Large stockpile, timely imports lower H1 prices
RICE stockpiles in the Philippines exceed the requirement to carry the country through the so-called lean months, likely postponing the need to import more grains until the fourth quarter of the year, the National Food Authority (NFA) said on Wednesday.
In a telephone interview, NFA spokesperson Angel Imperial said that there is no immediate need to import rice, adding that current procurement levels and stocks inventory is enough to last until December this year.
The current national rice inventory stands at 3,077,100 metric tons, good to last for 96 days. Of this volume, 913,500 MT belongs to NFA, good to last for 28 days, while 994,700 MT are commercial stocks, and 1,168,900 MT are household stocks.
Imperial added that daily withdrawals of rice at government-owned warehouses were pegged at 106,000 bags.
It is the first time in decades that the Philippines has not imported rice during the lean months.
Traditionally, lean season in the Philippines starts in July and ends in September. It is also the time when the government imports rice that would help stabilize price in retail markets.
With ample supply of the grains to meet Manila’s requirement for the so-called lean months, the NFA may defer its rice importation plans by end of the lean months September or October—in time for the projected drop in inventory by year end.
“Based on the report that we submitted to Cabinet Secretary [Leoncio Evasco Jr.], there will be enough rice for the Jr.], there will be enough rice for the coming months, and that we will hit low levels of rice stocks by December,” Imperial said.
Under the Food Staples Sufficiency Program, the entire country should have a 60-day inventory at any given time, and a 90-day buffer stock during lean months.
The state-run grains agency is required by law to have at least 15-day buffer stock at any given time, and 30-day buffer stock during lean months.
Rice prices deflated
Due to the ample supply, including some buffer stock imports before the lean season, the price of rice registered negative inflation rates in the first two quarters of the year, effectively pulling down the average for the food sector during the first semester of 2016, the NFA said.
NFA Administrator Tomas Escarez, citing the Second Quarter Inflation Report of the Bangko Sentral ng Pilipinas (BSP), said food inflation increased by 2.3 percent in the second quarter of 2016 from 1.6 percent in the first quarter “on tighter supply of agricultural products due to El Nino and pest infestations.”
In contrast, he said rice prices continued to decline compared to year-ago levels due to ample supply, Escarez noted.
The same report showed that other food commodities such as fruits, milk, cheese and eggs registered higher prices, with vegetable prices even reaching double-digit inflation levels.
“Being the basic food of Filipinos, rice traditionally consists about 30 percent of every Filipino family’s food basket, thus a stable price and supply, more so a decrease in prices, always redounds to the greater benefit of majority of our populace, especially the poor,” said.
The state-run grains agency is mandated to ensure food security and stabilize rice supply and prices. Escarez said this once again highlights the significance of prudent buffer stocking, market positioning and monitoring by the agency so that availability, accessibility and affordability of the staple food are continuously safeguarded and maintained across the country.
The ample supply during the first semester, despite the El Niño phenomenon in some areas across the country, was attributed to the output from the summer harvest from February to April, and the timely arrival of rice imports before the lean months of July to September.
For the first quarter of 2016, rice prices were monitored to be 2.0 percent lower compared to the previous year, inching a bit higher to –0.9 percent in the second quarter as the country approached the so-called lean months for rice.
The Philippine Statistics Agency (PSA) recorded the national average price for well-milled rice at P41.13/kilogram in the first quarter of 2016 versus P42.68 during the same period in 2015, and P41.3/kg during the second quarter of 2016 versus P41.81/kg in 2015.