My position on rice importation is very simple: at this point in time it is an absolute necessity as we are not yet able to produce 100 percent of our rice requirement.
But the news reports of The Manila Times on rice imports paints a picture that it has become a very controversial issue. The Times report “NFA chief seeking costly rice imports” published on April 20 also revealed the National Food Authority (NFA) is prioritizing the purchase of expensive rice imports on a government-to-government (G2G) deal instead of buying from local farmers. A report also by The Times “Piñol blocks NFA move to import rice” published on April 19 also revealed that the Agriculture Secretary does not want rice imported during the peak harvest season. This is just logical.
But if there is one reality that the Duterte administration should face, it is the need to import rice with certain transparent procedures to be followed. Also, the Agriculture Secretary should have a major say on the issue, because it is the Department of Agriculture that monitors domestic rice production or whether there would be a
shortfall or not, and undertakes various programs and projects to improve production of the staple.
Whether there would be a shortfall and the need to import, however, should be determined only once, or based on the production deficit of the previous year or two.
So the standard operating procedure is by the end of January at the latest, the government should already have the final figure on how much rice needs to be imported by the Philippines. Usually, this is based on the previous year’s production deficit, and should not be projected near or prior to the harvest season. The 2016 production figure indicates an 88-percent rice sufficiency level.
If the country ends up importing an excess of rice, which can happen if farmers produce more than projected, that would allow the government to shore up the country’s buffer stocks that I believe should be at least 120 days. Notably, India maintains a 365-day or one-year buffer stock and I see no reason why the Philippines should do the same.
For this year, the NFA has programmed 1.3 million metric tons of rice importations and plans to do this G2G but this still could go higher. Once the volume of rice to be imported has been determined, the government should transact only once and not by tranches. The delivery of the rice stocks, however, can be made in tranches based on necessities.
Determining the volume to be imported, or within January, before the year’s first planting season, would not result to the imports competing directly during the harvest seasons as you can schedule deliveries. I mean, just imagine if the rice importation volume was determined during the harvest season or a few weeks prior to the harvest season; that would drive down the farm-gate prices of palay (unmilled rice) to the detriment of small holder farmers.
And if possible, the government, through the NFA and the Department of Agriculture, should explain to farmers the need to import because of production shortfalls. I am not saying that the country cannot attain 100-percent self-sufficiency in rice; it’s simply impossible to mechanize most farms, get more farmers to start using high-yielding hybrids, and get more lands under national or small irrigation systems in one planting season or even over fiscal year or two.
I see also nothing wrong if the NFA allows the private sector to import rice based on pre-determined volumes and transparent processes. G2G has its merits but the NFA already has a debt of P167 billion as of 2016. To prevent unbridled importation by the private sector, a tariff of up to 35 percent or higher can be levied on imported rice, which will also force importers to seek the best deals from abroad. But since businessmen are concerned about profits, they would surely seek the best deals and would not import large quantities that they cannot dispose immediately.
The NFA can also set strict procedures for the private sector to import rice to make sure there would be no smuggling and that import levels will be followed.
All in all, transparency should be the key to making rice imports an issue that is free of controversy. But the current set-up can brew potential conflicts between the DA and NFA because Agriculture Secretary Manny Piñol is not part of the decision-making process when it comes to importing rice. I find this ironic because it is the DA that projects production volume and directly assists farmers in local rice production.
The NFA along with the National Irrigation Authority (NIA), Philippine Coconut Authority (PCA) and Fertilizer and Pesticides Authority (FPA) used to be under the DA until they were transferred to the Office of the President on May 5, 2014 under the Office of Presidential Adviser for Food Security Modernization by virtue of Executive Order No. 165.
If Piñol was part of the NFA’s decision-making process on rice imports, he would not have to ask President Rodrigo Roa Duterte to stop additional rice importations.
If the country ends up importing excess rice volumes, that can be a boon because what the country needs is buffer stocks to cover at least one full production cycle of 120 days or four months as I recommended earlier.
And over the long term, it is worth studying having a 365-day buffer stock like India. I believe that would be beneficial for Filipino consumers, because that would prevent private traders from creating artificial shortages and price spikes even if the country needs to import rice.
Based on latest figures or at the end of March this year, the country’s rice stocks would be sufficient for 64 days; Household stocks would be enough for 34 days, commercial warehouses 18 days and NFA depositories 12 days. This translates to households holding 52.95 percent of the country’s total rice stocks for the period, 28.81 percent in commercial warehouses and 8.61 percent in NFA depositories.
Piñol recently reported that for the first quarter of this year, there would be an additional one million MT of unmilled rice which translates to 650,000 MT of milled rice, and that the average yield per hectare is now 4.15 MT per hectare compared to the previous average of 3.9 MT/ha.
So that means that the planned importation by the NFA for 250,000 MT of rice may not be needed. If rice were imported with a bumper or good harvest, that could drive down farm-gate prices of palay to the detriment of smallholder farmers.
Good thing President Duterte stopped the importation of the 250,000 MT of rice.
All in all, rice importation need not be controversial if done transparently with the Agriculture Secretary having a say in the matter. But the reality still remains: the country needs to import rice until it can attain 100-percent self-sufficiency on the staple. For sure, the sight of people lining up at the stalls of rice retailers and stocks running out of depositories are not good news at all.