Philippine Rice Farmers Caught in Cost-Price Squeeze

Filipino rice farmers are caught in the "same old sob story" of high production costs versus low farmgate prices for their palay, leading to consumers paying high retail prices for the staple. Latest data from the Philippine Statistics Authority (PSA) reveals that in 2025, the average cost of palay production in the Philippines was estimated at P13.26 per kilo. This is significantly higher than Vietnam's estimated cost of around P6.5 per kilo and Thailand's P8.9 per kilo. Factors contributing to the high costs in the Philippines include elevated labor expenses, small and fragmented farm sizes that disincentivize mechanization, and reliance on imported inputs such as fertilizers, pesticides, and machinery. Furthermore, average yields per hectare are considerably lower compared to Vietnam and Thailand. Palay production in the first quarter of 2026 dropped to 4.4 million metric tons (MT), a 6.3% decrease from the previous year and the lowest for the period since 2020. In contrast, Vietnam's average palay yield is around six MT per hectare, and Thailand also boasts high production volumes, enabling cost-effective exports. Consequently, the Philippines has become the world's largest rice importer, with imports reaching 4.8 million MT in 2024. Domestic demand consistently outstrips production, and the country's rice self-sufficiency ratio has fallen from 116% in 1960 to 91% in 2025. Adding to the challenges, a looming super El Niño is expected to reduce rice yields by up to 30% this year, potentially necessitating an increase in rice imports to six million MT. Despite low farmgate prices, locally produced rice remains expensive for Filipinos. Traders purchase palay at low prices, mill it, and then sell rice at much higher markups, pocketing the difference. The National Food Authority (NFA), which historically acted as a market equalizer by buying palay at higher prices and selling rice at lower ones, has seen its role significantly diminished by the Rice Tariffication Law (RTL). The RTL opened the market to rice imports and imposed tariffs instead of quantitative restrictions, raising concerns about its impact on domestic production. With fewer guaranteed buyers, many rice farmers are at the mercy of traders who dictate prices well below production costs, discouraging local production and threatening livelihoods. Filipino rice farmers are consistently among the poorest basic sectors in the country, with a poverty incidence as high as 30%. IBON Foundation noted that Philippine agriculture has fallen to its lowest share of gross domestic product in history. Agricultural land area has sharply declined to just 6.2 million hectares in 2022 from 9.97 million hectares in 1991 due to massive land use conversions starting in the 1990s. The agricultural trade deficit ballooned to $11.12 billion in 2025 from just $42 million in 1994. Philippine rice self-sufficiency declined while countries such as Thailand, Vietnam, Cambodia, and Myanmar achieved more than 100 percent self-sufficiency. The state of the rice industry mirrors that of the entire agricultural sector, trapping Filipino farmers in a cycle of poverty and hunger while ordinary Filipinos bear the burden of high food prices. This situation is unlikely to change without the government prioritizing agriculture. Information Source: Philstar Business