THE National Food Authority (NFA) is pushing for the increase of its buying price for palay to P25 per kilogram to salvage its wiped-out stockpile, having been unable to purchase its much-needed buffer stock volume from farmers during the summer harvest owing to its uncompetitive pricing.
A source privy to the matter told the BusinessMirror the NFA submitted its proposal to hike palay buying price during the special meeting of the NFA Council on May 21.
However, discussions on the proposal were deferred to the next regular NFA Council meeting. “We are again requesting the [NFA] Council to allow us to increase our price. Because it has been always our priority to buy locally but we cannot purchase because of [farmers’] price consideration,” the source said.
“We proposed to increase it to P25 but it is up to the NFA Council if they want to trim it down to P20 or P22. But we would really push for an increase even if it is minimal,” the source added. In an interview with reporters on Tuesday, NFA Spokesman Rex Estoperez revealed that the NFA’s current rice stockpile has been totally wiped out.
“We are zero,” Estoperez said when asked on the latest status of the NFA’s
rice inventory.
“We have no local procurement right now because of the [farm-gate] prices. We haven’t received yet any additional increases in our support prices. Therefore, we are still buying at P17, while farmers are opting to sell their harvest to the traders,” Estoperez explained.
Data obtained by the BusinessMirror showed that as of May 17 the NFA has only purchased 65,001 50-kilogram bags of palay, or about 3,250.05 metric tons (MT) since the start of the year.
The figure is just 3.25 percent of the NFA’s low-end palay procurement target for the year of 100,000 MT. The NFA has set a high-end palay procurement target of 300,000 MT. However, the Department of Budget and Management has only given the NFA a palay procurement funding of about P1.7 billion, just enough to purchase 100,000 MT, according to officials.
Since the start of May, the NFA has only been able to purchase about 8,394 50-kilogram bags of palay—only about 2 percent of its target 509,900 50-kilogram bags for the month.
Historical data from the NFA showed that the grains’ agency’s palay procurement from January to May may sink to a six-year low level.
The NFA posted the lowest five-month palay procurement in 2014, when it was only able to buy about 7,329 MT of palay as traders dangled high buying prices amid lower production caused by El Niño. “If we are able to increase our buying price to P25 then we can exceed our high-end procurement targets of 300,000 metric tons or even hit around 500,00 metric tons,” the source said.
“When we adjusted our palay buying price in 2008 from P11 to P17, we were able to buy more than 600,000 metric tons. Our warehouses were overflowing. So, once we increase our buying price even at just P20 or P22, for sure we will be able to procure 100,000 metric tons of palay,” the source added.
At a 300,000-MT palay procurement target, the NFA plans to purchase about 178,190 MT during the country’s main harvest seasons which runs from September to December.
The source revealed that the NFA projects that the average farm-gate price of palay would remain above the P17-per-kilogram level until the end of the year.
“We are doing everything just to procure. We are even doing outside-the-box strategy. But we are unable to purchase a lot of volume because of uncompetitive price,” the source said.
“The price is the main consideration of our farmers. The current ex-farm price averages more or less around P20 to P21 per kilogram, which is way higher than our current P17 buying price. We can only buy palay from far-flung areas and in small barangays,” the source added.
The average farm-gate price of unmilled rice continued to go up and rose to a 32-month high of P20.96-per-kilogram level during the first week of May, according to data from the Philippine Statistics Authority (PSA).
Figures from the PSA show that the average farm-gate price of the staple during the period was 9.05 percent higher than the previous year’s price of P19.22 per kg.
Priority
Despite the depletion of their buffer stock, Estoperez said the NFA will still give priority to resuming the sale of affordable rice in the local market to arrest the increasing prices of the staple, as ordered by President Duterte, once its imports arrive.
“That is our priority, which was the instruction of the President to the NFA administrator—to stabilize the price and supply in the market,” he said. “Once we stabilize the prices in the market then that is the time that we will establish our buffer stock.”
Estoperez said they expect retail prices of rice in the domestic market to decline once the NFA resumes selling their P27- and P32-per-kg variants. “Definitely, [the prices will decline] once our imports arrive because we will sell the volume immediately to the market,” he said.
Bidding
Meanwhile, five Southeast Asian companies are likely to secure the contract for supply of 250,000 MT of rice as Manila seeks to revitalize its depleted stockpile.
The NFA made the pronouncement following an open-tender bidding in Quezon City, where the majority of the winning bidders came from Thailand.
Four Thai rice exporters were prospective suppliers for six of the seven lots the NFA auctioned off, which reached a total 212,500 MT. These companies include: Asia Golden Rice Co. Ltd., which may supply a total of 58,500 MT after becoming the lowest bidder for Lots 2 (25,000 MT) and 3 (33,500 MT) at $461.75 per MT and $465.04 per MT offers, respectively while Ponglarp Co. Ltd. could be the supplier for Lot 4, which is 36,000 MT, after offering $463.5 per MT.
Furthermore, Capital Cereals Co. Ltd. may supply a total of 43,000 MT of rice after giving the lowest offer for Lots 5 (18,000 MT) and 6 (25,000 MT) at $463.45 per MT and $463.1 per MT bids, respectively. Meanwhile, Thai Hua Co. Ltd. could be declared the supplier for the 75,000-MT Lot 7, which is to be discharged at Manila port, after offering $463.1 per MT.
On the other hand, Singaporean firm Olam International Ltd. bid out the lowest offer for Lot 1 (37,500 MT) at $463.1 per MT.
The NFA pegged the reference price per metric ton at $498.25 per MT. It allotted P6.5 billion for the 250,000-MT open tender.
The prospective winning bidders will be subjected to a post-qualification evaluation this week to determine the final winning bidders. The winning bidders would then be issued a notice of award and notice to proceed next week.
Image credits: Nonie Reyes