Govt considers rice stockpiling policy as contingency measure amid Middle East crisis

March 7, 2011

Press Release
March 7, 2011

The government is considering a rice stockpiling policy as a contingency measure to ensure food security amid an imminent food crisis arising from threats of skyrocketing crude oil price due to the Middle East conflict.

Convening a hearing on Monday (March 7) on food security, Sen. Francis “Kiko” Pangilinan, chairman of Senate Committee on Agriculture and Fisheries, said the Congressional Oversight Committee on Agriculture and Fisheries (COCAFM) is working with other agencies on setting contingency measures with regard to any adverse and abrupt impact of rising crude oil price.  Crude price is feared to hit to $150 per barrel as futures market already hit above the $110 per barrel level.

“Rice stockpiling is something that we raised, and they responded through the executive department that there should be a definite policy on stockpiling in the event a global crisis erupts, without necessarily resorting to panic. We just have to be ready,” said Pangilinan.

As there is a new policy for the National Food Authority (NFA) to allow the private sector to import as much as 75 percent of the immediate rice import volume, Pangilinan also assured the COCAFM, which he also heads, will closely monitor effective delivery of the needed rice volume.

“NFA should come in as a regulatory body to ensure that approvals for these permits be granted to those truly deserving, those that have the capacity to deliver to assure rice availability,” he said.

While the policy on the private sector’s rice importation is a relatively new policy, Pangilinan said this is worth the try considering that the government has failed over the last years in its rice import policy.

“Our track record in our rice importation has not been good.  We had a policy of buying rice at a high price.  But this is a new strategy, and we’re hopeful to find solutions,” he said.

With the private sector set to import 660,000 metric tons (MT) of the 880,000 MT that has to be brought in before July this year, NFA’s burden of financing of the import should be eased.

NFA Administrator Angelito Banayo admitted during the SCAF hearing that there has been some disturbing developments on rice in the world market.

“Roughly six percent of total rice production in the world is traded.  Most governments first have to ensure that their population will eat their production,” he said.

One of the disturbing signals, Banayo said, on rice reserve in the world market is that Vietnam, traditionally the country’s biggest rice supplier through its state-owned Vina Foods, gave notice last November that it is only exporting 5.5 million metric tons (MT) of rice this year.

This is from 6.8 million MT the previous year.  This is due to its policy of creating a bigger rice buffer for its people and also due to rice production problems arising from the Mekong Delta, a source of its irrigation but on which it has conflicts with Laos and China.

India, which used to export its rice, is now only limiting its rice export to the high-priced fancy Basmati rice.

NFA is still scheduled to import 220,000 MT of the immediate volume to be imported or just 25 percent.

The inter-agency committee (IAC) on rice has estimated a rice import volume of 1.1 million MT to 1.5 million MT for 2011.  The IAC is composed of representatives mainly from the Department of Agriculture and Bureau of AGricultural Statistics.

This must be less significantly less than the 2.25 million MT that the country imported in  2010 and the 2.4 million MT imported in 2009.

However, the government may still review the IAC volume in light of a threat of rice price that may soar due to the Middle East crisis as reported by the Food and Agriculture Organization.  It is feared rice price may rise  to the 2008 levels when price hit $1,000 per MT in the world market.