Lower rice imports seen this year

News date: 14 January 2021Source: https://www.philstar.com/business/2021/01/14/2070205/lower-rice-imports-seen-year#:~:text=to%20be%20volatile.-,According%20to%20the%20latest%20report%20of%20the%20United%20States%20Department,2.5%20million%20MT%20in%202020.

MANILA, Philippines — The Philippines will see a reduction in its rice imports this year amid higher local production and as global market prices continue to be volatile.

According to the latest report of the United States Department of Agriculture-Foreign Agricultural Service, rice imports of the Philippines will likely reach 2.3 million metric tons this year compared to the estimated 2.5 million MT in 2020.

This year’s imports were revised downward from the earlier 2.6 million MT forecast.

“The 2021 imports are set to decline for the second year in a row amid higher production, government interventions and high prices from its traditional suppliers,” the USDA said.

Local production is expected to slightly increase to 12 million MT from 11.9 million MT due to higher area planted and better yields.

This as the Department of Agriculture continues to implement programs to boost production through quality seeds, machinery, farm credit and extension through the Rice Competitiveness Enhancement Fund.

The government has maintained a role in regulating trade by implementing policies related to importing licensing and the timing of license distribution.

Last September, the DA appealed to rice importers to manage and temporarily halt their import application to give way to harvest season and not worsen the drop in palay (unhusked rice) prices.

The USDA further noted that high export prices for Thailand and Vietnam rice are also lessening rice purchases by the Philippines.

Vietnam and Thailand are the largest suppliers to the Philippines due to their proximity, competitive prices and lower import tariffs.  However, the two ASEAN neighbors experienced drought last year that continue to limit exportable supplies for 2021.

For one, Vietnam rice prices have hit a high of $500 per MT, prompting it to import from India to put less pressure on domestic prices.

In turn, Vietnam will buy cheap rice for their domestic use then export more expensive rice and still make money.

Experts already said such a scenario may be beneficial to local farmers as now is the best time to further boost local production.

“The Philippines is expected to continue being a large rice importer. Still, improved production, government policies that constrain trade and record high prices from traditional suppliers are key factors limiting imports this year,” USDA said.

Despite the decline, the Philippines will still emerge as the world’s biggest importer as China’s imports for the year are seen to  be lower at 2.2 million MT.

The Rice Tariffication Law enacted in 2019 has made imports more available in the market, depressing overall milled rice prices.

More than two years into the law, local rice farmers continue to struggle to compete with affordable imports from Southeast Asia with farm gate prices still slumping during the recent harvest season.