April 14th, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) supported calls to boost the rice buffer stock of the National Food Authority (NFA) “in a mix of both domestic sources and imports” as the agency’s projects that the country’s rice inventory will fall to 45 days’ worth of consumption, below its 90-day mandate, by year-end. Salceda however clarified that he hopes the government will limit its imports to the lean months of July and August.
“With El Nino, it’s always good to be prepared. Rice prices are actually declining globally, so it may be a good time to bolster our buffer stock,” Salceda said.
Salceda adds that, “anyway, we can always use excess inventory for pre-disaster and disaster relief operations.”
“So, I support the NFA’s call for an expansion of the government’s rice-buying operations – subject, of course, to close coordination with the Department of Social Welfare and Development, so that we can also take their needs into account.”
Global rice prices have declined by 3.2% from February to March 2023. The House tax chair says he expects “global price levels for rice to be very close to pre-pandemic levels by July or August 2023.
“The trend shows significant price reductions as the world fertilizer markets adjust better to the now-stagnant Ukraine situation. If a rice price downtrend affects local farmgate prices, although I don’t think they will by much, the NFA can also undertake a highly-targeted buying program to support prices in certain areas,” Salceda said.
“Mix of local, imported sourcing”
Salceda added, however, that to ensure that the NFA’s buying program, which places a 2-3 peso premium on farmgate prices, does not accelerate inflation, the government may need to source its rice from imports during the lean season – but not for the rest of the year.
“Incidentally, the rice lean season is also around July and August, so it might be a good time to buy externally just a bit earlier than that – when global prices are also declining,” Salceda said.
Salceda however says he doesn’t necessarily agree that the government should be the one to import the entire projected rice inventory deficiency for the rest of the year.
“Let’s do the lean season of July to August, just to be sure. But for the rest of the year, let the private sector do what it needs to do.”
“Unlike onions or other vegetables that need high cold-storage capital, the rice trading market has proven to be relatively harder to cartelize because of tariffication, and how easy it is to contest. So, I think the markets will adjust and respond better than the NFA can. Let the private sector do its job, for now.”
“We can negotiate something closer to ‘drawing rights’ from, say, Vietnam or India, so that if we ever need it outside July and August, we can get the rice we need. We can even pay a premium for the right to do so, instead of having to buy rice that we might not need.”