Cheap imported rice to flood market

Published June 5, 2018, 2:43 PM

by AJ Siytangco

By Genalyn Kabiling and Madelaine Miraflor

Cheap imported rice will flood the local market soon, starting this month after the series of importation led by the National Food Authority (NFA).

Finance Secretary Carlos Dominguez III (left); Trade Secretary Ramon Lopez (MANILA BULLETIN)
Finance Secretary Carlos Dominguez III (left); Trade Secretary Ramon Lopez

With the additional imports, Trade and Industry Secretary Ramon Lopez said there would be NFA rice that would be sold again at P27 and P32 “to provide that accessibility to low-priced rice.”

“This will of course drag down even prices of commercial rice, which as you know, despite the lack of supply, we were able to still hold on it at the level of P39 to P49 for regular and well-milled rice,” Lopez added.

Lopez said the trade department is closely monitoring prices of commodities including food products to ensure retailers abide with the agreed suggested retail prices. He added that the Department of Agriculture plans to impose SRP in agricultural products sold in markets too.

Finance Secretary Carlos Dominguez III said the passage of the proposed rice tariffication law could be one of the best ways to address high food prices. Such proposal is expected to reduce inflation by around 0.4 percentage points if implemented in the third quarter.

“It will bring down rice prices by around P7 per kilo for the Filipino families and reduce inflation to below 4 percent by the second half of the year,” he said.

Just recently, five suppliers from Thailand and Singapore were awarded the contract to supply 250,000 metric tons (MT) of 25 percent broken, well-milled long grain white rice, to the NFA under the open tender bidding held on May 22.

Nineteen suppliers participated in the bidding, but only 13 passed the eligibility and technical requirements, and only five eventually passed the post-qualification evaluation of the NFA’s special bids and awards committee.

The companies awarded the contracts are Thai Hua (2511) Co., Ltd. for the supply of 75,000 MT; Capital Cereals Co. Ltd. for 43,000 MT; Asia Golden Rice Co., Ltd. for 58,500 MT; Ponglarp Co. Ltd. for 36,000 MT; and Olam International Limited for 37,500 MT.

Olam International is based in Singapore while the other suppliers are from Thailand.
The fresh stocks will form part of the NFA’s food security stocks during the lean months of July to September.

Bulk of the volume or 200,000 MT are scheduled to arrive in the country not later than July 31, 2018, while the remaining 50,000 MT should be delivered not later than August 31, 2018.

The total volume was divided into seven lots with corresponding discharge ports in Luzon, Visayas and Mindanao to facilitate distribution to the markets and intended beneficiaries.

Gov’t to gov’t bidding

The open tender importation will be on top of the importation of 250,000 MT of rice through a government-to-government bidding that was also held recently.
Only the governments of Vietnam and Thailand – the two countries with a Memorandum of Agreement (MOA) on government-to-government rice importation with the Philippines – were invited to supply the 250,000 MT, consisting of 200,000 MT of 25 percent and 50,000 MT of 15 percent broken rice.

First tranche of imported rice

The first tranche of imported rice from Thailand and Vietnam should start arriving this week until June 15.

An initial shipment totaling 16,000 MT or 320,000 bags from Vietnam arrived at the ports of Subic (11,000 MT) and Surigao (5,000 MT) last June 2.
It will be immediately unloaded and is estimated to be back in the market within the week.

“As a result, regular patrons of good quality government-subsidized rice can now heave a sigh of relief,” NFA said.

Bidding under MAV scheme

Aside from the government-to-private and government-to-government importation, the bidding for the importation of 805,000 MT of rice under the Minimum Access Volume (MAV) scheme of the World Trade Organization (WTO) is also happening in a few days.

Slapped with a lower tariff, MAV refers to the volume of commodities that is allowed to be imported by a member country as a commitment to WTO.

Rice importation under this new program is pursuant to Republic Act No. 8178, or an act replacing quantitative import restrictions (QR) on agriculture products, except rice, with tariffs.

To compensate for the expiration of QR, the Philippine government unilaterally extended the MAV commitments of 805,200 metric tons (MT) and corresponding tariff concessions to maintain special treatment through Executive Order No. 23 (EO 23).

NFA statement

Meanwhile, the NFA clarified that it has no plans yet for further rice imports at this time.

NFA administrator Jason Aquino said the agency will first focus on the immediate presence of NFA rice in the markets, as imports arrive, to possibly pull down and stabilize rice prices.

The NFA is also considering new modes of rice distribution to effectively cater to the needs of the intended beneficiaries of good quality government subsidized rice.

Inflation rate to level off

In Seoul, President Duterte’s economic managers assured Filipinos that rice as well as domestic fuel are expected to temper down amid the anticipation that the Philippines’ inflation rate would start to level off,

Finance Secretary Carlos Dominguez III tried to assure Filipinos about the eventual drop in the country’s inflation rate even after it accelerated to 4.6 percent last May.

“It seems to me that the inflation rate is, I hope, levelling off. I think this is a sign of levelling off and probably dropping,” Dominguez said during a press conference on the sidelines of President Duterte’s official visit here.

“In the second half of the year, the inflation should be on the downtrend. In fact the estimate for the inflation for next year is below 4 percent,” he added.
Dominguez cited that world oil prices have been on the “downtrend” based on the government’s close monitoring.

He acknowledged that the latest inflation spike has been largely propelled by higher tobacco, rice, fish, and corn prices as well as world crude cost.

He assured that the government is “taking steps to stay ahead of the situation.”

“I would like to emphasize that TRAIN is not the sole reason for the increase in inflation. The effect of high global oil prices driven by unfavorable geopolitical events, along with the import quotas on rice has affected prices on a much larger scale,” he said.