The Department of Agriculture (DA) is recommending the inspection of rice warehouses in the country to make sure there would be no rice shortage in the local market.
Agriculture Secretary Emmanuel F. Piñol stated that “greedy” rice cartels are “operating again” to create an artificial “rice shortage” to justify increases in prices in the local market.
“As early as three weeks ago, I already had the suspicion that there was a conspiracy to launch a media propaganda about a ‘rice shortage,’ which I knew was intended to create panic,” Piñol said in a social-media post.
“I suspected that the plan was to use the ‘rice shortage’ propaganda as an excuse to increase the price of rice in the market and allow importation. Rice importation has always been a lucrative business for several big traders, including several people in government in the past,” Piñol added.
Due to this, Piñol is mulling over the “actual” inspection of all rice warehouses in the country to prove that the country’s stockpile is more than enough to feed the Filipino people.
“In the face of this brazen attempt to mislead the policymakers of this country simply because of greed for money, I am recommending that an actual inspection of all rice warehouses in the country be conducted by the proper government agencies,” he said.
“This is the best counter-attack to the attempt to sow panic among consumers by spreading the fake news that there is a rice shortage,” he added.
Estimated production
The agriculture chief said based on the data of the DA’s Field Operations Office the country is expected to produce about 3.067 million metric tons (MMT) of milled rice, which Piñol noted would be good for 96 days of national staple requirement.
“The 96-day buffer stock is one of the biggest rice inventories of the country in recent years, and this was the result of a bumper harvest of 19.4 MMT for 2017, a record harvest for the country. By the end of 2017, rice stocks in warehouses and home storages were placed at 2.7 MMT, which would be good for 88 days of supply,” he said.
“In the first quarter of 2018, the production forecast is placed at 3.067 of milled rice, which, when added to the buffer rice stocks carried over from 2017, would place the first-quarter rice supply at 5.8 MMT,” he added.
Mandatory inspection
As early as April 2017, Piñol has floated the creation of an inter-agency group that would conduct mandatory inspection of all rice warehouses in the country, following the country’s decision not to import the staple while harvest is ongoing.
One of the objectives of the what-would-be “Task Force Bigas,” Piñol said, is “to avert any attempt at hoarding rice to create an artificial shortage.”
“The new policy declared by the President is aimed at protecting Filipino rice farmers from price manipulation. Historically, paddy rice-buying prices would fall from a high of P18 per kilogram [before the start of harvest] to only about P10 to P12 per kg during peak harvest, a result of the inshipment of imported rice,” he said in April 2017.
“The task force will conduct a nationwide inventory of all rice stocks, including those that entered the country through the backdoor by a well-organized rice-smuggling syndicate, which receives the rice from other countries in the waters off Malaysia and transferred to small boats that bring the stocks to Zamboanga City and other small ports in the peninsula,” he added.
Nearing depletion
Reports have indicated that the retail prices of commercial rice in the market have increased by as much as P5 following revelations by the National Food Authority (NFA) that its stockpile is nearing depletion.
The current buffer stock of the NFA is pegged at around 1.2 million 50-kilogram bags, which is equivalent to two days of national daily rice requirement.
The state-run food agency has already suspended its distribution of rice to almost all retailers across the country due to the depletion of its stockpile.
The remaining stocks of NFA are reserved for the needs of calamity-prone areas and rice requirements of island municipalities and provinces.
Because of this, he said, the NFA slashed its daily rice withdrawal to 34,000 50-kg bags, from 64,000 50-kilogram bags, effectively stretching its current stockpile to last for 35 days, according to NFA Administrator Jason Aquino.
Price hike
Grains Retailers’ Confederation of the Philippines Inc. (Grecon) said the price of commercial rice rose by P2 to P3 per kg in recent days due to the high farm-gate price of local paddy.
Magbanua warned that once the NFA’s stockpile is completely depleted, local rice prices could go up further, as 10 million Filipinos would have no other recourse but to purchase the commercial variant.
This, he added, could cause the price of commercial rice to go up by P5 per kg in the coming weeks.
“The poorest of the poor depend on NFA rice. Because they cannot buy it anymore, they will buy commercial rice. Going by the law of supply and demand, the price of commercial rice would surely increase,” Magbanua added.
The Grecon chief said consumers would have to shoulder the burden of any increase in rice prices sold by traders. “We have no choice but to pass on the additional cost of rice to consumers.”
Aquino assured, however, that there is no rice shortage in the Philippines, as the country’s total inventory is enough for 88 days. Stocks held by commercial warehouses and households would be good for 34 days and 52 days, respectively.
He added that the agency was not able to beef up its buffer stock through local palay procurement, as the prevailing farm-gate prices—ranging from P19 to P19.50 per kg—are higher than the NFA’s buying price of P17 per kg.
The NFA management has been proposing to import 350,000 metric tons of rice as early as December last year.
In January, the NFA Council, the food agency’s highest policy-making body, has approved a standby authority of 250,000 metric tons of rice.
Since then, the volume has remained as a “standby authority,” as there has been no recommendation from the interagency food security committee for the government to import rice.
Import permit
But on February 8, one phone call changed everything.
NFA Spokesman Rex Estoperez confirmed to the BusinessMirror that the food agency has been allowed to import 250,000 metric tons following Duterte’s directive to Cabinet Secretary Leoncio Evasco to green light the importation.
In a television interview on Thursday, Evasco, who chairs the NFA Council, disclosed that Duterte called him on Wednesday evening to activate the 250,000 MT of rice standby authority of the NFA.
“NFA is proposing to buy rice via government-to-government, [because] we have a standby for 250,000 metric tons. The President called me last night, giving us the order to buy,” he said. “We have no option but to follow the President to activate the 250,000 MT, which is currently on standby.”
Piñol is also urging Duterte to cap the price of commercial rice.
“I will recommend [to the President] that there should be a cap on the price of commercial rice. The price of rice in the market now is not acceptable anymore,” Piñol told the BusinessMirror in an interview. “The rule of thumb in pricing rice is that it should be double the buying price of palay. Right now we have not heard of reports that palay is being bought at P25 per kilogram, the highest now is P20. So, the price of rice should not be higher than P40,” he added.
He said the price of commercial rice should be capped at P42 to P44 per kg, while the regular-milled variety should not exceed P40 per kg. “Prices should not be higher than these figures as no one is buying paddy at P25 per kg.”
Piñol said the Department of Agriculture will open a rice outlet on Valentine’s Day, where farmers’ groups would be allowed to sell rice at P38 per kg.
Image credits: Roy Domingo, Enrique Soriano/Bloomberg News