August 6th, 2025
With due respect to the Foundation for Economic Freedom, free trade works best when markets are genuinely free. What makes markets unfree is not only the government. A few dominant actors in the private sector, in collusion with public officials, can and often do accumulate sufficient market power to distort outcomes, control supply chains, and extract unjustifiable rents at the expense of both consumers and producers.
This is precisely what is happening in the Philippine rice sector today. In July 2024, the government reduced the most-favored nation tariff on rice imports from 35 percent to 15 percent. The policy aimed to curb inflation and stabilize prices. But a year later, the main beneficiaries are not consumers or farmers. They are importers, traders, and millers.
Retail rice prices did not fall in proportion to the drop in import costs. Well-milled rice retailed at ₱47.60 per kilogram in July 2025, down only 14.8 percent year-on-year. Regular-milled rice dropped to ₱41.31 per kilogram, a decline of 18.8 percent. Special-grade rice declined just 11.8 percent, to ₱56.83 per kilogram.
Meanwhile, farmgate prices collapsed far more severely. Palay dropped from ₱24.93 per kilogram in June 2024 to just ₱16.99 per kilogram in June 2025, a 31.8 percent drop. In some areas, farmgate prices have reportedly reached as low as ₱8 per kilo, well below production cost.
The result is a margin of ₱8 to ₱12 per kilogram captured by intermediaries, while farmers suffer losses and consumers see only modest relief.
As Chair of the House Committee on Food Security, Rep. Raymond Adrian Salceda has rightly warned that this dynamic is a death spiral. Farmers lose capital, cannot afford to replant, production falls further, and import dependence deepens.
I therefore support President Ferdinand Marcos Jr.’s recent decision to restrict rice imports. It is a necessary shock treatment to arrest this spiral and recalibrate market conditions in favor of producers. However, I also urge the government to act swiftly on buffer stocking through the National Food Authority. If the import restriction tightens supply, the state must be ready to release reserves to stabilize prices.
This is not protectionism. It is strategic management. The current system, where a handful of traders dominate logistics, warehousing, and pricing, has captured the gains of liberalization and transferred the risks to our farmers.
I speak from long experience. I was the principal author of the Philippine safeguard measures law during our accession to the World Trade Organization. I have always believed that trade can be good for everyone, but I have also insisted that certain sensitive sectors, such as food and agriculture, require salutary protection when national welfare is at stake.
Even advanced and trade-oriented nations recognize this. Singapore, a city-state with virtually no arable land, continues to invest heavily in local food production. Iceland, despite its harsh climate, produces vegetables domestically rather than rely entirely on imports. These countries are not being inefficient. They are hedging against geopolitical and supply chain risks. Food is not just a commodity. It is a strategic asset so vital to the national interest that countries can be held hostage for it. I’d rather that we are not.