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The continued weakening of the Philippine peso against the United States (US) dollar will likely lead to higher retail rice prices amid rising import costs, according to the US Department of Agriculture (USDA).

In a report dated Feb. 3, the USDA said there is strong potential for additional upward pressure on retail prices of the household staple as the peso continues to underperform.

“Continued depreciation of the Philippine peso is expected to increase the cost of imports, affecting import prices for both rice and farm inputs,” the USDA said.

The US agency expects higher costs for importers and traders to be ultimately passed on to consumers, undermining the government’s efforts to keep rice affordable.

The local currency has been on a steep decline in recent weeks, largely influenced by a massive corruption scandal in public infrastructure that led to a sharp drop in government spending.

The peso is feared to fall to ₱60 per US dollar, although the government has indicated that interventions are already in play to avert this threat.

Despite the government’s efforts to reduce reliance on imports, the USDA said the Philippines will still depend on imported rice to meet rising demand.

The Department of Agriculture (DA) estimated that the country will import up to 3.8 million metric tons (MT) this year, while the USDA earlier projected imports could reach as much as 5.5 million MT.

Based on data from the Bureau of Plant Industry (BPI), 3.39 million MT of milled rice shipments arrived from abroad last year, lower than the record-high 4.81 million MT in 2024 due to the imposition of a four-month import ban.

Rice importation officially resumed on Jan. 1, with around 300,000 MT of shipments expected this month. As of Jan. 22, the country had already imported 317,410 MT of rice.

The USDA said the Philippines remains unable to meet the demand of a growing population due to subpar domestic production, which continues to be dragged down by weather disturbances.

Based on its forecast, the Philippines will produce only around 19.52 million MT of palay, or unmilled rice, in marketing year (MY) 2025-2026—lower than the DA’s 2026 projection of 20.3 million MT.

The USDA said the increase in funding for the government’s Rice Competitiveness Enhancement Fund (RCEF)—from ₱10 billion to ₱30 billion—could help improve farm productivity over the coming years through its support programs.

However, since the expanded RCEF is still in the early stages of implementation, the American agency said its full impact on local output remains unclear.

“This increasing demand, combined with limited growth in domestic production despite the expanded RCEF, will result in a persistent and growing production-consumption gap, requiring the Philippines to rely on imports to meet domestic needs,” the USDA said.

On a positive note, the USDA said the weaker peso could help offset the impact of lower global prices, which are closely tied to Vietnam, the country’s top rice supplier.

Based on data from the Food and Agriculture Organization (FAO), Vietnam’s five-percent broken rice price stood at $361.12 per MT as of November 2025, down nearly 30 percent from $505.60 per MT in the same month in 2024.

“Given the sharp decline in global rice prices, imported rice may become less expensive than local rice even with higher tariff rates, which could potentially exert downward pressure on already constrained local farmgate prices,” the USDA said.

“However, continued depreciation of the Philippine peso may increase import costs, partially offsetting the impact of lower global prices,” it added.

The government temporarily suspended rice imports last year to protect farmers from falling palay prices, as cheaper imported rice flooded the market and undercut locally produced output.

Last year, palay prices in certain areas dropped to as low as ₱6 per kilo—well below the average production cost of ₱12 to ₱14 per kilo.

Based on market monitoring as of Feb. 4, regular milled rice averaged ₱40.65 per kilo, well-milled rice ₱46.30 per kilo, and premium rice ₱54.51 per kilo.

Source : mb