Consumers, Vendors, Retailers react differently

Consumers, Vendors, Retailers react differently

VENDORS and a group of retailers in Cebu have expressed their concern that the decision of President Ferdinand Marcos Jr. to set price ceilings on rice in the whole country will affect their income.

Marcos has imposed mandated price ceilings to keep the staple food affordable amid the sharp increase in retail prices in the market despite the sufficient supply.

Executive Secretary Lucas Bersamin, on Thursday, Aug. 31, 2023, signed Executive Order (EO) 39 which states that the President approved the joint recommendation of the Department of Agriculture (DA) and the Department of Trade of Industry (DTI) to set the price ceilings, the Presidential Communications Office (PCO) said in a statement.

The move came after Marcos was briefed on the rice supply situation during a sectoral meeting on Tuesday, Aug. 29.

Under EO 39, the price ceiling is P41 per kilo for regular milled rice and P45 per kilo for well-milled rice.

The EO will take effect once it is published in the Official Gazette, or in a newspaper of general circulation, the PCO said.

Gielma Homoc of Barangay Umapad, Mandaue City welcomed the President’s decision, saying it can help her family save money as her husband, a motorcycle-for-hire driver, only earns P500 to 1,000 every day, and they have three children to feed.

The Homocs consume more than three kilos of rice per day.

Another Mandaue City resident, Ana Hernan of Barangay Looc with a family of six was glad that caps were imposed on rice prices, but she called on the President to lower the price to P25 per kilo.

Decrease

However, Marcos’ decision did not sit well with Nieves Abarquez, a rice vendor at the Mandaue City Public Market. She said she would experience a drop in earnings if she complied with the order.

Abarquez said she only makes a profit of P250 per sack of 50 kilos that she sells since she buys it for between P2,600 and P2,700 per sack and resells it for between P2,850 and P2,950.

Another vendor, Nieves Auman, said it would be better if the National Government re-introduce rice from the National Food Authority to the market, as this would benefit cash-strapped customers.

Reduced supply

Consolacion Mayor Teresa Alegado, president of the Grains Retailers’ Confederation of the Philippines, said that imposing price ceilings would not only disrupt their earnings, but may also reduce the supply of rice in the market.

Alegado told SunStar Cebu that the worst-case scenario could result in retailers shifting to different products or ceasing to sell rice as it may become unprofitable for them.

This would also result in traders and distributors choosing to hoard rice, affecting the supply in the market.

The price ceilings will remain in effect unless lifted by Marcos on the recommendation of the DA, DTI or the Price Coordinating Council (PCC), the EO said.

Projection

The DA projects rice supply for the second semester to reach 10.15 million metric tons (MMT), which the department said is more than enough to cover the current demand of 7.76 MMT, with 2.39 MMT still left over to cover 64 days of demand.

The 10.15 million metric tons of rice is composed of the 2.53 MMT ending stock from the first semester, 7.20 MMT expected yield from local production and 0.41 MMT of imported rice.

The EO noted, however, that despite the steady supply of rice, the DA and DTI have reported “widespread practice of alleged illegal price manipulation, such as hoarding by opportunistic traders and collusion among industry cartels in light of the lean season, as well as global events taking place beyond the Philippines’ control, such as the Russia-Ukraine conflict, India’s ban on rice exportation, and the unpredictability of oil prices in the world market, among other factors,” that have caused sharp increases in retail rice prices.

Prices

As of Aug. 28, local regular milled rice in markets in the National Capital Region ranged from P42 to P55 per kilo while local well-milled rice ranged from P48 to P56 per kilo, the PCO said.

In Cebu, the price of regular milled rice ranged from P38 to P39 per kilo, while well-milled rice ranged from P42 to 43 per kilo, according to DTI 7 Director Naneth Arbon.

The National Economic and Development Authority also reported the increase in the rice inflation rate from one percent in January 2022 to 4.2 percent in July 2023, which it said could be attributed to the “rising demand and tight supply due to, among others, efforts of other countries to buffer their supply in anticipation of El Niño and the above-mentioned international developments.”

Aside from monitoring and investigating abnormal rice price movements, Marcos directed the DTI and the DA to assist affected retailers with the help of the Department of the Interior and Local Government.

Inspections

The Bureau of Customs (BOC) was also directed to intensify its inspections and raids of rice warehouses to prevent hoarding and illegal rice importation and facilitate the lawful seizure of smuggled rice with the help of the DA, which will provide the BOC with the list of accredited rice importers and the location of rice warehouses.

Last week, the BOC closed three warehouses in Bulacan after they were found to have stored more than P500 million worth of alleged imported rice.

To ensure fair competition and protect consumers, the Philippine Competition Commission, in coordination with the DA and the DTI, was also directed to move against cartels or those abusing their dominant position in the market.

The Philippine National Police and other law enforcement agencies were mandated to help the DTI and the DA enforce the price caps.

Section 7 of Republic Act (RA) 7581 allows the President, on the recommendation of the implementing agency, or the PCC, to impose a price ceiling on any basic necessity or prime commodity under specified conditions.

RA 7581, or the Price Act, allows the state to protect consumers against hoarding, profiteering and cartels. (CTL, HIC, EHP)

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