The Federation of Free Farmers forecasts a sharp drop in rice output in the fourth quarter of 2026, citing excessive and poorly timed imports, high fertilizer costs and El Niño.
Other factors are also contributing to the decline: unchecked agricultural land conversion that has permanently removed rice-producing areas; farmer fatigue that has led to a “planting strike” after repeated economic losses; inadequate irrigation, particularly in rainfed areas; and dry fields.
The report identifies the Rice Tariffication Law (RTL) of 2019 as the root cause of farmer fatigue. By abolishing quantitative restrictions and failing to use the Safeguard Measures Act, the government allowed palay prices to fall to P10 to P12 per kilogram for three to four cropping seasons. Farmers are now deeply indebted.
Although palay prices later rose to P27 per kilogram, the increase came after most farmers had harvested and sold their crops. The National Food Authority (NFA) is supposed to buy fresh palay at P17 per kilogram and dry palay at P20 per kilogram, but it lacks sufficient funds for procurement.
Selling to traders at P15 per kilogram is below the break-even price. Many farmers have decided not to plant, saying, “Lalo lang malulugi at babaon sa utang.”
Using available data and field-level analysis, this report brings together imports, input costs, climate conditions and land issues within a single framework. It argues that the projected decline in the fourth quarter of 2026 is not a cyclical dip but the convergence of market failure, policy failure and ecological stress.
Without changes to land policy, restored irrigation and import volumes calibrated against farmer income, the Philippines risks deeper import dependence, rural impoverishment and reduced food sovereignty.
Introduction
Rice remains the primary source of calories for Filipinos, accounting for 45% to 70% of daily intake. Yet the country’s production base is under unprecedented pressure.
The chair of the Federation of Free Farmers (FFF), a former agriculture secretary, anticipates a significant decline in rice output in the fourth quarter of 2026.
The reasons are familiar: Rice imports have surged, pushing palay prices down to P10 to P12 per kilogram for three to four cropping seasons, far below the P18 to P20 per kilogram cost of production.
At the same time, fertilizer prices remain elevated following global oil and gas shocks, while El Niño threatens to reduce yields by hundreds of thousands of metric tons.
This report argues that the FFF analysis is correct but incomplete. It captures the price-cost squeeze and climate risks but does not fully account for the loss of rice-producing acreage and the collapse in farmers’ intention to plant.
Across Laguna, Nueva Ecija and Mindoro, farmers are choosing not to plant because “nalulugi lang.” Many fields are dry because irrigation is unavailable or unaffordable.
In peri-urban areas from Biñan to San Pablo, as well as in Bulacan, Pampanga, Nueva Ecija and other parts of the country, rice lands near roads are being converted into subdivisions, warehouses and solar farms.
These are not weather events. They are policy outcomes.
The five factors — imports, fertilizer costs, El Niño, land conversion and farmer nonplanting — must be considered together to explain the projected contraction in rice output in the fourth quarter of 2026.
This report: 1) quantifies the import-price-fertilizer squeeze; 2) assesses the yield risks from El Niño; 3) documents the loss of rice land; 4) explains the planting strike; and 5) proposes integrated responses.
Import, price and fertilizer squeeze
Imports depress palay prices
Under the Rice Tariffication Law, quantitative restrictions were replaced with tariffs. This was followed by a surge in imported rice, particularly from Vietnam and Thailand.
Imports reached 4.7 million metric tons in 2025. For farmers, this translated directly into lower prices.
Farmgate palay prices during the peak harvest fell to P10 to P12 per kilogram, while production costs remained at P18 to P20 per kilogram. That represents a loss of P6 to P10 for every kilogram sold.
The FFF chair is correct to attribute declining output to this price signal. Rice is not only a subsistence crop for most smallholders but also a source of income.
When the market guarantees a loss, farmers may reduce their planted area, shift to corn or vegetables, lease out their land or sell it.
Rising fertilizer costs
The report estimates that fertilizer accounts for 50% to 60% of rice yield.
Producing 1 kilogram of nitrogen requires the diesel equivalent of 2.15 liters for Haber-Bosch manufacturing, packaging, hauling, transportation and farm application. Producing 1 metric ton of palay requires 18 to 20 kilograms of nitrogen.
With oil prices at $95 to $105 a barrel in 2025, fertilizer prices increased, but palay prices did not.
Farmers consequently reduced their fertilizer applications. Field reports indicate that farmers cut basal and top-dress rates.
The estimated agronomic result is a 25% to 30% yield penalty, or as much as 4.8 million metric tons in losses across 2.68 million hectares.
The “high fertilizer, low palay” scissors effect is therefore not only an income problem. It also threatens yields in the next cropping cycle.
El Niño’s impact
El Niño intensifies the economic pressure on farmers.
In 2025, four typhoons during the early harvest caused losses of 150,000 metric tons. El Niño caused an additional 600,000 metric tons in losses, bringing the total to 750,000 metric tons.
Irrigated areas produce an average of 4.3 metric tons per hectare, while rainfed areas produce only 3 metric tons per hectare. When rainfall is insufficient, rainfed fields can be left with only stubble.
For the fourth quarter of 2026, PAGASA models project continued dry spells in Northern and Central Luzon.
These conditions will affect the regions expected to compensate for low-priced wet-season harvests.
The FFF forecast is therefore supported by the projected climate conditions. Climate alone, however, does not explain why some farmers are not preparing to plant.
Land conversion
Permanent loss of rice land
The Philippines has 12 million hectares classified as agricultural land. However, the country’s net rice-producing area is shrinking.
The 1991 Local Government Code devolved land-use approval to local government units (LGUs). Under Internal Revenue Allotment pressure, many LGUs approved the conversion of irrigated rice lands for residential, commercial and industrial uses.
From Biñan to Calamba and from San Jose del Monte to Cabanatuan, rice fields have been converted into subdivisions and logistics hubs.
Once converted, the land cannot be returned to rice production.
The Department of Agriculture’s projection of 3.6 million to 3.8 million metric tons of rice imports in 2026 assumes that the country’s rice-producing area is static. It is not.
Every hectare lost is a hectare that cannot respond to price incentives.
Farm size and irrigation
The average rice farm is now 0.8 hectare, generating about P48,000 in gross income per crop and a net loss of P24,000 to P32,000 per crop.
These losses leave farmers without funds to invest in shallow tube wells or solar pumps. National Irrigation Administration systems are also aging.
Without water, a farmer’s first decision is not which rice variety to use but whether to plant at all.
The report cites a ratio of only one agricultural extension technician for every 150 barangays in Northern Mindanao, limiting the guidance available to farmers.
The planting strike
Why farmers stop planting
Farmers are not passive victims. They are economic agents.
When expected revenue is lower than expected costs, they withhold labor and capital. This is a planting strike.
It is more damaging than lower yields because it removes acreage from production entirely. Under the report’s model, if 10% of farmers do not plant, national output falls by 10%, regardless of the weather.
The planting strike is a direct response to three to four cropping seasons of losses under the RTL.
When palay prices remain at P10 to P12 per kilogram for several harvests, farmers accumulate debts to traders and input dealers (Mendoza, 2025d).
The subsequent rise in palay prices to P15 to P20 per kilogram offers little relief because the NFA lacks sufficient funds to buy at the floor price (Mendoza, 2025a).
Farmers consequently face liquidity and solvency problems. For many, the rational decision is not to plant.
“Bakit pa? Lalo ka lang malulugi at lalong babaon sa utang.”
This is not laziness. It is an attempt to protect already weakened balance sheets. Field reports from Bay and Calauan confirm that farmers skipped wet-season planting for this reason.
Dry fields and tighter credit
The second reason is biophysical.
Many communal irrigation systems were damaged by typhoons and were not rehabilitated. Pump irrigation is expensive when diesel prices are high.
Without assured water, farmers will not risk investing in seeds and fertilizer.
“Dry fields” therefore describes both climate conditions and inadequate infrastructure.
Banks and cooperatives also tighten credit after experiencing farmers’ loan defaults.
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