But ‘quadruple whammy’ looms for PH staple grain, solon warns
President Ferdinand Marcos Jr. said Tuesday the country’s rice supply was “okay” as he assured Filipinos of the government’s continued efforts to stabilize the price and supply of the staple grain.
“For now, the supply is okay,” Mr. Marcos said in a video message in a mix of English and Filipino. “We are looking at the cost of agricultural inputs to make sure the price of rice will not increase that much.”
But India’s rice export ban, Vietnam’s move to halve its exports, typhoon damage to crops, and the scuttling of the Ukraine deal are a “quadruple whammy” that will deliver a gut punch to the Philippines, the world’s second-largest importer of rice and sixth-biggest buyer of wheat, Deputy Speaker Ralph Recto said Tuesday.
“That’s a punch in the gut for everyone,” Recto said in a mix of English and Filipino. “These developments are the sound of empty pots clanging.”
He said the President’s warning that rice prices could go up was “refreshing honesty” that could spur action on how to meet the crisis ahead.
In a video message after he met with Agriculture officials at the Palace yesterday, Mr. Marcos assured the public of the government’s continued efforts to keep rice prices low after the onslaught of typhoons “Egay” and “Falcon”, which flattened thousands of hectares of rice and corn.
Agriculture officials acknowledged the difficulties brought about by India’s rice export ban, Vietnam’s move to halve its exports of the crop, and the damage brought about by recent typhoons.
“The President is very much worried. We really have to discuss ways by which we could really mitigate the further effect of these events that are now unfolding,” said Undersecretary Mercedita Sombilla of the Department of Agriculture (DA), which Marcos heads.
Sombilla said the government is ready to mitigate the possible impact of Russia’s withdrawal from the Black Sea Grain Initiative, India’s export ban on non-basmati white rice, and the El Niño phenomenon.
“You know, we are prepared. The production for up to the second quarter, we have something like 39 days of stocks,” she said, adding that the DA has already put measures in place to increase production.
She said the biggest rice production is expected either by the end of September or October.
Sombilla said Russia and India’s recent moves would have a minimal impact on global food prices.
But HSBC economist for the ASEAN region Aris Dacanay said the Thai Rice Exporters Association expected rice prices to go up by as high as 10 percent due to India’s recent ban on rice exports.
Recto also noted that flooding caused by typhoons “Egay” and “Falcon” would damage rice and corn supply as the three regions affected — Ilocos, Cagayan Valley, and Central Luzon — account for 44 percent of national rice production and 79 percent of corn.
“These are agricultural powerhouses that not only serve as our grain granary but a major supplier of poultry, pork, and other livestock,” Recto said.
However, the easy solution of importation when local production dips “is not as straightforward anymore due to convulsions in the world market.”
“It’s not easy to order rice in the world. A country will only export its surplus production. Their priority will be local demand. And this is where grains nationalism comes in because if there’s no rice on the table, the masses will rise up,” he said.
India, the number one rice exporter with a 40-percent world market share, has imposed a ban on the export of non-Basmati rice.
“You don’t need a Nobel to sagely predict that it will have a ripple effect on all grain prices, considering the big hole it will cause,” Recto said.
But what could hit the country “directly and painfully,” Recto warned, is Vietnam’s decision to slash its rice exports a year to 4 million tons by 2030 from 7.1 million tons in 2022.
The Philippines, he said, sourced 2.5 million metric tons, or 85 percent of its rice imports, from Vietnam in 2021.
Even the failure to free embargoed Ukraine wheat, after Russia bombed grain stores in Ukraine and pulled out of a deal that would have allowed safe passage of food exports through the Black Sea, “will shrink Pinoy pan de sal sizes while boosting its price.”
At the moment, the country is 81 percent rice self-sufficient, Recto said.
But he said rice consumption was also on the rise. “If you look at 2022, rice utilization data, it was 135 kilos per capita for that year, from 118 kilos per Pinoy pre-pandemic,” the lawmaker said.
In his video message, President Marcos said he met with the DA officials to discuss the looming effects of Egay on the production of rice.
Last weekend, the President flew to different parts of Northern Luzon to assist displaced families and assess the damage wrought by the super typhoon.
The DA said rice supply is projected to reach 5.47 million metric tons (MMT) in the third quarter of 2023, and demand is expected to reach 3.79 MMT, with ending stock in the third quarter projected at 1.69 MMT, enough to last 45 days.
Mr. Marcos said they discussed the DA’s preparations for the possible impact of the “El Niño” phenomenon on the agricultural sector.
While talk of rice imports is circulating, the President said there was a need to study this carefully.
Sombilla said part of the mitigation measures would be the scheduled importation of 1.3 metric tons of rice, the applications for which are pending.
She said the President needs to discuss the applications with the private sector to help with the importation.
“I think the President will really have to do some discussions, consultations with the private sector…for them to help us. I think we really need the help of the private sector in situations like these,” she said.
Sombilla said the President’s campaign promise of lowering the price of rice to P20 is still achievable—but only if the country reaches its sufficient production of the commodity.
“In the long run, if our productivity really improves, and that is what the DA is really aiming for, [the P20 per kilo price is still achievable],” she said.
The DA has seen rice prices going up by P1.50 to P2 a kilo following the recent typhoons.
DA Deputy Spokesperson Rex Estoperez said that based on the department’s monitoring, the prices of rice and vegetables went up after the country was hit by typhoons.
HSBC’s Dacanany said an increase in rice prices could add to the rate of inflation, slowing down central bank efforts to keep it within the 2 to 4 percent target.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said because rice accounts for nearly 10 percent of the consumer price index, the recent increase in local prices would keep the rate of inflation from falling.
Rep. Wilbert T. Lee of the AGRI party-list group said the government must aggressively address factors contributing to food inflation, or it will be unable to hit its 2.9 percent target inflation in 2024.
With food and non-alcoholic beverages being the top group contributing to the June 2023 inflation of 5.4 percent, Lee said the government must focus on making food more affordable for consumers to further slow down inflation.