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PHL year-end rice stocks to hit 2.9 MMT on more imports–FAO

A worker at the National Food Authority (NFA) sweeps the rice grains at their warehouse in FTI, Taguig City.

THE Philippines could end 2019 with a nine-year-high rice inventory of 2.9 million metric tons (MMT) due to the increase in the stockpile of the National Food Authority (NFA) and the private sector’s “record-breaking” purchase of imports.

In its biannual food outlook report, the Food and Agriculture Organization (FAO) of the United Nations said it expects the expansion in local output and imports this year to be sustained following the liberalization of the rice trade.

The FAO said more imports and the projected hike in output would cause year-end stocks to grow by 45 percent from the 2 MMT recorded last year.

“The Philippines, where record-breaking imports combined with efforts to reconstitute state reserves through local procurement, could boost carryovers to a nine-year high of 2.9 million tons,” the FAO said in the report published last week.

Last year, the depletion of the NFA’s buffer stock caused the Philippines to suffer an artificial rice shortage and see unprecedented hikes in retail prices.

Due to the higher-than-usual nationwide rice inventories, the FAO estimated that the per-capita rice consumption of Filipinos would go up slightly to 116.9 kilograms per year from 116.2 kg.

Total rice utilization this year is pegged at 14.5 MMT, 2.11 percent over the 14.2-MMT estimated total demand last year.

The FAO noted that rice consumption in the Philippines, Bangladesh, Indonesia and Sri Lanka would rise on the back of higher disposal of state-held rice stocks to “stabilize prices and ensure affordable supplies for vulnerable groups.”

“This is the case of Bangladesh, Indonesia, the Philippines and Sri Lanka, but also of India, where officials could accelerate rice releases through the country’s public distribution system next season, in an effort to trim the size of state inventories,” FAO added.

Just like the United States Department of Agriculture, the FAO also expects the Philippines to again become one of the largest buyers of imported rice this year, with purchases expected to reach an all-time high of 2.5 MMT. Last year, the country imported 2.4 MMT of rice.

“This volume would mostly comprise private-sector purchases, facilitated by the recent replacement of long-standing quantitative restrictions on rice imports with tariffs,” the FAO said.

The FAO report also noted that local milled-rice output would expand by 2.42 percent to 12.7 MMT, from last year’s 12.4 MMT despite the anticipated hike in imports by the private sector.

This translates to roughly 19.42 MMT of palay output, slightly below the government’s projected 2019 production of 20 MMT, based on the BusinessMirror’s computation.

The enactment of Republic Act 11203 or the rice trade liberalization law, which deregulated the NFA as well as the industry, would whet the private sector’s appetite to import more.

Despite the change in the rice trade regime, the NFA has been aggressive in hiking its buffer stock by capitalizing on its buying price advantage.

The NFA has maintained its palay buying price of P20.70 per kg, since it became effective in October 2018, amid falling farm-gate prices. The food agency has already purchased over 3 million bags of palay, or about 153,665.5 MT as of end-April.

The food agency said it is confident of hitting its paddy rice procurement goal of 14.46 million bags, or 723,000 MT, this year. It increased its palay procurement target for 2019 after the rice trade liberalization law took effect on March 5.

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