The Department of Agriculture (DA) expects rice prices to decline significantly early next year as the full impact of the recent rice import tariff cut takes effect.

Agriculture Secretary Francisco P. Tiu Laurel said the reduction in tariff rates from 35 percent to 15 percent is expected to drive down rice prices in local markets by P5 to P7 per kilo as mandated after President Ferdinand Marcos Jr. signed Executive Order 62.

“Since demand for food usually spikes in December, we anticipate seeing a more substantial drop in rice prices by January,” Laurel said.

While the tariff cut has already been implemented, Laurel said that the full impact has not yet been felt due to increased rice imports by traders anticipating shortages caused by El Niño.

Between December 2023 and May 2024, rice imports averaged 422,000 metric tons (MT) per month, exceeding consumption by 102,000 MT per month.

This excess supply, resulting from the higher tariff rates, is estimated to cover nearly two months of consumption.

“This resulted in an excess of approximately 612,000 metric tons of imported rice at the higher 35 percent tariff, enough to cover nearly two months of consumption,” said the DA chief.

Laurel also mentioned that rice imports declined in June and July before increasing significantly in August.

He attributed the higher prices in the global market to traders purchasing palay (unhusked rice) from local farmers at premium prices.

To ensure farmers are not shortchanged, the DA is closely monitoring the prices of palay, which are currently being bought at P16 to P17 per kilo in some areas due to the wet season.