Low farmgate prices in 2025 seen behind decline in Q1 palay output

LOW FARMGATE PRICES in late 2025 gave farmers little incentive to plant, likely leading to a decline in first-quarter output of palay (unmilled rice), analysts said.

“The palay harvested in the first quarter of 2026 was planted in the last quarter of 2025, during which time palay prices were severely depressed, even with the import ban,” Raul Q. Montemayor, national manager of the Federation of Free Farmers, told BusinessWorld.

Mr. Montemayor said the low prices discouraged many farmers from maintaining or expanding their production in the last cropping season.

The Philippine Statistics Authority (PSA) said palay production is projected to have declined 6.9% year on year to 4.37 million metric tons (MMT) in the first quarter, based on standing crops as of March 1.

In a report, the PSA said the forecast, if borne out, indicates a retreat from the year-earlier output of 4.7 MMT.

The new forecast also represents a 1.7% downgrade from the PSA’s January estimate of 4.45 MMT.

The area to be harvested based on the standing crop may have decreased by 6.1% to 1.08 million hectares, the PSA said.

The palay yield is also projected to have dipped by 0.7% year on year to 4.06 MT per hectare.

“Some farmers could have decided not to plant or reduced their input usage, resulting in lower yield, in reaction to the decline in palay prices,” Mr. Montemayor said.

Danilo V. Fausto, president of the Philippine Chamber of Agriculture and Food, Inc., said the palay output may have also been affected by damage to an irrigation system in Nueva Ecija late last year.

Mr. Fausto said the damage affected around 30,000 to 40,000 hectares of farmland in the leading rice-producing province.

“While the National Irrigation Administration tried to catch up on the repair, recovery of the planted areas affected by a lack of irrigation will be delayed, pushing the harvesting of palay to the second quarter,” he told BusinessWorld via Viber.

Meanwhile, former Agriculture Secretary William D. Dar said the downward trend in palay production may persist due to rising input costs as a result of the Middle East war.

“With the increase of fuel prices and fertilizer prices, the farmers will scale down their planting and reduce the use of inorganic fertilizers, thereby lowering rice production this rainy season,” he told BusinessWorld via Viber.

The PSA noted in its report that of the 1.01 million hectares farmers had intended to plant this quarter, only 750,130 hectares, or 74.3%, was actually planted.

Mr. Fausto said reduced input use and high fuel costs for land preparation could further cut palay yield by as much as 20% to 30% in the coming quarters.

Despite the projected decline in rice harvest this year, the Department of Agriculture (DA) is confident that the Philippines can tap adequate supplies of rice from its source markets overseas.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. earlier told BusinessWorld that rice supply remains sufficient in major suppliers such as Vietnam, India, and Myanmar.

The Bureau of Plant Industry reported that the Philippines imported 1.29 MMT of rice in the first quarter, with 85.47% of shipments coming from Vietnam.

The rice imports recorded in the first quarter are 40.17% higher than the year-earlier shipments of 917,855 MT and 71.54% higher than the DA’s forecast of 750,000 MT. — Vonn Andrei E. Villamiel