Non-Asean exporters, such as India and Pakistan, would need to increase consumer awareness and build business relationships in the Philippines if they want to capitalize on Manila’s decision to lower rice tariffs.
In its monthly global grain report, the United States Department of Agriculture (USDA) said the Philippines’s lowering of rice tariffs would only benefit countries like India and Pakistan because they offer “more competitive” prices.
Last month the Philippines lowered its most favored nation (MFN) rates for rice imports to 35 percent from 40 percent for shipments within the minimum access volume (MAV) and 50 percent for those outside of MAV. This equalized the tariff rates slapped on shipments from Asean and non-Asean rice exporters.
The move was meant to diversify the Philippines’s rice import sources amid the increase in the prices of rice from neighboring Asean countries and threats of climate change to domestic production, government officials said.
“The new policy on MFN tariffs is likely to have less impact on Western Hemisphere suppliers than other non-Asean exporters in Asia. Exports from the Western Hemisphere are expected to remain limited, as combined price, tariff, and transportation costs are higher than Philippines domestic prices,” the USDA report read.
“Non-Asean countries, including India and Pakistan, have more competitive prices and the reduced tariffs would result in lower landed prices.”
Taking advantage of lower tariffs would mean addressing “necessary market challenges,” such as consumer awareness and network connections, for Indian and Pakistan exporters, according to the USDA.
“However, these non-Asean Asian countries would need to increase consumer awareness and build business relationships in order to make significant gains in market share in the Philippines.”
Despite India having the greatest potential to expand market share in the Philippines, the USDA said Vietnam would remain as the major rice supplier of the country.
Given the tariff reductions, the USDA hiked its total rice import forecast for the Philippines this year to 2.1 million metric tons (MMT) from an earlier estimate of 2 MMT. The latest estimate of the USDA is 14.28 percent lower than the 2.45 MMT of rice imported by the Philippines last year.
For this year, the USDA projected that the Philippines would remain as the second-largest rice importer for the second consecutive year. China would also remain as the world’s top importer of the staple for 2021.
The USDA also forecast that the Philippines would still be the second-largest buyer of imported rice next year.
“The Philippines is expected to be the second-largest importer in 2021, and recently announced a change to its import tariffs that has the potential to shift its suppliers.”
The BusinessMirror earlier reported that the country’s rice imports from January to May declined by 11.8 percent to 1.026 MMT from 1.163 MMT last year.
Bureau of Plant Industry (BPI) data obtained and analyzed by the BusinessMirror showed that the volume of rice imports during the 5-month period was 137,141.602 MT lower than the previous year’s volume.
Vietnam remained as the country’s top import source as it accounted for 91 percent of the total volume.
However, rice imports from Vietnam during the January-to-May period declined by 3.2 percent to 937,309.55 MT from 968,329.885 MT recorded a year ago.
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