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Manila Bulletin devider Business devider Rice traders cling to stocks 'hoping for better margins' amid lower tariffs

Rice traders cling to stocks 'hoping for better margins' amid lower tariffs

Published Jul 11, 2024 01:50 am

The United States Department of Agriculture (USDA) reported that rice traders in the Philippines have been steadily holding onto their stocks after President Marcos’ move to lower import tariffs.

In the Grain and Feed Update report dated July 9, USDA noted that rice traders who brought in their grains before the issuance of Executive Order (EO) 62 on June 20 are maintaining consistent stock levels.

Citing “industry sources,” the USDA said these traders remain hopeful for “better margins” or profits.

“There will be some motivation to sell due to lower prices likely resulting from reduced tariffs as well as the wet season harvest in the fall, but industry sources report that traders are holding steady on stocks, particularly as they bought at a higher price and are still hoping for better margins,” the USDA report stated.

President Marcos' EO 62 lowered the tariff on rice and other products from 35 percent to 15 percent effective July 5.

The Department of Finance estimated that the tariff reduction would result in retail rice prices falling to a range of P44.17 to P49.56 per kilo by December.

Last week, several farmer and cooperative groups filed a petition for a temporary restraining order (TRO) with the Supreme Court to stop the implementation of the EO.

However, the Supreme Court decided not to issue the TRO. Instead, the high court instructed Malacanan to submit a response to the petition that questions the constitutionality of the EO.

The USDA said the government's tariff reduction will stimulate rice imports, which are expected to reach up to 4.7 million metric tons for the market years 2023-2024 and 2024-2025.

This new estimate from the USDA is a one-million-metric-ton increase compared to the Philippines’ actual rice importation of 3.7 million metric tons in the market year 2022-2023.

According to the Foreign Agricultural Service (FAS) Manila, rice consumption is projected to increase gradually from 16.1 million metric tons in the previous year to 16.7 million this year and is expected to reach 17.2 million metric tons by 2025.

However, the FAS Manila's rice consumption forecast falls slightly below the USDA's official estimates, which expect 16.8 million metric tons for this year and 17.4 million metric tons for the following year.

Related Tags

Rice importation United States Department of Agriculture USDA Rice prices
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