NEDA: Good palay, corn output curbed need for imports

MANILA, Philippines—The National Economic and Development Authority (NEDA) said that domestic gains in palay (rough rice) production lessened the need for imports for May 2011.

Citing a report by the Bureau of Agricultural Statistics, NEDA said in a statement that the Philippines posted a 14.9 percent improvement in palay production in the first half of 2011 compared with the same period in 2010, due to the increase in the harvested area and the higher yield on account of good weather conditions. First-half figures for corn were not immediately available.

NEDA said that the higher production improved rice stocks, resulting in a year-on-year drop of 33.8 percent in rice imports for May.

Socioeconomic Planning Secretary Cayetano W. Paderanga Jr. noted that imports of rice dropped by 33.8 percent to 177 million gross kilograms in May 2011 from 268 million gross kilograms in 2010.

“Higher domestic production resulted in an increase in total rice stocks (2.2 percent) in May 2011, lowering the need for imported rice,” Paderanga said.

The National Statistical Coordination Board (NSCB) said in separate communication via e-mail that aside from good palay output, the double-digit growth in the production of corn in the fourth quarter of 2010 and the first quarter of 2011 contributed to the slower growth in imports.

Citing government data, the NSCB said that palay posted 20 and 15 percent growth while corn recorded 11 and 20 percent in the fourth quarter of 2010 and first quarter of 2011, respectively.

The NSCB noted that the 33.3 percent decline in mineral fuels, lubricants and related materials significantly contributed to the slowdown of imports. This category shared 14 percent of total imports, the NSCB said.

The NSCB said a buildup in inventories might explain the drop in this category. From the first quarter of 2010 to the first quarter of 2011, imports of mineral fuels posted double digit growth (except in the third quarter of 2010). These added to existing inventories, hence, the decrease in imports of fuel in May 2011, the NSCB said.

Imports for capital goods also contracted by 11.5 percent year on year to $1.2 billion in May 2011 due to the decrease in purchases of telecommunications equipment and electrical machinery (-18.4 percent); office and electronic and data processing machines (-36.7 percent); and aircraft, ships and boats (-10 percent).

NEDA said the drop in these import purchases offset the double-digit gains in power generating and specialized machines (21.3 percent), land transportation equipment (23.8 percent), and photographic equipment and optical goods (12 percent).

Merchandise imports grew 1.6 percent to $4.89 billion in May 2011 from $4.81 billion in May 2010, the National Statistics Office (NSO) reported Tuesday. Benjamin Diokno, former budget secretary and an economics professor at the University of the Philippines, noted that imports growth in May 2010 was “strong” at 33 percent.

Cid L. Terosa, an economist with the University of Asia and the Pacific, said that year-on-year growth was expected to be lower because of base effects. Terosa was referring to the election spending that fueled consumption and in turn, imports of materials for making finished products, around May 2010.