Philippines rice prices surge on reduced imports, finds PIDS Study; smuggling remains rampant

A study by the Philippine Institute for Development Studies (PIDS) found that a decline in official rice imports led to surge in rice prices during 2013, not price manipulation by rice cartels. However, rice smuggling in the Philippines continues to run rampant thanks to the huge difference in global rice prices and local rice prices, and a reduction in official imports under the nation’s rice self-sufficiency efforts. While the Philippines tried to reduce imports in hopes of boosting local production, the result was smuggled rice imports and higher prices. PIDS researchers say the average domestic prices of milled rice increased to P34.16 per kilogram (around $764 per ton) in December 2013, up about 15% from about from P29.81 per kilogram (around $664 per ton) in January 2013 based on data from the Philippines Bureau of Agricultural Statistics (BAS). Over the same period, the Oryza White Rice Index fell about 5% from around $475 per ton fob in January 2013 to around $450 per ton in December 2013. The National Food Authority (NFA) imported only 205,700 tons in 2013, down about 76% from about 843,700 tons imported in 2012 due to the rice self-sufficiency program initiated by the government. The program aimed at 100% self-sufficiency in rice production in 2013. Reduced imports and natural calamities put further upward pressure on Philippines rice prices. Trade sources say unofficial imports reached around one million tons in 2013. The surge in prices and rampant smuggling led the government to reconsider its decision on reduction in rice imports in 2014. The NFA will be importing 800,000 tons of rice from Vietnam between May and August 2014 to maintain buffer stocks and control price hikes. However, Vietnam rice exporters are reluctant to fulfill the tender as Vietnam rice prices rose after the tender was announced. USDA estimates the Philippines to import around 2 million tons rice 2014, including unofficial imports, while the UN's Food and Agricultural Organization (FAO) estimates it to import around 1.2 million tons. —