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THE
Philippine government can well afford the burden of
subsidizing the rice staple in these times of perceived
short rice supply as the estimated cost should not top
$1.3 billion or around P54.2 billion this year,
according to the financial services giant Credit Suisse.
At this
level, it said the subsidy should be less than a percent
of local output or the gross domestic product.
“We
assume that the National Food Authority [NFA] imports
2.6 million metric tons of rice in 2008, 1.2 million
metric tons of which it has already bought at $708 per
ton. We conservatively assume it procures the other 1.4
million tons at $1,000 per ton, which compares with the
current spot price of around $850 per ton,” Credit
Suisse said in a study of the rice situation in the
Philippines.
In a
separate development, the United States Ambassador in
Manila said Washington is ready to fill in the
Philippines’ rice-supply needs.
US
Ambassador Kristie Kenney, who attended the Araw ng
Kagitingan ceremonies in Mount Samat on Wednesday, told
reporters that the possible volume of US rice exports to
the Philippines has not yet been determined, but the
US is prepared to provide its long-time ally all the rice it
requires.
By the
estimates of Credit Suisse, the fiscal impact of the
difference between the NFA’s import price and the price
at which it actually sells the staple—with plus P3.50
per kilo as margin to answer for storage and
distribution costs—should be bearable.
“On this
basis, we estimate a loss of $1.3 billion or 0.7 percent
of GDP for the importation of 2.6 million metric tons of
rice,” Credit Suisse said.
It also
said the NFA was likely to finance its forecast losses
this year via government-guaranteed borrowings from
state-owned as well as from commercial banks.
Earlier,
Finance Secretary Margarito Teves said both the Land
Bank of the Philippines and the Development Bank of the
Philippines have allocated a total of P20-billion
incremental loans for the rice sector this year.
Credit
Suisse made it clear the estimated fiscal impact assumed
the NFA was later able to import rice at the elevated
price of $1,000 per ton, or significantly higher than
the current price of $708 per ton.
“We also
assume that smuggling will not create the need for the
NFA to import substantially more rice from abroad,” it
added.
Credit
Suisse said the
Philippines
is the world’s top rice importer, having doubled its
import requirements the past 10 years.
Rice
imports between 2005 to 2007 hit 1.7 million metric tons
or 1.8 million metric tons, versus only 900,000 metric
tons between 1999 and 2004.
“The
surge in rice imports stems from domestic rice output
lagging consumption growth, which, in turn, has been
driven by population growth and increasing per capita
rice consumption.
“The
government aims to import 2.6 millon metric tons [MMT]
of rice in 2008, 44 percent more than in 2007, to build
stocks and prevent shortages.
“The
government has imported 1.2 MMT of rice so far in 2008,
with another 1.4 MMT to go,” it said.
In Davao
City, the local managers of the National Food Authority
(NFA) said a shipment of rice from Thailand was expected
to arrive Thursday, comprising 134,000 bags.
Assistant manager Filemon Cangrejo said it would be
distributed to the rest of Southern Mindanao, and some
parts of Central Mindanao. These would be in Mati in
Davao Oriental; Compostela in Compostela Valley; Tagum
City in Davao del Norte; Digos City in Davao del Sur;
Kidapawan City in North Cotabato; and in Maguindanao
province.
It would
be the sixth shipment since January and the unloaded
bags have already reached more than 800,000 bags.
Cangrejo
said the NFA usually receives 20 shipments in a year and
more shipments are expected in the first half of the
year due to the high demand for rice and the
stock-buildup policy for the lean months of June, July
and August.
Meanwhile, his boss regional manager Lorenzo Camayang
said he had also met the group of traders here almost
two weeks ago “and “have asked them to ensure that the
benefits of our increased buying price of palay should
really go to the farmers.”
He added
he got such an assurance.
The NFA
has increased its buying price to P17 per kilo of rice,
up by P2 from the previous rate. He said the NFA’s basic
buying price was P11, and it added P6 more to persuade
farmers to produce and sell them to the NFA.
“We hope
that farmers really get the full benefit of the P6
incentives,” he said, although he conceded that the
indebtedness of some farmers to traders may likely
divert the benefit to the traders.
“Actually, if there should be somebody who would benefit
from this increased price of rice, it should be the
farmers,” he said, “to help them purchase the expensive
fertilizers.”
Camayang
has met with representatives of the Catholic Church
parishes and grains traders in the region separately in
a bid to ensure that farmers get the full benefit of the
increased buying price of the NFA, and that poor
consumers may have more access to the NFA rice.
Some
parishes began distributing rice this week, especially
those located in blighted communities, including the San
Lorenzo Church in Talomo, about 10 kilometers south of
downtown Davao.
At Mount
Samat, Ambassador Kenney said Agriculture Secretary
Arthur Yap has been “in touch” with US Agriculture
Secretary Edward Schafer “to make
US
rice available.”
Kenney
said Washington has been providing other types of
assistance to the
Philippines,
such as in rice research to develop new strains of rice
that are “more nutritious, more disease-free.”
The
Philippines, one of the biggest markets for US rice, has
been shoring up its stocks to stabilize its supply and
has tapped Thailand, Vietnam and Pakistan for its rice
imports.
About
500,000 metric tons (MT) of rice from Vietnam and
Thailand has arrived in the country and 700,000 MT more
are due to arrive from April to June.
There
will be a public bidding on April 17 for 500,000 MT that
will arrive in May to July, and another bidding is set
in May for rice deliveries in June to August for the
balance of 500,000 MT. (With M. Cayon) |
