Philippine Palay Production Costs Decline May Not Last Past 2025

The average cost to produce palay (unmilled rice) in the Philippines saw an improvement in 2025 compared to previous years, though projections indicate this trend may not continue past 2026. Factors such as the looming El Niño phenomenon and rising fuel and fertilizer prices are expected to drive up costs. Raul Q. Montemayor, national manager of the Federation of Free Farmers, stated that despite the drop in production costs in 2025, palay yields remained flat, characterizing the situation as "not sustainable." Data from the Philippine Statistics Authority (PSA) reported that the average palay production cost fell by 7.7% to P55,097 per hectare in 2025. Mr. Montemayor pointed out that despite the Department of Agriculture (DA) allocating billions for seeds, fertilizers, and machinery, palay yields have hovered around 4.15 tons per hectare for several years, falling short of the DA's target of five tons per hectare. "As long as yields do not improve dramatically, any improvement will be superficial," he told BusinessWorld. He anticipates that production costs will likely increase this year due to escalating prices for fuel and fertilizer, coupled with the anticipated impact of El Niño. Meanwhile, Jayson H. Cainglet, executive director of the Samahang Industriya ng Agrikultura, contested the claim of reduced palay production costs in 2025. Mr. Cainglet noted that in key agricultural provinces such as Nueva Ecija, Bulacan, Pampanga, Mindoro, Pangasinan, and La Union, production costs reached P16 to P17 per kilogram last year, significantly exceeding the PSA's estimate of P13.26 per kilogram. Describing fuel and fertilizer as the "main farm inputs," he also expects production costs to rise this year. "For this current cropping, costs increased to nearly P20,000 to P30,000 per hectare," Mr. Cainglet added. Information Source: BusinessWorld Economy