‘No more limit’: Philippines import cap removal could see 1.2m MT of rice entering the country

06-Feb-2019 - Last updated on 06-Feb-2019 at 00:18 GMT

The Philippines’ lifting of a 20-year old rice import cap is likely to result in some 1.2 million metric tons of rice being imported into the country. ©Pixabay

Related tags Philippines Rice Import

The Philippines’ lifting of a 20-year old rice import cap is likely to result in some 1.2 million metric tons of rice being imported into the country in the wake of ongoing shortages and price hikes, the National Food Agency (NFA) has said.

According to numbers on the NFA site, so far some 1.186 million MT worth of rice import applications submitted by 180 applicants are being processed.

The agency has also approved 18 applications, which have received the relevant import permits. These rice traders will be obtaining imports of either 5% or 25% broken white rice from Thailand, Vietnam and Myanmar.

Rice imported from other South East Asian countries will be subject to a 35% tariff, but rice form other countries will have to pay a 50% tariff.

“We have not set any deadline for accepting applications to import rice. There’s no more limit,” said an NFA spokeswoman to Reuters.

The ‘unimpeded’ entry of rice was directed by Philippines President Rodrigo Duterte last year after the country’s inflation reached a nine-year-high of 6.7% in September and October.

According to Agriculture Secretry Emmanuel Pinol, these imports are not expected to impact the rice market negatively.

“I don’t think that’s going to happen because when the importers feel there is so much rice stocks in the market and prices go down to a level where they cannot make money anymore then they will not import,” he said to Philstar.

“It will be the absorptive capacity of the market that will set the cap. And no businessman in his right mind will import rice if there is no market.”

Dutrte previously denied the existence of a rice shortage in the country, despite increasing supply issues and voices of dissent. The government has since been taking multiple initiatives to control rice labelling and prices as part of dealing with the country’s rice crisis, including standardised rice labelling and pricing regulations.

Updates on rice auctions

Pinol added that the 1.186mn MT worth of imports would ‘add to’ the government’s previous rice supply auction attempts: 500,000 MT via open tender, and 203,000 MT via a government-to-government (G-to-G) scheme.

The 500,000 MT contracts were awarded to five Southeast Asian private bidders.

According to the Philippines News Agency, these were: Singapore’s Olam International Ltd., Thailand’s Asia Golden Rice Co. Ltd. And Thai Capital Crops Co. Ltd., Myanmar’s Shwe Wah Yaung Agriculture Production Company, and Vietnam’s Tan Long Group Joint Stock Company.

The final offer from the firms was PHP12bn (US$220.5mn) in total for 500,000 MT of rice, as compared to the government’s initial budgeting of PHP12.8bn (US$245mn).

Thailand and Vietnam had pulled out from participation in the G-to-G scheme in November last year citing difficulty in meeting the NFA’s Terms of Reference (TOR).

A letter from the Thai government read: “The TOR, even with amendments, ‘remains difficult… in terms of compliance,’ thus the Department of Foreign Trade ‘will not participate in the G to G procurement’.”

Vietnam’s letter in turn said: “Bach Ngoc Van, Deputy General Director of [state-run enterprise] Vietnam Southern Food Corporation (Vinafood 2), said they ‘could not meet [the] Terms of Reference (TOR)’s regulations” thus they will not participate in the bidding’.”

Both letters were read out by Maria Mercedes Yacapin, NFA Committee Chair on Government-to-Government Procurement, during the Opening of Bids.