By Madelaine B. Miraflor
Vietnam, which expects higher rice export sales this year, is seen to benefit the most once the Philippines entered a liberalized rice market.
A report in US Department of Agriculture (USDA) showed that Vietnam is expected to make some gains in the coming year as it is “well poised to continue to supply the Philippines, which has been a more active buyer in recent months, and where pending legislation would likely keep imports at robust levels.”
USDA is referring to the Rice Tariffication Bill, which seeks to replace the volume restriction on rice imports with a specific tariff rate.
Next to China and Nigeria, Philippines has always been one of the world’s top rice importers over the past years, with its local production only protected by World Trade Organization’s (WT) Quantitative Restriction (QR).
Sans the QR, the country’s rice imports is seen to balloon. From its previous projection of 1.8 million metric tons (MT), USDA alone now expects the Philippines to import as much as 2.3 million MT of rice this year. In 2018, Philippines only imported as much as 1.9 million MT.
Vietnam, on the other hand, is seen to export as much as 6.5 million MT of rice this year.
“Imports are raised for the Philippines due to the expected continued robust purchases from competitively priced exporters,” USDA said.
Last year, most of the country’s additional supply came from Vietnam and Thailand, which was procured through a series of government-to-government and open tender importation conducted by the National Food Authority (NFA).
Unlike Vietnam, Thai exports are set to contract more substantially, with its carrying stocks at lowest level in 10 years which is held primarily by the private sector. This year, Thailand may export as much as 11 million MT of rice.
While Thailand clearly has bigger exports, the Southeast Asian country is disadvantaged by uncompetitive prices.
“Over the past couple of months, the strengthening baht has kept Thai prices well above other Asian exporters. Thailand is set to engage in intense competition with other Southeast Asian suppliers, so the relatively uncompetitive prices put it at a distinct disadvantage,” USDA said.
Even if the Philippine government’s Rice Tariffication Bill is yet to take effect, the unlimited rice importation program actually started already with NFA’s out quota importation program.
Based on NFA’s latest data, 180 companies have applied for clearance to bring in as much as 1.2 million MT of rice into the country. Most of the additional supply will come from Thailand and Vietnam.
Under the out quota importation, everyone can import rice if they have the financial, warehousing, retailing capacity to do so.
It was reported last week that NFA, which will no longer be allowed to import rice once the Rice Tariffication Bill takes effect, is now waiting for the delivery of the last batch of imported rice it bought last year.
A recent data from the state-run grains agency showed that of the rice imports contract awarded last year, a total of 1.01 million metric tons have already been delivered in the country.
The balance of 236,196 MT of rice from last year’s importation is now in “transit and expected to arrive soon,” said the NFA.