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MANILA, Philippines — Rice prices may go up if the proposed import ban pushes through as it may result in tighter supply of the staple nationwide, a former ranking agriculture official said.

Former agriculture undersecretary Fermin Adriano said halting rice imports could do more harm than good for the Philippines since it is still a net rice importing nation.

Citing international estimates, Adriano said the country needs to import at least four million metric tons to ensure ample stocks and prevent price spikes.

“The problem is if importation is halted or the Department of Agriculture (DA) pegs import quota at one million metric ton, that will result in severe shortage as we imported almost 4.7 million MT last year,” Adriano told The STAR.

“The USDA predicts we will import a higher amount this year. How will DA fill the huge supply gap given that dramatic productivity levels cannot be achieved in a year’s time?” he added.

Given the likely tighter supply situation, rice prices are expected to increase and inflation is seen “jacking up,” which Adriano pointed out would not be liked by the government’s economic managers.

The DA dismissed supply concerns emanating from the possible rice import ban, arguing that the country will still have sufficient stocks because of a projected record-high harvest and recent import arrivals.

Should there be any rice price increase due to tighter supply, it will be minimal and manageable for consumers, agriculture officials said.

Agriculture Secretary Francisco Tiu Laurel Jr. told The STAR that they want to stop rice importation by 45 to 60 days starting September to prevent further depression of palay prices.

Under Republic Act 12078, the President is empowered to suspend or prohibit the importation of rice for a limited period when there is an “excessive” supply of imported or locally produced rice that results in “extraordinary” drop in local prices.

Tiu Laurel defended the importation ban proposal, arguing that it is the “simplest” and most immediate way to protect the farmers especially that the wet season harvest will begin next month.

“Increasing the tariffs will only fuel smuggling. Temporary stopping the imports is the same thing as raising tariffs and it is even simpler and easier,” he said.

“We need to do what we need to do [to protect the farmers],” he added.

Tiu Laurel said the temporary rice importation may lift palay farmgate prices from P10 per kilo to between P16 and P18 per kilo.

The import ban will also cause an uptick in rice prices but it should be “minimal” since world prices are down, Tiu Laurel added.

“To support both farmers and consumers, a balanced policy such as step-by-step tariff hikes or capped imports may be more effective,” Marie Annette Galvez-Dacul, executive director of the University of Asia and the Pacific’s Center for Food and Agri Business, told The STAR.

For Adriano, the government should instead adopt a variable tariff scheme for rice imports. Under such a scheme, tariffs go down during off-season harvest and they go up during peak season harvest.

“But the more permanent solution is raise productivity of our palay farms by seriously pursuing land consolidation and clustering,” Adriano said.

Palay prices have fallen year-on-year due to a glut in stocks caused by high carryover stocks coupled by significant rice imports.

The decline in world rice prices also caused the landed cost of imported stocks to fall further, negatively influencing the price of local palay.

The average farmgate price of palay in June declined by almost 32 percent year-on-year to P16.99 per kilo from P24.93 per kilo, based on Philippine Statistics Authority data.

Some industry groups have claimed that palay prices have declined to as low as P8 per kilo in certain areas of the country. The Federation of Free Farmers earlier estimated that palay farmers have lost over P54 billion due to falling palay prices.

Meanwhile, rice prices have fallen on an annual basis due to the implementation of the lower tariff rate on imports. The average price of well-milled rice in July fell by 15 percent year-on-year to P47.6 per kilo while regular-milled variety declined by 19 percent to P41.31 per kilo.

Source : msn