True cost of P20 rice program points to daunting fiscal challenge

By Vonn Andrei E. Villamiel

THE QUEUE was longer than usual when Elisa J. Valencia arrived at the Kadiwa store in Diliman, Quezon City one Wednesday morning in December. Some had been waiting since 8 a.m. to buy rice at P20 per kilo, but deliveries were delayed, stretching the line well into the day.

The 62-year-old, who said she had traveled from Novaliches, taking five rides to get to the store, chose to stay. A qualified recipient of subsidized rice, she said the savings she stood to realize made the long wait worth it.

“It’s better to endure the wait than go home and spend on transportation again,” Ms. Valencia told BusinessWorld. “If the rice is coming anyway, we might as well wait. At least we save on rice.”

Ms. Valencia is one of the almost two million beneficiaries served by the government’s “Benteng Bigas Meron Na!” program, which is designed to aid vulnerable members of society like senior citizens, solo parents, persons with disabilities, Pantawid Pamilyang Pilipino Program (4Ps) beneficiaries, and minimum wage earners.

The program allows beneficiaries to purchase up to 30 kilos of rice per month at P20 per kilo at Kadiwa outlets and other designated selling points.

While the 30-kilo allocation is not enough for her household of eight, Ms. Valencia said it still helps ease the burden as food prices continue to rise.

“The 30 kilos we’re allowed to buy usually lasts us about three weeks. We still have to buy the rest from the market. But the savings are significant; we use what we save for other household needs and other food items,” she said.

In 2022, President Ferdinand R. Marcos, Jr. campaigned on a promise to bring down the price of rice to P20 per kilo, which resonated with voters dealing with persistent food inflation.

“Today, we fulfill a promise made three years ago by President Marcos to the Filipino people: to bring down the price of rice to P20 per kilo. That promise is now a reality,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. said during the program’s launch in Cebu in May 2024.

Outside Kadiwa stores, however, the reality is different. More than three years into the Marcos presidency, market prices remain far above the P20 level.

For some analysts, the P20 subsidized rice is a political workaround rather than a structural solution.

Jose Enrique A. Africa, executive director of think tank IBON Foundation, said the subsidy masks structural problems in agriculture and delays the more important work of increasing rice production capacity to make the staple genuinely affordable.

“The P20 rice program gives tangible relief to some families, but its political value to the beleaguered Marcos Jr. administration far exceeds the zero impact on fixing food insecurity. This expensive populist move is politically motivated and economically brittle,” he told BusinessWorld via Viber.

Former Agriculture Undersecretary Fermin D. Adriano called the program “obviously political.”

“No economist in his right mind will agree that this is sustainable and the correct path of improving agricultural productivity. In fact, it was a political mistake on the part of the president promising P20 per kilo of rice without the benefit of a serious study on the matter,” he told BusinessWorld via Viber.

Mr. Laurel told reporters that the program’s expansion in 2026 has been allocated a P23-billion budget: P9 billion from the National Food Authority (NFA), P10 billion from the “Rice-for-All” program, and P4 billion from contingency funds.

The Department of Agriculture (DA) said it aims to establish at least one P20 rice outlet in each of the more than 1,600 cities and municipalities nationwide by this year, aiming to service 15 million households or roughly 60 million Filipinos. According to Mr. Laurel, this will require opening about five new sites per day.

Analysts, however, said funding seems insufficient to meet the target.

Jayson H. Cainglet, executive director of the Samahang Industriya ng Agrikultura estimated the value of the subsidy at P18 per kilo at least — nearly at par with the selling price itself.

He said the NFA procures dry palay (unmilled rice) at P23 per kilo. Milling, handling and logistics add roughly P15 per kilo, bringing the actual cost to about P38 per kilo.

“The P20-per-kilo rice program is a well-intentioned consumer subsidy, but its current design and funding severely limit its impact,” Mr. Cainglet said. “Existing appropriations only allow coverage for a small fraction of Filipino families and less than 3% of national palay production.”

Mr. Africa said that given the size of the subsidy, the P23-billion budget “will not get very far.”

Assuming a subsidy of P20 per kilo, “the P23-billion budget will give 15 million beneficiaries 30 kilograms per month for just a little over two-and-a-half months… This may be long enough to spin for manufactured goodwill but is too short to really improve family nutrition or welfare,” he said.

At a year-end briefing, Mr. Laurel told reporters that with the 2026 budget, the DA’s own estimate and annual target volume is between 1.5 million metric tons (MMT) and 1.8 MMT of rice.

Using the higher estimate of 1.8 MMT, the volume would be able to provide only 120 kilos of rice to each of the 15 million targeted households.

The 120-kilo actual allocation would be sufficient to meet the average annual rice consumption of about 110 kilos to 120 kilos per person, but would fall far short of the needs of an entire household.

Mr. Africa added that scaling the program to hit the DA’s targets for a full year would require at least P108 billion. This is nearly a third of the total budget of the agriculture sector in 2026.

Mr. Adriano said the scheme is not sustainable. “I have not seen any business operations losing that much money and still remain sustainable. Given our tightening fiscal position, it will be worrying for economic managers to continue this folly,” he said.

He added that the volume of rice the budget can purchase is not sufficient to make a real dent in the problem of high rice prices.

Analysts also noted that these calculations do not yet account for administrative and logistical costs, nor the risks of diversion or beneficiary inclusion errors, which could further limit the program’s impact.

According to a 2012 World Bank study, the government spent nearly P6.84 for every P1 of support that reached rice consumers under the NFA’s universal rice subsidy program.

According to the study, most of the spending went to program administration rather than direct consumer subsidies. Audited NFA financial reports from 2005 to 2008 showed that about 87% of total costs went to administrative and operational expenses.

BusinessWorld sought additional details from the DA on the program’s funding and implementation, but has yet to receive a response.

Analysts said that while poor and vulnerable Filipinos need cheaper rice, relying on short-term subsidies is short-sighted.

“There’s no doubt that the country’s 15-20 million poor and vulnerable families are in urgent need of cheaper food,” Mr. Africa said. “However, this should be done not just with the ultra-short-term stopgap of subsidized rice but astride meaningful production-side interventions.”

Mr. Adriano said the subsidized rice program is an inefficient use of government resources compared with more productive investment in agriculture infrastructure.

“Productive expenditures are those that will lead to higher productivity in the future, like building more irrigation facilities, farm-to-market roads (FMR), investments in research and development and post-harvest facilities,” he said.

The DA is set to ramp up its agriculture infrastructure operations, taking over the construction of FMRs from the Department of Public Works and Highways in 2026.

The bicameral conference committee approved a P33-billion allocation for FMR projects, against the P16 billion initially proposed under the 2026 National Expenditure Program. Other planned investments cover post-harvest facilities, ports, and related infrastructure.

While this is a massive boost for the agriculture sector, the spending plan still falls short of IBON Foundation’s estimate of P200-300 billion needed annually over five to 10 years for serious gains in farm productivity to steadily reduce rice prices.

“This may seem large, but this is the real cost of a serious and not merely rhetorical rice security push, and is the only way to make cheap rice structurally plausible without intermittent subsidy patches,” Mr. Africa said.

While that has yet to happen, beneficiaries like Ms. Valencia say they must make do with the allocation provided under the subsidized program and hope for broader relief.

“I hope it’s not just rice, but also other food items. I hope rice prices outside Kadiwa go down too,” she said.