The National Food Authority’s plan to increase its stockpile via importation was put on hold after the interagency National Food Security Committee (NFSC) and the NFA Council recently thumbed down its request to buy 250,000 metric tons of imported rice. The NFAC reasoned out that the country’s total rice stock is good for 90 days, or three months, hence there was no need for the food agency to import the staple. Of the total Philippine rice inventory, the bulk is with households and commercial traders.
As proof that the current national inventory is enough, the NFAC pointed out that commercial prices remain relatively stable. The highest policy-making body of the NFA also noted that top rice-producing provinces would start harvesting rice in March and that production forecast is “bright.” The Philippine Statistics Authority earlier projected that paddy output from January to March would rise by 5.65 percent to 4.67 million metric tons. The Philippines ended 2017 with a paddy production of 19.28 MMT, nearly 10 percent higher than the 2016 record of 17.36 MMT. These figures appeared to have given the NFAC enough confidence that imports are not needed to ensure the stability of the country’s rice supply.
In terms of its ability to influence the rice market, it would seem that the NFA’s impact is miniscule. In a statement, the NFA said it accounts for only 6 percent to 10 percent of the Philippine rice market. But the NFA’s presence in the market and its mandate to stabilize domestic rice prices have effectively prevented unscrupulous traders from taking advantage of situations when rice supply is tight. There are unconscionable Filipino traders who are not averse to profiting from natural disasters. To keep them in check or correct unwarranted rice prices, all the NFA has to do is channel part of its stockpile into areas where the staple is needed. This and the sale of cheap rice at fixed rates help keep inflation in check.
In keeping with its mandate to stabilize supply and prices, the NFA has to keep a buffer stock of 15 days at any given time, and 30 days during the lean season. The food agency resorts to importation when its procurement program falls short of its target. A few months before the start of the lean season in July last year, the NFA sought the go signal of the NFAC to import rice to boost its dwindling stockpile. The approval was given only last May, after the NFA had complained that it could not compete with traders who paid more for locally produced paddy.
While the decision of the NFAC to reject the food agency’s request to import is lamentable, as the NFA’s rice stock is good for only three days, the council and the NFSC had no choice. The requested volume would arrive sometime in April and May, when farmers in top rice-producing provinces, such as Nueva Ecija, are already harvesting their crop. The arrival of imports would only give traders a reason to slash their buying price.
If imported rice is no longer a viable option for the NFA, the government must find a way to help the food agency buy more paddy rice from farmers. The NFA buys rice from farmers at P17 per kilogram, lower than the farm-gate price of P18 to P21 per kg last year. It’s time for the NFAC to consider increasing this support price to reduce the NFA’s reliance on rice produced by farmers abroad.