Palay price is generally based on the current price of rice in the local market, expert from Philippine Rice Research Institute (PhilRice) said.

Alice Briones-Mataia of PhilRice Socioeconomics Division said as a “rule of thumb,” the average selling price of rice is divided into two to get the estimated buying price of dry palay.

“In August, average retail price of local regular milled rice was recorded at P38.38/kg. So our estimated price of dry and clean palay is about P19.00/kg. However, rice price still varies depending on milling classification, whether its regular milled or well milled; and grading, whether its premium or special. Special rice, which is at P51.74/kg is expected to have a high buying palay price,” she explained.

For fresh palay, the supervising science research specialist, said buying price is expected to be lower than dried palay depending on its moisture content. In pricing, traders account the costs of drying and transportation and shrinkage losses or loss in weight due to drying fresh palay to 14% moisture content. High percentage of unfilled and immature grains and poor physical appearance also lower the buying price of fresh palay.

Increase in rice supply also affects palay price.  Recently, Mataia said, the open importation of rice increased the volume of cheap imported rice in the local market, which translated to a falling palay price.  Millers have to lower their buying price of palay in order to compete with cheap imported rice.

“We have observed that retail rice prices have not fallen as much as the drop in palay prices. Numerous studies have confirmed that decrease in palay price does not completely transmit to the decrease in retail price, “Mataia said. 

Meanwhile, PhilRice Deputy Executive Director for Special Concerns Dr. Flordeliza Bordey, said that palay traders depend on the landed price of imported rice for setting the buying price of palay.

Bordey, also an economist, said that imported rice from Thailand and Vietnam has an average landed price or wholesale price of P33/kg as of July 2019. Landed price already includes costs of shipping/freight, insurance, import fees, transfer, and tariff or tax. Retail price of imported rice will have additional mark up of P2-3/kg to cover their costs and profit.

PhilRice experts advised farmers to improve the quality of palay to get the best price. Recommendations include appropriate drying of palay and ensuring that rice has reached its full maturity to avoid greenish palay grains.

Farmers are also advised to plant rice varieties with good eating qualities, which command higher price in the market such as NSIC Rc 160 (Tubigan 14), Rc 216 (Tubigan 170), and Rc 218 SR (Mabango 3).

Group marketing of palay produce among group of farmers is also recommended. This works to most farmers’ cooperatives and farmers’ groups as they can sell their harvest a fair price or negotiate price higher than the prevailing market price.

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Philippine Rice Research Institute (PhilRice) is a government corporate entity attached to the Department of Agriculture created through Executive Order 1061 on 5 November 1985 (as amended) to help develop high-yielding and cost-reducing technologies so farmers can produce enough rice for all Filipinos.

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Philippine Rice Research Institute