PH set to end 2021 with more rice imports

The Philippines is seen to import more rice this year as tighter supply forces the country to source the staple food elsewhere.

The US Department of Agriculture-Foreign Agricultural Service (USDA-FAS) said in a report that Philippine imports are expected to rise to 2.6 million tons in 2021, from 2.3 million tons last year.

The country remains the third-largest importer following China and Bangladesh, it added.

For this year, the Philippine government has been more liberal with the issuance of import licenses and granted twice the number of licenses and quantities for import in July and August compared to the same period last year.

Bumper crop expected

Additional import licenses were issued through October, and the USDA-FAS is expecting the country to import rice in November and December “albeit at a much more muted pace.”

The government is anticipating a bumper crop in the fourth quarter and buyers have indicated the government is not approving additional licenses, it added.

The Philippines has multiple rice crops throughout the year and the government often uses import licenses as a way to manage imports in the run-up to its harvests.

“This is especially common before its main harvest beginning in mid-September, thus imports historically dip down then,” the USDA-FAS explained.

Several factors may have prompted the country to purchase rice abroad over the last few months.

“Pent-up demand and the overdue fulfillment of late shipments from top supplier Vietnam may partly explain higher imports in September and October,” said the USDA-FAS.

“Furthermore, the opening of the economy from previous COVID-19 restrictions boosts consumer demand,” it said.

Tighter supply due to lower crop output in the third quarter has increased the need to supplement total supply with additional imports.

Balancing interests

The USDA-FAS said the Philippines has had to balance the dual interests of both farmers and consumers and has used various policy tools to achieve this.

Imports have increased since the enactment of the Rice Tariffication Law (RTL) in February 2019, but the government ensures that the tariffs are in part supporting efforts to enhance domestic production.

“Rice is a politically sensitive crop and a staple food in the Philippines, so the government is attentive in balancing its need for imports and boosting its domestic production, which makes up about 85 percent of its total rice consumption,” the USDA-FAS said.

On a global scale, global rice production is anticipated to decline mostly due to decreased area harvested in Bangladesh and Thailand.

Global trade is also anticipated to rise on the account of stronger exports from Burma and greater imports for the Philippines.

RTL liberalizes the importation, exportation and trading of rice as well as lifts the quantitative import restriction on rice. It also imposes a minimum 35 percent tariff on rice imports.

Amid criticisms on the said law, the Department on Agriculture stood firm the RTL is a game-changing reform policy that broke the decades-long inefficiency of the country’s rice sector and enhanced its prospect of being globally competitive.

Agriculture Secretary William Dar said last month rice was cheaper than during pre-RTL years which benefited millions of consumers, and that farmers were harvesting and earning more per hectare.

According to the Agriculture department’s price monitoring report released on Friday, the prevailing retail prices of local special rice and imported special rice in Metro Manila stood at P50 per kilogram each.