The National Food Authority (NFA) recently announced that the country’s current rice inventory is good for 92 days. At a daily consumption rate of some 31,000 metric tons (MT), this means that rice stocks held by households, commercial warehouses and the food agency amount to some 2.9 million metric tons. The bulk of this volume, based on historical data, is usually with households and private traders.
The rice stockpile of the NFA, however, would only last for three days, according to its spokesman. This volume is lower than the 15-day stockpile requirement of the Legislative-Executive Development Advisory Council. During the lean months, when Philippine rice harvest declines significantly and the country is frequented by storms, the NFA is required to maintain a 30-day buffer stock.
This stockpile allows the NFA to immediately release stocks in areas hit by natural disasters. Access to food is usually a major problem following the devastation caused by natural disasters, such as strong typhoons. Rice in government warehouses are usually given to evacuees and other residents in affected areas.
That is why the pronouncement of the food agency attached to the Office of the President that its stockpile is good for only three days is worrisome. As the NFA also distributes rice in markets to stabilize domestic prices, this information could be used by unscrupulous traders to gain a windfall by hoarding rice. Also, harvest of paddy in a number of rice-producing areas is two months away and this could embolden speculators.
The implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law could also be used as rationale by some traders to jack up prices. The TRAIN law, which took effect on January 1, increased the excise taxes on fuel products. It is almost always the case that when fuel prices go up, the impact is absorbed by consumers.
What could exacerbate the supply situation of the NFA is the threat of Mayon Volcano’s eruption. The Philippine Volcanology and Seismology has recently raised Alert Level 3, which means that hazardous eruption is possible within weeks or days. Thousands of residents in barangays in Albay have already evacuated and are currently being housed in 18 evacuation centers. These residents are in need of government assistance, including food, until such time that the situation in the province has returned to normalcy.
To prop up its stockpile, the NFA will import 250,000 MT of rice. As of last week, however, they are still awaiting the volume that would be recommended by the interagency National Food Security Committee (NFSC). While the food agency has already been given the go signal by the NFA Council, it could not yet purchase imported rice pending the NFSC recommendation.
Pending the arrival of rice imports, we call on the government to strictly monitor markets and see to it that rice retailers would not unduly increase their prices. We urge the NFA to step up its monitoring activities so unscrupulous traders would be discouraged from hoarding rice. The government must also make up its mind on importing rice so that rice imports would not arrive during harvest.