EO 100: The Floor Price of Palay
Legal question
What is a palay floor price, and how does it protect farmers from low buying prices?
Applicable laws and rules to discuss
- Executive Order No. 100, establishing the floor price of palay
- Republic Act No. 8435, the Agriculture and Fisheries Modernization Act
- National Food Authority procurement rules
Why this matters
When market prices for unmilled rice (palay) fall below production cost, farmers can end up selling at a loss to traders. A floor price sets a minimum price at which the government will buy palay, giving farmers a fallback when farmgate prices collapse.
Who sets the price
The Order does not fix a peso figure itself. It directs the Department of Agriculture, in consultation with a Steering Committee created by the Order, to determine, set, and adjust the floor price. The Steering Committee is chaired by the DA and co-chaired by the Department of the Interior and Local Government, with the Department of Trade and Industry and the Department of Social Welfare and Development among its members.
What the price must account for
The DA must weigh cost of production, prevailing prices, reasonable margins for farmers, and the welfare of both farmers and consumers. It must also account for trigger conditions: emergencies or calamities affecting the rice supply chain, an influx of import arrivals that could dampen farmgate prices, a sharp decline in global rice prices affecting estimated landed cost, and the government's own capacity to purchase palay and manage market intervention.
Prices vary by region, and get revisited
The Order requires the DA to ensure a fair return on investment on a regional level, recognizing regional variance in production costs, market conditions, and profit margins. The floor price is to be reviewed and adjusted before the onset of each cropping season, or whenever otherwise necessary.
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