Vietnam could disrupt plans to bolster Philippines NFA’s rice buffers

THE strong drought hitting, some of the Philippine's key source of rice imports, could disrupt the government’s plan to build up reserves of the staple held by the National Food Authority (NFA), an industry official said.

Vietnam could disrupt plans to bolster NFA’s rice buffers
 

"There are many countries, not only us, hit by drought. And then everybody will be trying to get rice from these rice-producing areas but they themselves are also hit by drought . That's where price will be critical," said Philippine Confederation of Grains Associations (Philcongrains) President Herculano Co adding that funds for procurement will be crucial for the country's imports.

Earlier, the National Food Authority expressed plans to import additional 500,000 metric tons (MT) of rice on top of its current government-to-government contract to bolster the country's buffer stock amid the El Nino.

When asked if the country may be able to count on drought-stricken rice-producing countries for 500,000 MT considering the possibility of higher rice prices, Mr. Co answered in the negative.

In 2015, some 511,250 MT of rice was approved for importation via contracts with various countries, with specific quotas governed by the minimum access volume scheme, which allows produce to enter into the country at reduced tariff rates. Of the total, 51.50% was bagged by Vietnam. Thailand and India received allocations of 42.08% and 1%, respectively.

According to “Vietnam Consolidated Report on Drought and Saltwater Intrusion” collated between October and March by the United Nations Disaster Risk Management Team (UNDRMT), provinces in the Mekong Delta, Southern Central and Central Highlands regions have been feeling the impact of the El Niño-induced dry spell since the end of 2015.

The Mekong Delta is Vietnam’s source of about half the country’s rice and fruit, with 159,000 hectares (ha) of the staple grain reported damaged by the drought as well as by saltwater intrusion as of March 9.

“Since the end of 2015, water levels in the lower Mekong River have been at their lowest level since records began nearly 100 years ago. It is estimated that levels of water shortage in the rivers of the Mekong Delta range from 30-50%,” reported the UNDRMT, adding that “further 500,000 ha of paddy rice is likely to be damaged by mid-2016.”

In January, Thai Prime Minister Prayuth Chan-ocha encouraged farmers to shift from solely planting rice crops to help sustain water reserves across the country, which have dipped below 2015 levels. The Commerce Ministry, in addition, forecast output of 25 million MT for crop year 2016, down from 27.06 million MT a year earlier.

According to a report by the Food and Agriculture Organization of the United Nations dated Feb. 8, rice stocks this year may need "to be drawn down to bridge the expected gap between world production and consumption, with much of the release likely to concern India and Thailand, the two leading rice exporters."

NFA spokesperson Angel G. Imperial said that the Philippine plan to import about 500,000 MT more rice is “not yet a definite plan... It’s just a possibility” being considered to boost buffer stocks as a precaution against the dry spell, which has been hurting farms here since February 2015.

Earlier, the NFA announced that buffers may be sufficient to rule out imports in the first half of the year.

This will be an interesting few months for the global market, which faces a tight supply situation for the first time since 2007-08,” according to a post by Dr. Sam Mohanty, head of the Social Sciences Division of the International Rice Research Institute (IRRI) dated Feb. 22 on the official IRRI Web site.

The rice stocks of five major exporters -- India, Thailand, Vietnam, Pakistan and the United States” have declined since reaching a peak of nearly 41 million tons in 2013, according to IRRI, citing United States Department of Agriculture (USDA) data.

The USDA was quoted as saying that the biggest drawdown of stocks in the exporting countries is under way this year, with a 40% drop from a year earlier to reach 19 million tons by late 2016.

Mr. Co said that with great crop damage resulting from the dry spell, a potential crisis looms that reminded him of the rice crisis of 2008, when prices exceeded $1,000 per MT.

“If we rely on imports, what happens if the countries have problems [supplying] their own like what is happening now? We will be hostage to the rise in prices,” said Estrella F. Catarata, executive director of the Philippine Network of Food Security Programmes, a convenor of the Green Action PH, civil society group.

Ms. Catarata also noted similarities to 2008.

“If possible this may be even worse than 2007-2008 crisis when there were no weather disturbances to spur the crisis,” Ms. Catarata said, noting that the violence in Kidapawan City may be a sign of the worsening situation.

“If the government is serious in eradicating poverty and boosting agriculture, they should invest in irrigation,” said Ms. Catarata. She estimated that nongovernment organizations can establish irrigation systems for P300,000-P400,000 adequate to the needs of a community of some 200 households.

UNIDRMT reported that Vietnam has allocated $23.3 million in emergency funds to compensate farmers suffering from El Niño as well as providing them with water tanks and other provisions.

Khoa LE

Source: The Business World Online