The Philippine National Standard on Grains Grading and Classification of Paddy and Milled Rice was developed to guarantee quality standards across the rice value chain.
Truthful labelling of rice boxes and price tags indicating source, i.e., local or imported, is instrumental in promoting and marketing locally produced rice to support our farmers while ensuring safe and quality rice for consumers.
The non-observance of rice labelling regulations in our country has led to incomplete and substandard selling practices of some retailers arising from their non- compliance with the national grains standards.
LGUs must ensure that retailers follow existing guidelines on labelling of rice boxes and price tags.
Educating consumers on truthful labelling will make them more critical whenever they buy rice, which will prompt retailers to be more transparent and fair.
TRUTHFUL LABELLING of rice:
helping local farmers and consumers
KEY P INTS
VOL. 9 • MARCH 2021 • ISSN 2094-8409
INTRODUCTION
The 2019 Rice Tariffication Law (RTL) intensified competition in our rice market as it loosened rice importation. Figure 1 compares the wholesale prices of well-milled1 and premium grade2 rice with their counterparts from Vietnam and Thailand. Obviously, imported rice is cheaper than local rice.
1 2
Well-milled- rice kernel without the hull, the germ, the outer bran layers, and greater part of inner bran layer; parts of lengthwise streaks of the bran layers are less than 20% of the kernel (Source: NFA Memorandum Circular No. AO-2018-10-002)
Premium grade- any well-milled rice variety that meets the highest grade requirements for rice that contains a maximum 5% broken kernel (Source: same as above)
Figure 1. Import parity price1 vs. local price2 of rice, 2015-2019 Source of basic data: 1World Bank, 2020; 2Philippine Statistics
Authority, 2020
Looking at our limited household income, common sense tells us to buy the cheaper imported rice. Certain trader-millers therefore ventured into importing rice to pump up their supplies instead of procuring and processing palay (unhusked rice) from our rice farmers.
By September 2019, some 2 million MT of rice imports had entered the country – over 60% higher than the same period in 2018. The imports boosted rice supply but dampened palay prices as well. At peak harvest in October 2019, farmgate prices fell to P14.40/kg, the lowest since 2011. It was a result of the inability of some traders to release their existing rice stocks that paralyzed their palay buying operations (Montemayor, 2020). Other traders continued to buy palay but at a lower price to match the price of local milled rice with that of imported rice. Cash-needy farmers had no choice but to accede to the low price offer.
To help remedy the situation, the Department of Agriculture (DA) and PhilRice spearheaded the 2019 National Rice Awareness Month (NRAM)’s campaign
“Buy Local. Eat Local. Support our Rice Farmers”
to lead consumers into patronizing local rice. The Campaign, however, saw little success because most retailers do not adhere to existing labelling guidelines, and consumers could not distinguish local from imported rice.
Current guidelines on rice labelling
Minimum requirements for labelling must be set for sellers to provide complete and clear information on food labels (FAO, 2016). These requirements were set in the Philippine National Standard on Grains Grading and Classification of Paddy and Milled Rice (PNS:
BAFS-290.2019) (BAFS, 2019) reinforcing guidelines on the labelling of rice boxes and price tags contained in the National Food Authority’s (NFA) Memorandum Circular AO-2018-10-002.
The PNS was developed by the Bureau of Agriculture and Fisheries Standards (BAFS) upon NFA’s request, and was approved by the DA Secretary in 2019.
This provides the revised national grains standards that include prescribed specifications on quality, safety, packaging and labelling, and price tagging of unpacked rice for retail, as well as methods of test and analysis for the sustained implementation of the Philippine Grains Standardization Program (PGSP) launched in May 1996.
Truthful labelling in rice is the act of putting valid, reliable, and complete information about the milling classification and source of rice on sacks/packages, rice boxes for unpacked rice, and price tags based on prescribed labelling standards.
Figure 1. Rice box labelling following MC AO-2018-10-002. Figure 2. Rice price tagging following MC AO-2018-10-002.
RICE BOX LABEL PRICE TAG
NFA issued MC AO-2018-10-002 in 2018 in compliance with Republic Act 8751 (Price Tag Act) (Gallarde, 2018). It provides general guidelines on the suggested retail price (SRP) for milled rice and on the prescribed labelling of rice boxes (Figure 1) and price tags (Figure 2).
Subsequently, NFA Circular OCS-2018-J-01 (SRP for Milled Rice) limited the classification of local rice into four: regular milled rice (RMR), well-milled rice (WMR), premium grade rice, and special rice, as replacement for rice brands such as Sinandomeng and Dinorado (Teves, 2018). This circular guides the DA’s Agribusiness and Marketing Assistance Service (DA- AMAS) and the Department of Trade and Industry’s Fair Trade Enforcement Bureau (DTI-FTEB) in market monitoring.
RESULTING CHALLENGES
RTL reduced NFA’s regulatory functions, including its role in the enforcement of the national grains standards.
The Bureau of Plant Industry (BPI) has assumed NFA’s food safety functions through inspections and issuance of sanitary and phytosanitary import clearances (SPSICs), excluding the implementation of the prescribed labelling of rice boxes and price tags.
While the DA-AMAS and the DTI-FTEB continuously monitor market situations, their capacity may be inadequate to fully cover the operations and conduct of market retailers on a national scale. Furthermore, retailer compliance with the PNS remains voluntary allowing them to disregard the labelling guidelines.
To be fair, some retailers may be unaware of the PNS due to the absence of an implementing body; hence, they fail to comply. Nonetheless, this has resulted in incomplete and substandard rice labelling in the country.
Figure 3 shows how some retailers fail to meet the basic minimum standards, that is, including the milling grade and source in the price tags. Some retailers also still include the popular rice brands Dinorado and Sinandomeng despite the prohibition in 2018. Other retailers allegedly mix imported and local rice or different rice grades to corner a more expensive price from average income-earners, which is a practice of unlawful adulteration and mislabeling. Such act violates RA 7394 (Consumer Act of the Philippines) that protects consumers against “deceptive, unfair, and unconscionable sales acts and practices”.
With complete and truthful labels and price tags, consumers can freely choose which to buy depending on the amount that they are willing and able to pay. The same, however, cannot be said of the actual situation in the rice market where truthful labelling is not being practiced. Ordinary rice consumers cannot distinguish local from imported rice, not to mention the alleged illicit practice of rice mixing. Many consumers would want to purchase local rice as documented by inquiries through the DA-PhilRice’s Facebook page.
Figure 3. Examples of rice labelling/price tagging malpractices.
THE NEED FOR “TRUTH” IN LABELLING
Aside from rice retailers’ compliance with rice labelling guidelines, the integrity of rice labels is vital in protecting consumers against misleading information.
Product specifications are an important consideration of consumers when purchasing food products in the market (Kumar & Kapoor, 2016). They consult and rely on the labels when choosing products. Rice product specifications refer to the source, milling degree, and price that can be indicated on sacks or pre- packaged rice usually sold in malls and supermarkets.
For unpacked rice retailed in public markets, these specifications may be shown on rice boxes or price tags.
Knowing the origin and distribution route of rice also assures consumers of the quality and safety of rice they buy. As a case in point, the Japanese government’s large-size deregulation of its rice market allowed the entry of deceitful companies that led to the Osenmai (contaminated rice) scandal in 2003. About 5,000 MT of non-edible rice contaminated with pesticide was procured and sold as food by various rice traders in Japan. Following this incident, the Japanese government enacted the Rice Traceability Act in 2009 (Godo, 2017).
Golan et al. (2000) suggested that the government is most likely to warrant some information in labels when there is information asymmetry or externality (asymmetry happens when producers/sellers do not completely disclose information to consumers to influence their choices; externality occurs when individual consumption has an influence on the social welfare).
CONSUMERS AND PRODUCERS TO BENEFIT
Truthful labelling enables rice consumers to exercise their power of choice and make informed decisions through transparent and reliable information. Aside from price, milling degree and product source influence consumer perceptions regarding the safety and quality of rice. Previous studies (Corazon et al., 1992; Hadi et al. 2012) suggest that as consumers’
income increases, they become more selective and place higher value on safety and quality of rice.
Specifying source in rice packages, box labels, and
price tags will benefit consumers who want safe and high-quality local rice. Results of a PhilRice-IRRI study show that Philippine rice has the least amount of pesticide applied compared with rice produced in other Southeast Asian countries (Beltran et al., 2016).
Our major irrigated rice areas were also found safe from heavy metals except those deposited with mine wastes that increase metal levels in the soil (Magahud et al., 2015).
Through labelling intervention, the US government aimed to align individual consumption choices with its social objectives (Golan et al., 2000). In the same way, enforcing the prescribed labelling of rice boxes and price tags to help consumers choose local from imported rice could spur demand for Philippine rice.
Consequently, rice traders will source their supply from local farmers who will then have sure market with a reasonable price. This increase in demand will also encourage local farmers to continue producing rice that meets consumer quality standards. Furthermore, the national grains standards can help make local rice globally competitive by setting benchmark standards on quality and packaging that rice value chain actors must meet. These same standards must uphold consumer rights and welfare.
WHAT TO DO?
This policy brief is articulating the issue that no government agency is yet tasked to enforce the national grains standards, and thus rice retailers do as they please. Given this issue, there is wisdom in mobilizing local government units (LGUs) to enforce the existing guidelines on labelling of rice boxes and price tags in their respective areas of jurisdiction through ordinances or resolutions. Accordingly, local task forces that would police and monitor rice retailers’ malpractices would do well to be formed.
This is to ensure that rice retailers consistently follow the standard specifications on labelling of rice boxes and price tags, with emphasis on truthful labelling.
Using the traceability system in Japan as a model, rice value chain key players should be directed to keep transaction records that certify compliance with food safety requirements. Key players must also declare information on the source of rice and rice- based products across each stage of the value chain to easily identify the responsible entity(ies) along the distribution route, should any problem arise.
Conclusion
The easy entry of cheaper imported rice in the country because of the RTL in 2019 intensified competition in our rice market. The cheaper rice has diverted consumer preference and, in turn, traders’ demand for imported rice. The uncontrolled increase in rice supply not only significantly reduced rice prices, to the benefit of consumers, but also alarmingly pulled down farmgate prices of palay that jeopardized local rice farmers’
income. To help the farmers earn a decent income, the campaign “Buy local. Eat local. Support our Rice Farmers”
was carried out to promote the consumption of locally produced rice. The success of the campaign, however, was stifled by the consumers’ inability to distinguish local from imported rice owing to the non-observance of rice labelling standards.
The loose imposition of the national grains standards led to low or non-compliance of some rice retailers with the labelling guidelines. Truthful labelling of rice boxes and price tags, and specifying milling classification and source are important and patriotic measures to promote and market locally produced rice.
It is therefore imperative to put in place measures requiring rice business actors to show complete and truthful labels, mechanisms for validation, and a traceability system (as prescribed in Article 8 Sec. 27 of RA 10611 or the Food Safety Act of 2013). This move will foster consistent, transparent, and fair marketing practices for the benefit of consumers and farmers.
LGUs should pass ordinances imposing adherence to prescribed guidelines on labelling of rice boxes and price tags, particularly specifying the source (local or imported) and grain milling classification.
LGUs should create local task forces to monitor and regulate rice retailers in their respective areas to ensure compliance with the ordinances. A clearance from the task force may be included as a requirement in their business permit renewal.
LGUs should incentivize compliant retailers by awarding them an
“Honesty Seal” that entitles them to a business tax discount, among others, to better cultivate compliance among retailers.
DA-PhilRice in coordination with LGUs must conduct information dissemination activities on the distinct characteristics of locally produced rice to educate and empower consumers.
CALL FOR ACTI N
Carlo Dacumos
Rice Science for Decision-Makers is published by the Department of Agriculture-Philippine Rice Research Institute (PhilRice). It synthesizes findings in rice science to help craft decisions relating to rice production and technology adoption and adaptation. It also provides recommendations that may offer policy triggers to relevant rice stakeholders in search of opportunities to share their knowledge on rice-related products.
The articles featured here aim to improve the competitiveness of the Filipino rice farmers and the Philippine rice industry through policy research and advocacy.
This issue discusses the practice of truthful labelling of rice boxes and price tags, and its importance in safeguarding consumer rights and welfare while promoting locally produced rice. This paper calls for the enforcement of the prescribed standard specifications on the labelling of rice boxes and price tags through ordinances or resolutions and a local task force for sustained implementation in the market.
ABOUT THE MATERIAL
REFERENCES
Bureau of Agriculture and Fisheries Standards. (2019). Philippine National Standard: Grains – grading and classification – paddy and milled rice. Retrieved from http://www.bafs.da.gov.ph/bafs_admin/admin_page/pns_file/PNS%20BAFS%20290%20 2019%20Grains-Paddy%20and%20Milled%20Rice-%20Grading%20and%20Specifications.pdf.
Beltran, J. C., Bordey, F. H., Launio, C. C., Litonjua, A. C., Manalili, R. G., Mataia, A. B., Relado, R.Z., & Moya, P. F. (2016). Pesticide use and practices. In F. H. Bordey, P. F. Moya, J. C. Beltran, & D. C. Dawe (Eds.), Competitiveness of Philippine rice in Asia (pp. 55-73). Science City of Muñoz: Philippine Rice Research Institute; International Rice Research Institute.
Corazon, A., Duff, B., Lantican, F. A., & Juliano, B. O. (1990). Consumer demand for rice grain quality in selected rural and urban markets in the Philippines. Advances in Grain Postharvest Technology Generation and Utilization, 350-376.
Food and Agriculture Organization. (2016). Handbook on food labeling to protect consumers In. Retrieved from http://www.fao.
org/3/a-i6575e.pdf
Gallarde, J. (2018, November 14). Some commercial rice brands to be removed from stalls: NFA. Philippine News Agency.
Retrieved from https://www.pna.gov.ph/articles/1053865
Godo, Y. (2017). Traceability and food labeling of rice in Japan. Food and Fertilizer Technology Center for the Asian and Pacific Region. Retrieved from https://ap.fftc.org.tw/article/1181
Golan, E., Kuchler, F., Mitchell, L., Greene, C., & Jessup, A. (2000). Economics of food labeling (Agricultural Economic Report No.
793). Retrieved from https://www.ers.usda.gov/webdocs/publications/41203/18885_aer793.pdf?v=840.5.
Hadi, A. H. I. A., Shamsudin, M. N., Selamat, J., & Radam, A. (2012). Consumers’ demand and willingness to pay for rice attributes in Malaysia. International Food Research Journal, 19(1), 363-369.
Kumar, N., & Kapoor, S. (2017). Do labels influence purchase decisions of food products? Study of young consumers of an emerging market. British Food Journal, 119(2), 218-229. doi:10.1108/BFJ-06-2016-0249
Magahud, J. C., Sanchez, P. B., Badayos, R. B., & Sta. Cruz, P. C. (2015). Levels and potential sources of heavy metals in major irrigated rice areas of the Philippines. IAMURE International Journal of Ecology and Conservation, 15(1), 28-59.
doi:10.13140/RG.2.1.4735.8163
Montemayor, R. (2020). Winners and losers from the rice tariffication law. Inquirer.Net. Retrieved from https://newsinfo.inquirer.
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National Food Authority. (2018). General guidelines on the suggested retail price (SRP) for milled rice and prescribed labeling of rice boxes and price tag. Retrieved from http://www.nfa.gov.ph/images/files/announcement/2018/srp_103018.pdf.
Philippine Statistics Authority. (2020). Cereals: Wholesale selling prices of agricultural commodities [Data file].
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tableViewLayout1/?rxid=956ac8ba-2d81-4713-aa06-0a800c95b1b0
Teves, C. (2018, October 27). Agri chief vows sanctions vs. rice profiteers. Philippine News Agency. Retrieved from https://www.
pna.gov.ph/articles/1052303
World Bank. (2020). Commodity price data [Data file]. Retrieved from http://pubdocs.worldbank.org/en/226371486076391711/
CMO-Historical-Data-Annual.xlsx
For comments and requests for additional copies, please write to:
Development Communication Division
Philippine Rice Research Institute Maligaya, Science City of Muñoz, Nueva Ecija
Contact: [email protected] • (44) 456-0258,-0277,-0285 loc. 500 PhilRice Text Center: 0917-111-7423
Rice Science for Decision-Makers • March 2021 Authors: Alice B. Mataia, Aerone Philippe G. Bautista Design and Layout: Jemina Laya D. Bugayong Language Editor: Constante T. Briones
Subject Matter Specialists: Haydee A. Horlador, Joyce M. Bengo
Editorial Advisers: John C. de Leon, Karen Eloisa T. Barroga, Jesusa C. Beltran, Jaime A. Manalo IV Published by PhilRice as a policy advocacy material.
