Two recent developments have the potential to crimp shipments of rice, the staple food of many Asian countries, including the Philippines. Last month, Reuters reported that Thailand and Vietnam—two of the major sources of rice for the Philippines —have agreed to cooperate in raising the price of rice in the global market. Citing a Thai agricultural official, the report indicated that the move of the two countries, which account for more than a quarter of global rice exports, is aimed at increasing their farmers’ incomes.
Another development that should concern us is India’s decision to restrict exports of key varieties that go toward feeding Asia and Africa (See, “Top rice exporter India curbs shipments in threat to inflation,” in the BusinessMirror, September 9, 2022). Bloomberg reported that New Delhi imposed a 20 percent duty on shipments of white and brown rice and banned broken rice sales abroad. The curbs apply to roughly 60 percent of India’s overall rice exports, based on Bloomberg calculations.
India is the top exporter of rice, accounting for 40 percent of global rice trade. New Delhi’s decision is expected to put pressure on countries that import the staple to plug the shortfall in their domestic output, including the Philippines. India’s rice supply has helped keep rice prices relatively stable even after Russia attacked Ukraine in February, which raised the prices of other grains like wheat.
The Philippines, the world’s second-largest importer of the staple, has been importing rice for decades as local output could not keep pace with rising demand. As of August this year, the country’s purchases of imported rice have already reached 2.77 million metric tons, 64 percent of the level recorded a year ago (See, “PHL rice imports jump by 64% in January-August,” in the BusinessMirror, September 8, 2022). Industry sources said they expect rice imports in 2022 to surpass the purchases made last year as demand continues to outpace domestic output.
Measures recently undertaken by rice exporters should remind our agriculture officials of the need to raise the country’s rice production to minimize the adverse impact of trade restrictions on the country’s food supply. In a report released in November 2021, the Philippine Statistics Authority said that the country’s self-sufficiency ratio (SSR) was at 85 percent in 2020. This means that the country had to import some 15 percent of its rice requirements that year.
Reducing the import dependency ratio or rice supply from imports would allow the Philippines to avoid the price volatility that may be caused by the measures undertaken by three of the world’s top rice exporters. The country has shown that it is capable of doing so based on the SSR in 2013 and 2016, when it reached 96.82 percent and 95.01 percent, respectively. For one, the new administration now has the requisite resources to make this happen, starting with the Rice Competitiveness Enhancement Fund, which consist of tariff collections from rice imports.
In his first pronouncement as agriculture chief, President Marcos assured the public that his administration will ensure adequate rice supply in the country. The people have high hopes that the President will deliver on his priority, which is to ensure that there is sufficient food supply that poor Filipinos can afford.