RP to buy 1.5M tons of rice from Vietnam

By Amy R. Remo
Philippine Daily Inquirer

Posted date: March 27, 2008


http://newsinfo. inquirer. net/inquirerhead lines/nation/ view/20080327- 126654/RP- to-buy-15M- tons-of-rice- from-Vietnam


MANILA, Philippines—To address its rice shortfall, the Philippines on Wednesday signed an agreement with Vietnam in Clark, Pampanga, allowing the former to import up to 1.5 million metric tons of Vietnamese white rice.


But the Philippines may not get the full volume because of tight supply in Vietnam.


Xu Xuan Truong, Vietnam's ambassador to the Philippines, said Hanoi would "try its best to supply" the volume despite a projected decline in Vietnamese crop production and rice exports.


"This year we have difficulties, as crop production is not that good due to calamities. Our rice exports [in 2008] may be lower than last year—lower than 4 million MT," Truong said.


From the last tender held earlier this month, prices of 25-percent broken white rice from Vietnam, Thailand and Pakistan ranged from $618.50 to $735 per metric ton.


If Vietnam could supply the full volume of 1.5 million MT, the Philippines would pay $927 million (P38.7 billion) to $1.1 billion (P45.9 billion) at current prices.


Farmers and civil society groups warned of a worsening rice crisis and said prices could soar during the lean months of July to September.


"The price of rice is expected to go up to as high as P40 by July as traders will definitely take advantage of the limited supply, while the government will be dependent on imported rice for its buffer stock," said Jimmy Tadeo, chair of the National Rice Farmers Council.


Prices going up


In Southern Mindanao, consumers are complaining that the increase in the prices of commercial rice has become abnormal.


As of Wednesday, commercial rice varieties in Davao City were being sold at P29 to P30 a kilo, up from last week's P25 to 27.


An official of the National Food Authority (NFA) said prices of commercial rice would continue to increase during the next two months, considered lean months.


Based on farmers' estimates, the expected output this harvest season is 1.9 million MT, enough to last for almost two months.


The same period last year saw production in excess of 2 million tons but "there was no global shortage then," Tadeo said.


President Gloria Macapagal-Arroyo on Tuesday acknowledged the country was a "price-sensitive nation" and ordered raids against rice hoarders in a bid to keep the prices steady.


"I am asking traders not to jack up prices just because there is a crisis," she said.


President's order


Agriculture Secretary Arthur Yap told reporters the government would make certain rice types are available to the poorest households at P18.25 through subsidies. "That is the order of the President," he said.


Tightening global supply has pushed local prices of rice abnormally high even at the onset of peak summer harvests, Jessica Reyes-Cantos, Rice Watch and Action Network lead convenor, said in a statement.


A shortage of corn was also being felt in the central province of Cebu, where it is considered an alternative to the staple.


Beefing up stockpiles


Yap said the memorandum of agreement (MOA) between the Philippines and Vietnam, signed on the sidelines of the two-day 2008 Philippine Development Forum in Clark, Pampanga, would help beef up stockpiles and guarantee ample rice supply in the country.


"We hope that at least half of this volume will arrive by July, in time for the start of the lean season and the onset of typhoons, which visit the country in the latter part of the year," he said.


Yap said the MOA would bring possible rice procurements to at least 2.7 million tons, thus assuring the public that the country has more than enough rice to last the whole year.


Biggest import in 10 years


Rafael Mariano, chair of the militant Kilusang Magbubukid ng Pilipinas (KMP), said this year's rice import would be the biggest in 10 years.


"Obviously now demand is higher than supply. That is why Secretary Yap has now started monitoring hoarders and unscrupulous traders who jack up their prices," Mariano said.


About 50 KMP members (KMP) picketed the Department of Agriculture main office in Quezon City, carrying placards bearing slogans such as "Be truthful! Admit the rice crisis!"


Manila-Hanoi Pact


Under the Manila-Hanoi Pact, the "Vietnamese government agrees to sell, unless under circumstances of natural disaster and harvest loss, and the Philippines to buy up to 1.5 million MT of Vietnamese white rice annually starting year 2008, subject to market and production conditions."


Vietnam Southern Food Corp. and the NFA are the only government agencies authorized to implement the terms of the MOA, which will be in effect for three years.


US credit program


The agreement will be "automatically renewed for another three years unless terminated by either of the parties."


To keep the country's rice supply stable, the Department of Agriculture must be able to secure some 1.8 million tons, on top of a projected production of 17.3 million tons, according to the agriculture secretary.


"I am not worried about 2008 as we have secured more than enough commitments to supply rice to the country—the 1.5 million MT from Vietnam, another 1.1 million MT that the National Food Authority had already contracted through its tenders and the 100,000 MT from the US through the GSM-102," Yap said.


Earlier, the Philippines obtained a credit export guarantee worth $75 million under the GSM-102 program, to import some 100,000 MT of rice from the United States.


The GSM-102 program helps ensure that credit is available to finance commercial exports of US agricultural products to developing countries.


Rex Estoperez, NFA spokesperson, said the country had enough rice but the population boom, unabated conversion of arable lands to other uses, and climate change were putting pressure on supply.


The country consumes 33,000 tons of rice daily, up from about 29,000 tons two years ago, he said.


Cantos criticized the government for failing to improve the production performance of rice and falsely relying on imports to feed the people.


She said the government must also buy "rice directly from rice farmers at prices higher than the trader's offer" instead of letting its rice-buying arm negotiate with middlemen.


With reports from Jerome Aning and Kristine L. Alave in Manila; Rizalene P. Acac, Inquirer Mindanao; Agence France-Presse




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