BSP backs private sector to lead rice importation

The Bangko Sentral ng Pilipinas (BSP) is supporting moves to continue the private sector importation of rice as part of the country’s commitment to the World Trade Organization while allowing market forces to ensure stable supply and prices.

BSP Deputy Gov. Diwa C. Guinigundo told reporters on Friday that the interagency National Food Authority (NFA) Council, in which he sits, was “making sure that we don’t experience significant increases in rice prices.”

“If you look at the latest number issued by the National Economic and Development Authority and the Philippine Statistics Authority, you’ll see that in terms of the number of days, the first-quarter rice inventory covers 69 days versus the 71 days in the same period last year. Summer harvest starts in April and concludes in June. So at the end of March, you have 69-days’ worth of inventory, which means that by the end of June, you’re still okay. And that’s the reason why people are saying we shouldn’t import,” Guinigundo said.

“But then there’s another side to it. First, you have a standby approval of 250,000 metric tons of government-to-government [rice importation] basis. We haven’t activated that. The NFA Council hasn’t activated that precisely because we have sufficient supply at this point lasting until the end of June. Secondly, we allow the MAV (minimum access volume) importation which means we allow the private sector to import,” Guinigundo said.

“The problem with government-to-government is that the government has to spend for the amount of importation. In the case of private import, for the MAV, it’s the private sector who will spend for their imports. And the private sector normally does it based on the dynamics of the province or the city—the supply and demand in that area. So, the likelihood of the private importer to make a mistake in terms of supply and demand is quite remote because it’s their money that’s at stake. So we allow the private sector to do importation under the MAV,” Guinigundo said.

The NFA’s debt is estimated at P211 billion.

According to Guinigundo, fears that rice importation during the summer harvest season will depress prices is “not true.”

“What is outstanding is about 50,000 MT. While it’s possible that the importation will be lower, still because of the bumper harvest the supply of rice is still ample. So we don’t believe rice prices will move up in a very significant way,” the BSP official said.

“All of us want to make sure on one hand that the price of rice will be stable while at the same time avoid exposing the NFA to further indebtedness. We are also cognizant of the need to avoid getting more rice when you have the so-called summer harvest coming in. But it does not mean that allowing importation of the private sector will flood the supply. If I am a company that imported rice, why will I dump my import? Doing so will bring down prices, so I’ll be incurring losses,” Guinigundo said.