Government told to rely less on rice imports

Aug. 04, 2008

DAVAO CITY–It would have been cheaper for government to source rice in the domestic market instead of importing rice abroad if there had been enough supply of rice in the country, according to the leader of the National Food Authority Employees Association (NFAEA).

Roman Sanchez, president of the NFAEA, compared what the government has been paying for the lauded cost of imported rice in the last four years to the prevailing price of rice in the domestic market at the time of importation.

According to the data gathered by NFAEA, the country imported rice at a price of US$241 in 2004. At the foreign exchange rate 56.04 peso to a dollar at that time, the price of rice import easily reached P13, 550 per metric ton, or 21 per cent lower than the P17,300 per metric ton prevailing price of rice in the domestic market.

But the landed cost of rice – which covers other expenses aside from the purchased price – brings the cost of imported rice higher, making it more expensive for the government to source rice abroad than in domestic market.

Sanchez said that in 2004, the landed cost of imported rice reached P20,258 per metric ton, or 17 per cent higher than the prevailing domestic prices.

Landed cost is the total cost of a shipment from the point of origin, including the purchase price, freight, insurance and other costs incurred, up to the port of destination. The fluctuating cost of dollar against the peso also affects the price of imported rice.

Sanchez said that in 2005, the country imported rice at a price of US$285 or P15, 697 per metric ton but the landed cost of this imported rice reached P23, 546 per metric ton, which was 23 percent more expensive than the domestic price of only P19, 490 per metric ton.

In 2006, the landed cost of rice imports was only .08 per cent higher than the prevailing domestic price of P 19, 490 per metric ton while in 2007, the landed cost reached P25,200 per metric ton or 22 percent higher than the prevailing domestic price of P20, 660 per metric ton.

This year, the price of rice imports is even higher. The Philippines imported rice at a price of P 44, 731 per metric ton at a foreign exchange rate 41 peso to a dollar, which was already 33 percent higher than the domestic price of only P30,000 per metric ton.

The landed cost of this rice imports reached P67, 096 per metric ton, or 124 percent higher than the prevailing domestic price.

“This only showed us that importing rice is not cheaper and the world market can’t be trusted,” said Sanchez. He said that despite having the International Rice Research Institute, one of the world’s best agriculture school, it is very unfortunate that the Philippines placed now as the world’s top importer of rice.

Sanchez said that the government’s heavy reliance on cheap imports instead of building the country’s capacity for increased rice production threatens the country’s food security.

Now that rice exporting countries like Vietnam, Thailand, Pakistan, US and China restricted their rice exports to secure food for their country, the Philippines face difficulties because of its dependence on rice imports, Sanchez explained.

He said that aside from the high landed cost of rice, there is also a 50 percent rice import tariff on government security stocks which NFA also has to pay. NFA also has to pay interest payment on commercial loans for rice imports as well as other expenses like transport, handling, stevedoring and arrastre services, warehousing, pest management, among other things.

“Because of the rice imports, NFA incurred many losses,” Sanchez said.

He said that NFA paid a total of 20.97 million pesos for rice import tariffs from 2002 up to 2006. Sanchez also said that the money used to pay for these tariffs came from commercial loans, with interests.

But he said NFA cannot do away with importing rice because of the rice production shortfall in the country, which should have been addressed by the Department of Agriculture, according to Sanchez.

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