RP to continue rice imports
By Amy R. Remo
Philippine Daily Inquirer, INQUIRER.net
First Posted 04:17:00 05/08/2008
MANILA, Philippines -- Agriculture Secretary Arthur C. Yap on Wednesday said the Philippines will continue to aggressively buy rice in the international market in preparation for the typhoon season, but it will do so confidentially so as not to destabilize world prices.
“We’re entering that time of the year when cyclones are coming into Southeast Asia. We have to take a cue from what happened to Burma [Myanmar] where it was reported that rice demand has spiked while local rice production has been largely affected by the cyclone Nargis,” he said.
The onset of the rainy season in May and June is expected to usher in destructive typhoons that frequently ravage rice paddies and diminish local supplies. About 20 typhoons hit the country each year.
“We will continue to be aggressive, our policy has been to go on an active procurement, active engagement of suppliers,” said Yap.
Yap said that Asian exporters Thailand and Vietnam have expressed concern that the Philippines’ aggressive buying was driving up prices.
He said the government will seek other ways as suppliers did not want to negotiate under an open public tender because it tends to drive up prices.
He said other options include government-to-government deals and that the World Bank has offered to help facilitate importation from countries with surplus production.
He said the World Bank has said that with the way rice prices were moving in the market, the Philippines should consider an alternative way of buying rice.
The Philippines, the world’s top rice importer, has so far contracted 1.7 million metric tons of the staple to fill a 10-percent domestic production gap despite tight global supplies and record high prices.
Of the 1.7 million MT, 700,000 MT are already in the country while the remainder is expected before the lean months of July to September.
However, prices have already hit $1,136 per ton as of April, about 60 percent higher than the previous tender held in March.
Yap said that even if the government has already contracted the critical 1.7 million metric tons, “we must still have an eye for the worst possible case that can happen, that’s why we must continue having a 30-day buffer stock.”
He said the National Food Authority still needs to import around 675,000 metric tons of rice as buffer stocks for the last quarter of the year.
The auction last Monday for 675,000 metric tons of rice failed because only one bidder, from Vietnam, submitted an offer.
Yap stressed that the private sector must play a greater role in the rice procurement process.
On May 9, the NFA will hold a country-quota specific auction for private importers for 163,000 metric tons. Rice will be sourced from Thailand for 98,000 MT, China and India for 25,000 MT each and Australia for 15,000 MT.
Private firms, which are normally lukewarm to these tenders, will be eligible to import the grain, with the government waiving the 50-percent import tariff, although a service fee would be imposed.
But allowing the private sector to import did not mean that the NFA, the state-run grain importer, would be done away with, especially at this time when more typhoons are expected to hit the country, said Yap.
“In fact, the NFA’s role is and must be heightened at this point. They must continue to do what they’re doing and keep on distributing rice,” he said.
Yap said the private sector must take an active role in rice procurement so the NFA can decide exactly on how aggressive an import stance it will take.
“We’d like to encourage the private sector to import more so that the NFA can also focus its efforts on other areas such as buffer stocking and local palay procurement, and thus enabling our farmers to profit,” he said.
Transparency
Senators agreed with the administration’s plan to undertake government-to-government rice purchases but stressed the need for transparency in these deals.
Senate Majority Leader Francis Pangilinan joined Senate President Manuel Villar in saying details such as with whom, where, and when the negotiations take place should be made known so the public may guard against any possible graft.
Senator Miriam Defensor-Santiago, for her part, said such transactions may eventually be advantageous to the Philippines as it may get a "friendship price" for its rice requirements.
She said the value of international diplomacy will come to the fore in such a situation and factors other than price will likely be considered.
"Here we shall see the value of international diplomacy, and we shall see that international relations, especially in southeast Asia, depends on many factors…They are concerned not only with food security but also with maritime or navigational security,” she said.
“The rice situation is very extensive and potentially explosive," she added.
Help from big firms
In an effort to ease the burden of employees experiencing skyrocketing food and fuel prices, President Gloria Macapagal-Arroyo on May 2 signed Executive Order 721 which encourages large companies to provide the rice requirements of their employees either by importing or producing the staple cereal.
Under the order which was released Wednesday, the NFA would recommend a period of time in which large corporations -- those with at least 500 workers -- will be allowed to import or produce rice for their employees’ needs, "provided that said corporations report earnings over the last four years that will allow them to engage in the production or importation of rice for their employees' requirements without affecting their financial viability."
“Moral suasion, not compulsion, shall be applied on large corporations to carry out the purposes of this order,” the EO said.
All importation undertaken by the corporations would be coursed through the NFA and would be eligible for fiscal privileges. Any production of rice in excess of the employees' needs could be sold in the local market upon the NFA's approval, the order added. With reports from Christine O. Avendaño, Veronica Uy, INQUIRER.net, and John Alliage Morales, contributor
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