A House leader has warned against possible rice price increases over the coming months as Vietnam, the country’s main source of imported rice, suffers rice supply pressures as Vietnamese farmers shift to more high-value varieties of the staple grain.
Rep. Joey Sarte Salceda of Albay said: “The implications of these developments in Vietnam are certain. If we don’t do anything with domestic supply and source diversification, we could see higher rice price inflation.”
To address the problem, Salceda said the government should fast-track the Rice Competitiveness Enhancement Fund (RCEF) programs.
Salceda cited data from the Vietnam Food Association (VFA), which showed that Vietnam’s rice exports in the first seven months only reached about 3.5 million tonnes, down 12.7 per cent over the same period in 2020.
Salceda added the VFA’s statements that Vietnamese farmers are shifting to more expensive varieties, while accepting a decline in export volumes.
“We should never depend on Vietnam’s rice exports for our supply in the first place. Vietnam is a society that is becoming more affluent. The result of higher purchasing power is greater food consumption. That means fewer volumes available for export,” Salceda said.
The lawmaker said Vietnam’s Ministry of Agriculture and Rural Development (MARD) also showed that rice prices increased in the first seven months of 2021, although with limited supplies due to the ongoing health crisis.
“Part of what keeps inflation tame despite higher meat and transport prices is because rice inflation is actually negative in some cases. Average rice prices in August declined by 0.4 percent year-on-year. Imagine what happens to inflation when that ticks up even just a bit. The poor spend around 20 percent of their income on rice,” Salceda remarked.
“We really need the RCEF programs to be fast-tracked so that we can respond to these developments from our main provider of imported rice,” he stressed.
Meanwhile, the Bureau of Customs (BOC) has collected P11.69 billion in tariffs from 1.74 million metric tons (MT) of rice imports from January to August, which is already 17 percent more than the minimum funding requirement for the annual RCEF for the following year.
Customs Commissioner Rey Leonardo Guerrero said revenues from rice imports during the Jan. 1 to Aug. 29, 2021 period came from shipments worth a combined amount of PHP35.07 billion.
The BOC’s improved valuation system also raised the average value of rice imports by 4.1 percent to PHP20,188 per MT during this period from PHP19,386 per metric ton (MT) during the same timeframe last year, Guerrero said in his report to Finance Secretary Carlos Dominguez III.
Even with a 7.6-percent drop in volume from 1.88 million MT in the Jan. 1 to Aug. 29, 2020 to 1.74 million MT in the same period this year, the revenue collected by the BOC dipped only slightly by 4.4 percent from PHP12.22 billion to PHP11.69 billion, he said.
All import duties collected from rice imports beginning March 5, 2019 go to the annual PHP10-billion RCEF as provided under Republic Act 11203, or the Rice Tariffication Law (RTL).
The RCEF is used to finance programs that will sharpen the competitiveness of palay (rice plant) growers by providing them easy access to fertilizer, farm machinery and equipment, high-yield seeds and cheap credit; and offering skills training programs on farm mechanization and modern farming techniques.
Annual tariff revenues from rice imports in excess of PHP10 billion shall be earmarked by the Congress — and included in the national budget of the following year — for financial assistance to palay farmers, titling of agricultural lands, an expanded crop insurance program on rice and crop diversification.