RP boosts rice stock to avert importation

MANILA, Philippines - The National Food Authority (NFA) plans to build up its rice stock inventory to 4.4 million metric tons (MMT) by the end of the year to avert the need for additional imports next year, NFA director Romeo Jimenez said.

In an interview, Jimenez said the NFA is trying to secure a total of at least 2.05 MMT from four rice tenders before the year ends.

It has already successfully awarded an initial 250,000 MT from its Nov. 4 rice tender intended to secure its 2010 rice requirement. The NFA last week held its second tender during which it received up to one million MMT in offers but at much higher bids.

The NFA will hold at least two more additional tenders on Dec. 8 and 15. However, if it is not able to fully award the remaining 1.8 MMT it is targeting from its Dec. 1, 8 and 15 rice tenders, there is speculation the NFA may still call for additional tenders before the year ends.

As of Nov. 27, the NFA has a total of 1.575 MMT of imported rice it had previously secured in its warehouses, while its local rice (from palay procurement) as of the same date is only at 384,671 MT.

The NFA is targeting a local rice procurement of 1.05 MMT.

The NFA is also collating additional rice stocks held by households and commercial wholesalers and retailers. Jimenez explained that the stocks held by households and the commercial sector may have decreased or destroyed following the flooding caused by the recent spate of typhoons.

Because of the higher bids it received during the Dec. 1 rice tender, the NFA decided to increase its budget for the purchase of rice for its Dec. 15 rice tender from P15.26 billion to P18.525 billion following indications that rice prices are going up.

The NFA Bids and Awards Committee (BAC) approved the increase following the higher bids its received for its Dec. 1 rice tender for 600,000 metric tons of rice.

Bids during Wednesday’s tender had increased by up to $130 per metric ton compared to the first rice tender for 2010 rice stocks held last Nov. 4, when bids ranged from a reasonable $468/MT to $600/MT.

However, a month later, the bids had moved up significantly to a range of $598/MT to $697/MT.

The NFA is holding two more tenders for a similar volume of 600,000 metric tons each for Dec. 8 and 15.

The NFA is now faced with a dilemma on accepting the higher bid price offers with expected criticism that doing so would drive up world market prices.

However, Jimenez argued, if the NFA tries to stand firm and cap prices at a certain price level, it also faces the risk that prices may still go up as China and India are also reportedly expected to enter the market soon to replenish their own rice stocks.

India has been suffering from a drought this year that has turned it from a net exporter of rice to a net importer this year.

India, which in 2008 exported about three MMT, is now reportedly expected to import about three MMT this year.

Thus, Jimenez pointed out, a total supply of six MMT alone (coming from the loss of the normal three MMT supplied by India and the three MMT it will secure) will compete with the needs of the Philippines.