The National Food Authority (NFA) could not buy more palay from farmers even if the summer harvest season has reached its peak as traders continue to aggressively compete with the food agency for locally produced rice.
A government official told the BusinessMirror that the state-run grains agency can only buy palay from farmers in remote and nontraditional areas through its mobile procurement scheme.
“The palay procurement is very minimal. [The NFA] is only able to buy in remote and nontraditional areas through mobile procurement and ugnayan, the official, who requested anonymity, told the BusinessMirror.
“The main reason for the low procurement is the high ex-farm price of palay ranging from P20 to P24 per kilogram [kg] and the aggressive stance of private traders,” the source added.
The source revealed that the NFA has received help from some local government units (LGUs), such as Isabela, to improve its palay procurement and salvage its nearly depleted rice stockpile.
“There’s help coming from LGUs, like the provincial government of Isabela, which gives [farmers] a premium of additional P4.50 per kg on top of the government support price of P17 per kg,” the source said. “But the problem is that they only have limited funding.”
Part of the NFA’s stockpile, which has fallen to 170,000 50-kg bags, or around 8,500 metric tons (MT) as of April 18, consists of unmilled rice bought from farmers. The NFA’s buffer stock is equivalent to less than a day, or just one-fourth of the country’s total daily requirement volume of about 32,000 MT or 640,000 bags.
This means that the NFA is only capable of supplying a fourth of the country’s total rice demand for a day should it become the lone seller of the staple and the stocks held by the commercial warehouses and households are totally wiped out. Also, the source disclosed that the present stockpile held by the NFA would be totally depleted by the end of the month.
Earlier, the NFA has vowed to step up its purchases of unmilled rice, but an official from the agency said it would be a tall order for the NFA to hit its procurement target for this year’s dry season harvest.
The NFA said it has bought 19,361 50-kilogram (kg) bags of palay from farmers. Of this volume, 7,412 bags were bought last month, at the start of the summer crop harvest.
“Rice harvest started in March, and it would peak this month. So, if the farm-gate price of palay would drop, then we could procure more palay,” the official said. “We remain optimistic that we can hit our target, but it would be quite difficult.”
Rice imports
NFA Administrator Jason Aquino on Thursday ordered the agency’s special bids and awards committee to fast-track the government’s importation of 250,000 metric tons (MT) of rice via the government-to-government (G2G) procurement scheme to replenish the government’s nearly depleted stockpile.
Aquino made the directive following President Duterte’s instruction that the NFA should “immediately” import its needed stocks to bring back cheap government rice in local markets.
An official told the BusinessMirror that the NFA will invite Bangkok and Hanoi to participate in the G2G importation within the week. Thailand and Vietnam are the only countries that can participate in G2G importation as they have agreements with Manila.
The official said the NFA will receive and open the offers made by Thailand and Vietnam on April 27. “If successful, the notice of award will be issued on the same day. After the submission of required perforemance bond and other documents, the issuance of notice to proceed [would be] issued by May 7.” The official said the rice imports will have to be delivered to the Philippines starting the third week of May until June 30.
Of the 250,000 MT that will be imported, 250,000 MT is 25 percent brokens, while the remaining volume is 15 percent brokens. “Most likely, the DAP price for 25 percent brokens rice would be around $460 per MT, while the 15 percent brokens would be around $470 per MT.” The attached agency of the Department of Agriculture has set aside a budget for P6.1 billion for the rice imports.
Under the approved terms of reference for the G2G importation, the official said the NFA would implement a delivered-at-place (DAP) system, which would require Thailand and Vietnam to deliver rice directly to NFA warehouses. Also, the DAP indicated that exporters should process and shoulder the delivery costs. The official said rice imports would be delivered to the following ports: La Union, Subic, Tabaco, Manila, Batangas, Ilo-ilo, Bacolod, Cebu, Zamboanga, Cagayan de Oro, Davao, General Santos and Surigao.
Image credits: Alysa salen