RP may reduce rice imports due to projected hike in output

The projected increase in rice and corn production in the first semester could reduce the country’s total rice importations this year, Agriculture Secretary Domingo F. Panganiban said.

He pointed out that if all the required support to increase the production of the country’s two major staples are put in place, especially in the first quarter, the National Food Authority (NFA) may have to revise its rice import projections for the year.

Earlier, the NFA placed the country’s rice imports for the year at about 1.8 million metric tons (MT), is the same volume brought into the country in 2005. It was recorded as the highest purchase since the 1998 El Nino phenomenon that forced the country to import as much as 2.1 million MT.

Panganiban had asked the Department of Budget and Management to release P3.3 billion to the Department of Agriculture (DA) in the first quarter for the rehabilitation of critical national and communal irrigation systems.

"When we have all those crucial irrigation network already in place, then we can assume a higher production for both rice and corn," said Panganiban.

He explained that the DA is also pushing for the increase in the hectarage devoted to corn production, not just for the livestock and poultry sectors, but also to encourage corn-eating consumers in the Visayas and Mindanao regions to revive their traditional practice of substituting corn for rice. He added this should also ease the pressure to increase rice production in irrigation-challenged farmlands.

By next month, the NFA said it will hold a public bidding for additional rice importations of 400,000 MT to beef up the country’s reserve stocks.

"The volume will augment the 488,000 MT that will be coming in tranches in the first quarter," said NFA administrator Gregorio Tan Jr.

The NFA is already expecting an initial volume of 87,500 MT to be be unloaded in Manila by end-January, the next 175,000 MT to come in by February, while the balance of 87,5000 MT should be in by March. Most of the volume will be coming from Vietnam.

These should bring NFA rice imports in the first quarter to 750,000 MT. The remaining volume will be brought in by the private sector and farmer groups that were allocated an import volume of 138,000 MT. The private sector is expected to bring in the additional volume by May 31, when the onset of the lean season for rice begins.

Tan said the NFA wanted the additional volume to come in early so that the government could take advantage of lower prices in the world market.

Currently, the benchmark for rice imports is pegged at $274.5 per MT, compared to last year’s $282 per MT price during the same period when prices soared due to higher fuel costs.

Tan added the imports will support the current warehouse inventory of the NFA which is likely to fall below the comfortable 15-day stock as improved farmgate prices of palay, now averaging P10 per kilo, are prompting farmers to sell to traders which offer slightly higher prices than the agency.

Tan said added that the national rice consumption has also increased to 30,000 MT daily from the previous year’s 29,000 MT as the population keeps on increasing. Per capita consumption is now at the level of 115 kilos from only 109 kilos in 2005.

The NFA, which last year imported a total of 1.8 million MT of rice due to the lingering effects of the El Nino phenomenon, wants to further frontload its rice import requirements for 2006 in view of the anticipated recovery in fuel prices that drove up fuel and transport costs of rice in 2005.

"While fuel prices have gone down, we expect this to recover shortly and to again affect rice prices. We also have to position early on because of the projected tightness in world stocks next year," said Tan in a previous interview

The world’s biggest rice producer and exporter, Thailand temporarily suspended its exports in September-October to secure its domestic requirements.

On the other hand, China’s rice imports have been steadily increasing in recent years and is expected to raise its import volumes to feed its burgeoning population while its rice farmers have been shifting to planting high-value commercial crops.

These developments will have far-reaching implications for rice net importers like the Philippines.

Last year, the rice importations of the NFA have gone up significantly from the 2004 average of $250 to $260 per MT to $280 to $290 per MT in 2005 . For 2004-2005, this has cost NFA some P28 to P29 billion.