PH should anticipate effects of Indochina drought on rice supply

News of extreme drought coming out of Indochina should be a major concern for our country given the impact of the rice tariffication law (RTL) on rice production, supply and prices. According to reports, Thailand — one of the world’s biggest exporters of rice — is forecasting an even worse drought and dry season until May this year; it has asked its farmers to switch crops or delay planting season in the meantime.

RTL apparently anchors food security on the assumption that there will always be cheap rice available in the international market.

“We see the rice tariffication law continuing to help pull down overall inflation in the near term as it continues to help improve the rice stock inventory of the country. This access to cheaper rice is good for Filipino consumers,” Socioeconomic Planning Secretary Ernesto Pernia had said.

The problem is that the severe to extreme drought conditions in Indochina portend a possible repeat of the 2008 rice crisis when the international price of rice went up to US$800-$1,000 per metric ton, on both a shortfall in production in the region due to climate change and an upsurge in demand from the Philippines. The National Food Authority (NFA) incurred huge losses to address that crisis.

The NFA no longer has the authority to import rice and regulate the rice industry under the RTL. Government officials are not inclined to amend the law, with Pernia saying that it should be given a period of at least two years to work.

As such, if the private sector deems it unprofitable to import rice, how do we address the problem? Agriculture Secretary William Dar was previously quoted saying that rice production in 2019 was only at 85 percent of the country’s requirements.

In a meeting of the committee on international trade of the Philippine Council for Agriculture and Fisheries last December, rice importers manifested that while they earned income from their initial importations, they have suffered heavy losses in their subsequent efforts, noting a glut in the market because of over-importation.

The market could only absorb one million MT but, unfortunately, three million MT was brought in. Thus, we have a situation where the RTL has had a negative impact on both producers and importers.

Important questions need to be asked soonest so that plans can be drawn up to provide answers and avoid or mitigate a possible crisis. What is the projected total dry season production? What is the target importation? If the private sector is wary of importing, what can the government do in the event of an emergency? What would be the required emergency appropriation?

In short, yesterday was the time to prepare.

ATTY. ELIAS JOSE M. INCIONG
President — United Broiler Raisers Association
Vice-President — Alyansa AgrikulturaCo-Convenor—Samahan ng Industriya sa Agrikultura
Corporate Secretary — Philippine Chamber of Agriculture and Food, Inc.
AA Representative — Agri-Fisheries Alliance