PH’s largest rice suppliers see lower production

Published January 12, 2020, 12:00 AM

by manilabulletin_admin

By Madelaine B. Miraflor

Philippines, the world’s top rice importer, may soon have to pay more for imported rice as its two biggest suppliers for the staple, Vietnam and Thailand, will both see lower production this year.

Two separate reports prepared by United States Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) showed that Vietnam’s paddy production will go down during the current market year (MY), while Thai rice exports are “forecast to tumble further in 2020, dropping to the lowest level in seven years” due to production decline and stiffer global competition.

This is bad news for the Philippines, said Federation of Free Farmers (FFF) National Manager Raul Montemayor. As prices of imported rice increase, the country may eventually succumb to higher prices amid insufficient local palay production.

“International prices could inch up due to lower hectarage and output from major exporters,” Montemayor said in a text exchange.

“And we have no choice. We can’t produce enough rice, more so now that farmers are downscaling their production due to the low prices. We have no choice but to import. We can negotiate prices but in the end we have to pay what the sellers are demanding otherwise they won’t supply us,” he added.

For this year, the Philippines is expected to produce 19.6 million metric tons (MT) of palay and import around 2.7 million MT of rice. Last year, the country imported a record amount of 3 million MT, officially making it the world’s top rice importer, beating China.

Based on the USDA report, Vietnam, which sold 2.15 million MT of rice to the Philippines last year, will see lower production due to unfavorable weather conditions and crop restructuring.

“MARD [Ministry of Agriculture and Rural Development of Vietnam] lowered its estimates for the country’s production for the MY 2018 to 2019 Autumn crop, especially in the Mekong Delta, due to a reduction in cultivated area,” the report said.

“Several factors drove this reduction, including uncertainty on weather conditions and the water supply and lower paddy prices, which encouraged farmers in the Mekong Delta to switch to other crops such as fruits, vegetables, and aquaculture,” it added.

Combined with lower production in the Central region due to droughts that occurred early last year, USDA-FAS assessed Vietnam’s Autumn crop for MY 2018 to 2019 at 2.8 million hectares (HA) and 15.2 MMT, down from 2.9 million HA and 15.4 MMT in the previous MY.

Vietnam’s total exports will also be lower than estimates at 6.6 million MT from 6.7 million MT.

Meanwhile, Thai rice exports for 2020 are forecast down by a third compared to two years ago as exportable supplies fall and prices remain high.

“Thailand competes with more competitive Indian and Vietnamese rice, which is priced about 20 percent lower. Thus, even as the Philippines soared to become the top global importer, Thailand’s share of its trade was marginal, undercut by Vietnamese prices,” a separate USDA report showed.

“At the same time, China has shifted its trading position from net importer to net exporter, returning as a major exporter of low-priced rice as it seeks to offload its copious stocks. Its expansion of market share in African markets has come largely at the expense of Thailand,” it added.

Looking ahead to 2020, Thailand’s export “prospects are grim,” said the report. This as lower demand from key markets and uncompetitive pricing, compounded with a severe drought, are expected to decimate offseason rice production.