TURNING POINT: The Toothless Price Cap

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NAAWAN, Misamis Oriental (MindaNews / 19 Sept)—Supposedly to decline because of the price cap, the price of rice has instead spiked to as high as P70 per kilogram. Available within the price cap range are black-stained or yellowed grains and broken rice—poor qualities resulting from palay that had been long submerged in water before the harvest. When cooked, this kind of rice has certain undesirable taste and smell. What you saved from the low price is not worth it.

The price cap ought to be lifted because it has not served the purpose but has in fact compounded the problem. Accordingly, because of the price cap, the farm gate price of palay could drop to as low as P16/kg from the current P22-25/kg. Pressuring the millers or wholesalers to lower their price for the retailers forces them to drop the farm gate price of palay. Where else would they recover a loss in revenue from the reduction of their price to the retailers but in lowering their acquisition cost of the palay. It’s the rice farmers who suffer the brunt of the burden of the ill-thought rice price cap at the end of the line.

It’s apparent that, at the moment, the millers have not yet dropped their palay acquisition cost and the price of grains sold to retailers because the price of rice is not affected by the price cap. In fact, the price of rice remains generally the same, except for some high quality which is rising. And there are still takers. Why? Because we prefer good quality rice in our table. Cheap quantity is not a substitute to desirability. There are still many where want and need are one and the same thing—that which is desirable. They will pay for it.

Again, to effectively drop the price of rice, PBBM should start hunting and dismantling rice smugglers and cartels; confiscate their hoards and flood the market with the same and let the forces of the market take over from there.

(MindaViews is the opinion section of MindaNews. William R. Adan, Ph.D., is retired professor and former chancellor of Mindanao State University at Naawan, Misamis Oriental, Philippines.)

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