Average Rice Production Costs Reaches 7-Year High

Due to higher wage rates and expensive fertilizer, the average palay production cost in the Philippines last year went up to ₱12 per kilogram territory and went back to a 7-year high.

In 2021, the average cost of producing one kilogram of palay increased to ₱12.02 from a previous ₱11.50. This is a 4.52% increase caused by higher costs of hired labor and fertilizer according to data from the Philippine Statistics Authority (PSA).

This was the highest palay production cost since 2014 with a recorded ₱12.33 per kg then, ultimately reversing the rice sector’s gains from the yearly ₱10 billion  Rice Competitiveness Enhancement  Fund (RCEF) which was implemented in 2019.

PSA’s data showed that the average cost per hectare of palay last 2021 breached a record high of ₱49,920 which is an increase of 6.15% compared to 2020’s figure of ₱47,027.

For cash costs, which account for almost half of the total costs, this went up to ₱24, 258 per hectare.

Data from PSA shows that costs for fertilizer recorded the highest growth rate with 31% as it hit a 12-year high of ₱5,019 per hectare.

With this, palay farmers spent ₱10,794 per hectare for hired labor last 2021. This figure is 5.4% higher than 2020’s numbers of ₱10, 241. According to PSA data, this was the highest recorded labor cost.

Data also from PSA shows that the gross revenues of farmers last 2021 were at ₱69,600 compared to 2020’s  ₱68,519. This would mean that the net income of Filipino rice farmers decreased by 8.43% year-on-year to ₱19,680 per hectare, which is an 8-year low.

Source: Business Mirror