Govt allows private firms to import 300,000 ton rice

Reuters

Posted at Feb 25 2009 05:45 PM | Updated as of Feb 26 2009 07:13 PM

The Philippines is allowing private firms to buy up to 300,000 tons of rice this year overseas as the world's biggest importer of the grain anticipates a drop in output in the second quarter.

The volume is part of the 1.8 million tons that Manila is eyeing to import in 2009. The government earlier signed a deal to buy 1.5 million tons of milled rice from Vietnam.

"That's the volume we're looking at (which) we're leaving to the private sector," Agriculture Secretary Arthur Yap told reporters.

"But that does not mean we are surrendering the entire volume to them. If at such time we see they are not moving, we will move."

The Philippines imports around 10 percent of its annual rice needs and state-run National Food Authority (NFA), tasked with stabilising domestic prices, has the monopoly in importing the grain.

The government began allowing private firms to import rice in 2002 to curb smuggling, though the volume has been usually small due to the huge capital outlay needed and volatile prices.

Last year, private firms imported only 71,000 tons of milled rice, mostly from Vietnam and Thailand, around a fifth of the 350,000 tons allocated by the government, NFA officials said.

In the event that the private sector is not able to use up its entire quota this year, "the government can always step in," said Yap, adding the remaining tonnage can also be procured from local farmers.

"That's why we're doing it early, we're giving them a chance right now to begin importing," he said.

The Philippines' purchase of 1.5 million tons of Vietnamese rice was expected to help stabilise the global rice market and prevent a replay of what happened in 2008 when Manila's open tenders to secure its rice supply drove prices to record levels.

In 2008, Manila bought 2.3 million tons of rice, mostly from Vietnam.

The country is expecting unmilled rice output to increase 4.4 percent this year from the 16.82 million tons produced in 2008.

But government estimates showed rice output is forecast to drop an annual 4.4 percent in the second quarter after a projected 6.4 percent year-on-year rise in January-March.

Yap said the expected decline was largely the effect of early planting in 2008, which boosted output in the third quarter by more than 10 percent but made land unavailable for planting for several months.