THE Philippines is mulling over requiring rice importers to post a bond amounting to at least 10 percent of their import value to ensure that they will bring in their approved volumes amid non-utilization of import clearances.
Agriculture Secretary Francisco Tiu Laurel Jr. disclosed on Tuesday that the Department of Agriculture (DA) is now fine-tuning the guidelines for implementing the bond requirement for all rice importers in the country.
“We have now put in place new conditions on the import permit. I will be requiring each importer to post a bond, [amounting to] 10 percent of their import value,” Laurel told lawmakers during his Commission on Appointment hearing.
“If they cannot bring in their import volume then the bond will be with the government. That is one of [our] stop gap measures,” Laurel added.
Laurel explained that the measure is being put in place after he discovered a lot of unused valid sanitary and phytosanitary import clearances (SPSICs) for rice imports.
Laurel revealed that a lot of rice importers have already surrendered their valid unused SPSICs after he gave them a 30-day ultimatum to bring in their approved import volume.
Under the existing rules and regulations, rice importers must first secure an SPSIC from the Bureau of Plant Industry, an attached agency of the DA, prior to bringing in foreign grain stocks in the country.
An SPSIC certifies that an inbound shipment is safe to human and animal health and is not bringing in any pests that would be detrimental to the local agriculture sector.
Laurel also added that he has formally shortened the must ship-out date for rice imports to 30 days from the previous 60 days to 90 days deadline.
“I shortened the deadline so that importers will be forced [to bring in their volume] and would help us see the actual [rice] situation [of the country],” he explained.
Laurel issued on Tuesday Memorandum Circular (MC) 53 revising the must ship-out deadline for rice imports. Under MC 53, all rice shipments regardless of their origin must arrive in the country within 30 days upon the issuance of their respective SPSICs.
Under the revised import rules, rice importers who will not fully use the approved volume they applied in their SPSICs could face sanctions and penalties.
“Furthermore, the importers shall fully utilize their applied SPSICs. Low or no utilization of SPSICs may result in sanctions and penalties in accordance with the guidelines as this can create discrepancies in the forecasting being done in relation to the availability of rice supply,” Laurel said.
Bonds a good mechanism
Monetary Board Member V. Bruce J. Tolentino said requiring rice importers to post bonds is a good mechanism to ensure that traders and importers engaging in rice importation are “experienced” and “have discipline.” Tolentino proposed that the bond be refundable, especially for traders and importers who abide by the state’s importation rules.
“If it’s refundable then the bond should not push up market prices. But it will help to ensure that traders are serious and experienced,” Tolentino told the BusinessMirror on Tuesday.
Philippine Chamber of Agriculture and Food Inc. (PCAFI) President Danilo V. Fausto earlier proposed that the DA explore requiring rice importers to post a bond to ensure that the imports would arrive in the country.
“If you are really determined to import rice, then at the onset you should post a bond,” Fausto told the BusinessMirror in an earlier interview. (Related story: https://businessmirror.com.ph/2023/11/24/da-chiefs-30-day-ultimatum-on-rice-imports-supported/)
Sinag: Weed out idle importers
Groups like the Samahang Industriya ng Agrikultura (Sinag) backed Laurel’s MC 53, arguing that it would “weed out” importers with low or no utilization of their SPSICs.
Sinag Executive Director Jayson Cainglet earlier proposed to Laurel to “blacklist” rice importers who are not using their approved SPSICs. (Related story: https://businessmirror.com.ph/2023/11/27/da-must-blacklist-traders-who-will-delay-rice-imports/)
The BusinessMirror broke the story last month that the Philippines’s rice imports is close to touching the 3 million metric tons (MMT) territory as the state recently approved the entry of over 1 MMT of foreign supply via private traders and importers.