Press Releases

‘Crucial 30 days for action:’ Salceda warns against possible global rice supply downturn amid China droughts; House tax chair asks DA for heavy support for rice crop dry season, secure contracts on imports to guarantee rice supply

August 21st, 2022

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) is appealing to the Department of Agriculture to invest heavily in trying to attain a domestic bumper crop of rice during the dry cropping season, which starts next month and peaks in November, amid reports of drought in the Yangtze river, which feeds into some of the country’s major sources of imported rice. If a global shortage takes place, Salceda warns, rice prices could increase to P48/kg by November this year unless the country sees a strong dry season harvest and secures import contracts from foreign governments.

“China’s Yangtze river regions are experiencing bad spells of drought this year, and there are indications that the Mekong River (Lancang River before it leaves China’s borders) could suffer similar issues. They have the same source. That’s not good for our rice supply, because Thailand and Vietnam rely heavily on the Mekong for rice production.”

“Myanmar is also suffering from lower rice production, as some agricultural areas have been affected by civil strife. India, our major non-ASEAN source of imported rice, is likewise suffering drought in some key areas. So, one can almost certainly predict that there will be global rice supply issues within the next three to four months.”

“I’m not trying to sound negative, given all the other crises we have to deal with. But I think, now that we can see the problems ahead before they can come, we have a chance to act. We have a thirty-day window before the dry cropping season starts.”

The House tax chair says that the Rice Competitiveness Enhancement Fund of 10 billion has been nearly filled up for this year, by January to June rice tariff collections. Hence, Salceda says, there are available funds for preparatory support for rice farmers.

“The rice cropping season starts next month, in September. That peaks around November. The DA has a chance to craft a comprehensive farm support program, composed of drought-resilient seeds, fertilizers, and other inputs for rice farmers. The timely distribution of the rice farmers’ financial assistance, which was downloaded by the DBM to the DA already, will also be beneficial,” Salceda added.

“What we do over the next thirty days will be crucial. We need a comprehensive package of assistance, and a plan to deal with potential global rice issues. It’s like the half-time break,” Salceda said.

Funding available for rice assistance

Salceda added that he has found at least P179 billion in sources not in the Budget of Expenditures and Sources of Funding, which could allow the Government to craft an off-budget package of support measures.

Among such sources, Salceda pointed out equity withdrawals from government financial institutions after the purpose of such infusions had lapsed under Bayanihan 2, the discontinuance of undistributed unconditional cash transfers from the TRAIN (Tax Reform for Acceleration and Inclusion) Law, the sale of bunked gas from the Malampaya field to the Ilijan Power Plant, and the privatization of the now-defunct Legazpi Domestic Airport.

“PBMM can also undertake a cash sweep similar to what PRRD [President Rodrigo Roa Duterte] did in 2019, the privatization of casinos under Pagcor [Philippine Amusement and Gaming Corporation], and the streamlining and renationalization of approvals for reclamation projects,” Salceda added.

Global rice supply issues could push retail prices to P48/kg

Salceda also said that the Philippines should already secure its import channels to ensure that it will have enough rice supply should a global rice shortage take place.

“Of course, droughts in China’s agricultural areas will also mean lower overall global rice supply, unless other countries achieve bumper crops. So, I think we need to secure some baseline level of contracts on a government-to-government procurement basis with Vietnam and Thailand already. We did that last year, just when export bans were also being imposed. That was a lifesaver during the pandemic. During the worst of times for global trade, our rice prices were stable. We need to secure such contracts ahead of time again.”

“If a global rice shortage happens, and we don’t have secure rice import contracts and strong domestic production, we could see rice retail prices jump to P45 for regular milled, and P48 for well-milled rice by around November 2022. That’s when we shall have exhausted much of the July harvest.”

“I’m sure PBBM has the diplomatic channels to secure such contracts already, following his G2G [Government to Government] procurement model for fertilizers,” Salceda said.

Irrigation, water conservation will be critical

Salceda also appealed to the National Irrigation Administration to expedite its irrigation programs and expand the capacity of the country’s irrigation facilities to catch rainwater and retain water.

“It’s not unthinkable that similar droughts will affect us, if not this year, then the years after that. Besides, we do experience El Nino every so often, so it’s good to prepare. We can apply evaporation suppressants to our municipal reservoirs. In the United States, they use solar panels to cover their irrigation canals, and they use these black, non-toxic plastic balls to cover the surface of reservoirs so that water doesn’t evaporate too fast.”

“From months ago, we already knew there were going to be sugar supply issues. Early this year I have already been calling for demand management, even before PBBM took office. We now have a chance to get ahead of the curve on rice,” Salceda said.

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