A FARMERS’ association pressed the government to regulate rice imports more closely to allow domestic farmers and traders to dispose of their inventory particularly during the current harvest, and called for an increase in the National Food Autority’s buffer stock minimum to support the market.
“Government must focus on the supply side, because that is where the problem is coming from. It must find a way to manage the inflow of imports until the supply glut disappears and farmers and traders are able to unload their stocks,” Federation of Free Farmers (FFF) National Manager Raul Q. Montemayor said in a statement.
Farmers are currently bringing in their crops amid a shortage of storage space in key rice-growing areas. Meanwhile, traders are still holding significant inventories from the last harvest because they purchased domestic rice at relatively high prices that cannot compete with cheaper imports, and are unwilling to sell at a loss.
The resulting softening of the market for palay, or unmilled rice, has depressed farmer incomes with reports emerging that traders are paying as little as P7 per kilogram.
FFF proposed the implementation of other measures like special safeguard duties, as well as trade remedies like anti-dumping measures, which would allow the government to temporarily impose additional duties on rice imports, making them more expensive.
According to the Bureau of Customs (BoC), 2.4 million tons of have arrived to the Philippines as of July since the enactment of the Rice Tariffication Law, which opened up the import market to private traders who must pay tariffs on their shipments starting at 35% for Southeast Asian Rrce.
The imports are equivalent to 17% of the Philippines’ annual consumption.
“We actually need to import only 10% of our needs because we can produce 90%, so there is already an excess supply of 7% in the market and this glut will become worse if more imports come in and coincide with the main harvest,” Mr. Montemayor said.
The Philippine Statistics Authority (PSA) estimates that the average price of palay was P17.62 per kilo in the second week of August.
The National Food Authority (NFA) has been limited by the law to procuring rice only from domestic farmers, but Mr. Montemayor said that this is not enough while farmers are exposed to competition from imports.
He noted that the P7-billion budget of the NFA can only purchase about 412,000 metric tons (MT) at P17 per kilo, which is only 2% of the country’s annual rice output. If it were to absorb 10% of output, the agency would need P35 billion.
The government also plans to increase the country’s buffer stock to 90 days as another way to boost the procurement of domestic rice.
“If they want NFA to have a buffer stock equivalent to 90 days, they will need to invest around P80 billion. Where will they get that money, and where will NFA and the LGUs [local government units] store that palay?,” Mr. Montemayor said.
LGUs have recently been roped in by the Department of Agriculture (DA) to participate in direct palay purchasing, milling and marketing at “reasonable” prices to help provide a floor to the market for farmers.
“In 2018, farmers were enjoying very good prices above P20 per kilo even without NFA having to buy a single kilo of palay. Why, because there was a tight supply of rice in the market and the NFA ran out of stocks to control the market. This shows that palay prices can be influenced through proper demand and supply management without government having to directly intervene in the market,” he said. — Vincent Mariel P. Galang