate with the government to ensure the implementation of the price ceiling. The country's customs will tighten inspections of rice warehouses to prevent speculation and smuggling.

The Philippines is one of the world's largest rice producers, but it often buys rice from major suppliers such as Thailand and Vietnam to offset production losses caused by typhoons. The latest report from the Ministry of Agriculture and Rural Development shows that in the first half of this year, the Philippines was the largest market for Vietnamese rice, with 1.5 million tons, equivalent to more than 772 million USD.

Ha Thu (according to Bloomberg)

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