Rice imports slashed substantially

THE PHILIPPINES will import less than one million metric tons (MT) of rice this year and let the private sector bring in up to 65% of the volume, the state grains agency said yesterday.

The decision was reached by an interagency council overseeing the National Food Authority (NFA) in a meeting where new private sector importation guidelines were also adopted to help ease the financial burden on the government, NFA Administrator Angelito T. Banayo said in a telephone interview.

Excess inventory following record importation of 2.45 million MT last year amid a dry spell, as well as expectations of a good harvest, provide some comfort, Mr. Banayo said.

"The Department of Agriculture estimates a bumper crop this summer harvest," he said.

Agriculture Secretary Proceso J. Alcala last week said the government expected farm output to rebound this year by 5% after a contraction of 0.12% in 2010.

Mr. Banayo declined to disclose specific figures so as not to affect market prices, but said the private sector would be allowed to import 60-65% of the volume this year, duty-free.

The NFA will hold a bidding among private importers in mid- to late March, he said. Imports should come in before the lean season in July, he added.

"The private sector will shoulder majority of the country’s rice imports, but they are subject to new importation guidelines," Mr. Banayo said.

This marks a reversal from last year when government imports accounted for 90% of the total, he added.

While private importers won’t pay duties, they will bid for the service fee to be paid to the debt-saddled NFA, whose outstanding debts from years of subsidizing rice farmers and consumers are estimated at P177 billion or $4 billion.

This will be a departure from a "first-come, first-served" arrangement where private importers paid a service fee of P25.00 per 50-kilogram bag of rice, or P0.50 per kilogram. The NFA earned P100 million in service fees for last year’s private importation of 200,000 MT.

Mr. Banayo said the floor for the service fee could be set at "way above" P30.00/bag, subject to the approval of the Fiscal Incentives Review Board, which is composed of the Department of Finance, National Economic and Development Authority, Department of Trade and Industry, and the Department of Budget and Management.

"If private importers bid on the service fee, the NFA will earn considerably much more for each kilogram of rice," he said. "We don’t have funds and we are about to breach our debt ceiling," the NFA chief added.

Private importers will be left to decide on where to import the grain from. Manila could buy from Vietnam, Thailand, or Cambodia, Mr. Banayo said in a radio interview prior to the NFA council meeting.

The Philippines is targeting an increase in domestic unmilled rice output this year to a record 17.4 million MT as it aims to be self-sufficient in rice by 2013. A first half dry spell and yearend storms pulled down palay output in 2010 to 15.77 million MT, 3.07% lower than the previous year.

(Source: http://www.bworldonline.com/content.php?id=26358)