PHL’s use of rice quantitative restriction extended

Categories: Business Updates

Date: 25 Jun 2014

New quantitative restriction (QR) schemes on rice imports are set to be put in place by the government to protect the farmers from the possible onslaught of imported cheap rice, the Department of Agriculture said on Monday.

This is after the Philippines obtained a favorable response from the World Trade Organization (WTO) on its bid to extend the use of QR to 2017, which augurs well for the Aquino administration’s bid to make the country rice self-sufficient.

“The country has finally secured the final nod of the Council for Trade in Goods [CTG] of the WTO for new QR on rice between now and 2017,” Agriculture Secretary Proceso J. Alcala told reporters.

The CTG will be endorsing to the WTO this July its recommendation favoring the Philippines’s request for another extension in the country’s use of QR, Alcala said.

The Department of Agriculture (DA) chief also said the minimum access volume, or the volume of rice imports that can enter the country in a given period at concessional rates, will increase, albeit minimally.

He, however, declined to give details on the new volume, pending the formalization of the endorsement this July.

The QR has allowed the government to limit the volume of rice that can be imported by the Philippines every year, preventing a possible influx of cheap rice imports.

To date, only South Korea and the Philippines have rice QRs. This is the third time the Philippines has appealed for an extension of the QR.

Industry sources earlier told the BusinessMirror that in negotiating for the QR extension, the Philippines would be forced to give trade-offs to rice-exporting countries that may negatively impact on the domestic livestock and poultry sectors. These concessions may come in the form of reduced tariffs for imported meats and other agricultural products.

The Philippines earned the support of the United States on its bid to continue utilizing the QR, a scheme allowed by the WTO to give its member-countries the opportunity to protect their domestic players from injury, especially for critical products like rice.

The three other countries that the Philippines was negotiating with for concessions in exchange for their support to the QR extension were Australia, Canada and Thailand.

China, India and Indonesia in 2013 gave their endorsement to the Philippines for the continued QR.

Alcala said improved palay production has catapulted the Philippines as the No. 1 in terms of percentage increase in milled-rice yield among all rice-producing countries for the last five years.

Citing a report by the US Department of Agriculture (USDA) Foreign Agricultural Service, Alcala told reporters the country’s milled-rice production improved by an average of 5.05 percent from 2009 to 2014.

The average growth in milled-rice production was followed by Egypt at 4.85 percent, with India at third place with 4.29 percent. Cambodia was at fourth with 3.94 percent and Bangladesh followed at 2.8 percent.

The Philippines also registered 2.3 million metric tons (MMT) of average ending stock of milled rice for the same period, which was a mere 0.07-percent decline in stocks, the DA chief said.

Thailand has the highest percentage change in ending stocks, at 25.82 percent for the five-year period.

Average rice consumption in the Philippines declined by half a percentage point, or negative 0.52 percent, during the period, the USDA report indicated.

“The average annual consumption of milled rice was estimated at 12.917 MMT, 18.85 percent higher than the 10.867 MMT average milled rice produced for the period,” the report said.

Other countries with declining average consumption included South Korea (-0.25 percent), Burma (-0.83 percent) and Brazil (-1.25 percent).  The highest average percentage increase in terms of consumption was posted by Nigeria at 8.71 percent, followed by Vietnam (3.05 percent), India (2.95 percent), Cambodia (2.79 percent) and Bangladesh (2.31 percent).

Alcala said the latest USDA report proves that the government’s self-sufficiency efforts in rice is attainable and is, in fact, becoming a reality. He said the government “expects to achieve this feat before the end of the Aquino administration.”

Critics of the government’s Food Staple Security Program cited geographical conditions, lack of agriculture infrastructure and failed implementation of the Comprehensive Agrarian Reform Program as the reasons for the difficulty in attaining rice sufficiency in the Philippines, at least “within the next 10 years.”

The country was able to achieve 96-percent self-sufficiency considering the interplay of rice production, per-capita consumption and population, Alcala said.

The DA chief said the data was higher compared to the 82-percent sufficiency level in 2010.

“We were able to achieve this despite removing subsidies to rice farmers,” the DA’s top official said.

Farmers produced 18.44 MMT of rice in 2013, up 2.3 percent from the previous year, Alcala said, attributing this “to wider irrigation coverage and increased farmers’ adoption of certified and hybrid seeds.”

In the first three months of 2014, rice output expanded by 3.28 percent, or 4.3 MMT, from the 4.17 MMT during the same period last year.

Based on the latest estimates of the Bureau of Agricultural Statistics, the Philippine rice production is expected to increase by 6.8 percent to 8.541 MMT in January to June 2014, from 7.997 MMT a year ago.

“The probable increase in production is due to improvement in yield, particularly in major rice-production areas of Nueva Ecija, Davao del Norte and Kalinga as a result of sufficient water supply during the period,” Assistant Secretary for Field Operations Edilberto de Luna said.

Yield improvement in palay would have Philippine rice production increasing to 6.8 percent for the first half of the year, the  DA said on Monday.

“The country’s palay output is expected to reach 8.541 MMT in January to June of this year, from 7.997 MMT a year ago,” de Luna said in an interview.

He said the projected output is higher than the 8.528 MMT forecast for April  this year.

From April to June this year, rough rice production is expected to reach about 4.015 MMT, or 4.9 percent higher than the 3.827 MMT last year, with initial estimate at 4.002 MMT.

For corn, during the first semester this year, corn production is expected to reach 3.482 MMT, or 4.8 percent higher than the 3.323 MMT in the same period in 2013, based on the updated production forecast. The improved latest forecast is still lower by 0.1 percent from the 3.486 MMT target set in April.

De Luna said corn output for the second quarter of the year is expected to increase by 12 percent to 1.203 MMT from 1.075 MMT registered in April to June last year. The improved forecast is also still lower by 0.3 percent from the April target of 1.207 MMT.

“Dry spell” is the main reason for the slight drop in the target for corn harvest areas and yield, de Luna said, adding that the intense heat affected corn plantations in the reproductive stage.


Written by Alladin S. Diega / Correspondent


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