LAWMAKERS on Monday called on the national government to boost the rice buffer stock of the National Food Authority (NFA) “in a mix of both domestic sources and imports” as the agency projects the country’s rice inventory will fall by yearend to 45 days’ worth of consumption, below its 90-day mandate.
House Committee on Ways and Means Chairman Joey Sarte Salceda, however, clarified that he hopes the government will limit its imports to the lean months of July and August.
“With El Niño, 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.
For his part, Ang Probinsyano Rep. Alfred Delos Santos said the best way to ensure rice supply is to buy buffer stocks from local farmers.
“What the National Food Authority can still do is maintain its own NFA buffer stocks. It should be in preparation for the lean months from late June to mid-September,” he said.
“The NFA must source its buffer stocks primarily and directly from local rice farmers and cooperatives,” added Delos Santos.
Moreover, Salceda backed the NFA’s call for an expansion of the government’s rice-buying operations—subject to close coordination with the Department of Social Welfare and Development.
Global rice prices have declined by 3.2 percent 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,” he said.
“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 added.
To ensure, however, that the NFA’s buying program—which places a 2- to 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, Salceda said.
“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 said 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,” he argued.
“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,” he said.
Balance in supply, demand
The way forward, Delos Santos, meanwhile, said, is to impress upon rice importers and consumers that balance must be maintained between rice supply and rice demand.
“One probable complication is when an El Niño cycle emerges in the coming months because the lack of rainwater will reduce harvest of rice, other crops, livestock production, and even cause some fish kill and red tide algae blooms,” he said.
“It must also be impressed upon rice importers that the national government still has enough police powers and administrative powers to crack down on hoarding, smuggling, price manipulation, and economic sabotage,” he added.
According to Delos Santos, the clear message must be sent that it is not good business to create artificial rice shortages now or anytime in the future.
“For the long term, long overdue is the creation of the country’s national and regional clusters’ grains commodity exchanges where rice and corn can be transparently traded to ensure stable supplies and fair, affordable retail prices,” he added.
Image credits: Nonie Reyes
