Proposed 2016 volume to stabilize supply, prices
Rice imports may reach nearly 1 million metric tons (MT) in the first half of 2016 as the government moves to ensure stable supply and prices amid an ongoing El Nino.
National Food Authority (NFA) Administrator Renan Dalisay told reporters that the Food Security Committee (FSC) could recommend an additional 400,000 MT of rice imports on top of the 500,000 MT already programmed for the first quarter of 2016.
Dalisay said the FSC was expected to approve the additional import volume before the year ends, with shipments to arrive before the onset of the lean season that starts in June.
“We need to ensure that we have enough rice inventories at government depositories as El Nino peaks in the first quarter of next year,” he said, adding that the proposal is part of a roadmap aimed at alleviating the impact of a prolonged drought on food supplies.
Manila, formerly the world’s biggest rice importer, traditionally buys an average of 1.7 million MT of the grain annually. For 2015 alone, the country contracted a total of 1.9 million MT of rice but actual arrivals of the grain have been pegged at 1.135 million MT.
For next year’s importation, Dalisay said the NFA Council was looking at the possibility of buying the rice through a government-to-government (G2G) deal or via an open tender.
A G2G transaction requires an existing executive agreement for a country to participate. At present, only three countries – Vietnam, Thailand and Cambodia – have existing rice purchase agreements with the Philippines.
An open tender, on the other hand, will allow foreign private entities outside of the Philippines’ current bilateral agreements to bid for Manila’s rice requirement.
“The NFA Council is also studying the possibility of including the planned import volume under the minimum access volume (MAV),” the NFA chief said.
At present, Manila limits the amount of rice allowed to enter the country through the MAV to 805,000 metric tons.
The MAV refers to the minimum volume of farm produce allowed to enter into the Philippines at reduced 35 percent tariff. Shipments outside the MAV are levied a higher rate of 50 percent and require NFA approval.
Depending on the impact of the dry spell on domestic palay production, rice imports could double in 2016 to ensure stable prices, Dalisay said.
The NFA is mandated to protect the interests of both rice producers and consumers. As such, the agency’s two primary duties are to stabilize the price of rice and to ensure food security.
The price stabilization mandate means the NFA tries to influence prices on two fronts. On one end, it must support palay farmers and keep prices at a level that is enough to ensure a reasonable return. At the same time, it must also ensure that the price of rice is affordable enough for consumers.
Over the past two years, the NFA has relied massively on cheaper imported rice to replenish its buffer stocks since it cannot compete with private millers and traders in buying locally grown palay.
Buying rice from abroad cuts the agency’s spending on local purchases, and it can earn more and limit its losses by selling to consumers at higher prices.
NFA Spokesperson Angel Imperial Jr., meanwhile, said the country still had enough of the grain, with inventories at government-owned depositories as well as commercial warehouses and households sufficient for the next 69 days.
“As of November 30, the NFA has 801,000 MT of rice which is good for 26 days, while commercial and households stock as of October 30 was pegged at 666,000 MT and 777,000 MT, respectively,” Imperial said.
The Philippine Atmospheric, Geophysical and Astronomical Services Administration has projected that the ongoing El Niño will exceed the 1997 to 1998 occurrence.
The full effects of the current weather phenomenon, the agency added, will be felt in February and March 2016 when the entire country is projected to get only 20 to 30 percent of normal rainfall.
Despite the threats of a prolonged drought, however, the government still expects palay production to bounce back in the first quarter of next year, thanks to changes in the cropping calendar.
The palay sector has suffered massively from unrealized plantings as a result of delayed releases and inadequate irrigation water, late rains and some areas being left fallow. The wet season should have started mid-April but was delayed to June-July due to the lack of water supply.
With recent storms having filled dams and irrigation facilities now overflowing, the Agriculture department said harvests would rebound in the first quarter of 2016. Officials also said they were meeting with farmers who wish to conduct early planting of palay.
Palay production is forecast to reach 20.69 million MT next year.